Shit Or Get Off The Pot: Post-bankruptcy Majors Said to be Merger Sniffing Again

As reports surfaced today that Delta Air Lines is once again in the merger market, who among us felt a rather nauseating case of déjà vu? One need only Google the words “Delta merger” to see just how much ink has been wasted on the “will they/won’t they” debate (arguably first started when US Airways made an ultimately failed bid for Delta). Is anything different this time around? Possibly!

First of all, if reports hold true, Delta has whittled its choices down to two other post-bankruptcy US majors – Northwest Airlines and United Airlines (hey, at least they all have something in common). The former is a partner with Delta in the SkyTeam alliance, and has been rumoured to be a likely match for quite some time.

Star Alliance member United, on the other hand, is the same United that Delta CEO Richard Anderson rejected as a would-be partner in November.

“There have been no talks with United regarding any type of consolidation transaction and there are no such ongoing discussions,” Anderson said at the time, following calls by common shareholder Pardus Capital management for the two US carriers to consolidate.

Delta’s pilots feel pretty convinced that management is seriously considering a merger this time around. The Delta chapter of the Air Line Pilots Association (ALPA) has written a veritable treatise to members discussing just how calmly they’re going to handle the news - open a strike operations center and mobilize the strike preparedness committee.

Should anyone assume that Delta’s pilots are flatly against a merger, the union assures that “the flexible nature” of the strike preparedness committee will also allow union officials “to task them in support of a consolidation effort - but if and only if it is the right consolidation, a merger opportunity that provides the Delta pilots with the protections and equity we have communicated so clearly and unambiguously from the outset”. Well that’s a mouthful indeed. But the message seems rather clear – you’re not doing anything without our stamp of approval.

It’s a message that American Airlines’ pilots union, the Allied Pilots Association, made loud and clear to management in December 2006. At that time, APA officials approved a resolution to oppose any future company merger that would integrate another pilot group into the employee group’s seniority list. American in April 2001 acquired TWA’s assets. Merging the two carriers’ pilot seniority lists proved a thorny issue during the integration.

Merging the flight attendants’ lists proved a disaster. Thousands of former TWA flight attendants lost their seniority after American acquired the carrier and were furloughed after September 11.

Hoping to ensure that this never happens again, US Senators Claire McCaskill and Kit Bond last month secured a provision to the Senate’s omnibus spending bill – since signed into law - to provide air carrier employees with a base level of protection during mergers. This provision would make it harder for one airline or union to add the employees of another airline or union to the bottom of the seniority list.

Interestingly, the APA did not support the measure. “While this legislation is no doubt well-intentioned, APA does not favour legislative branch involvement in any aspect of labor negotiations,” said APA president Lloyd Hill in a recent statement.

Mega-pilot union ALPA, meanwhile, supports the law, which only applies to mergers going forward. “The legislation does not have any impact on US Airways and America West,” notes an ALPA spokesman. You’ll recall that even though US Airways and America west merged in September 2005, their major labor groups continue to work under terms of transition agreements reached after the merger. You want to talk about thorny!

But despite all the possible headaches stemming from mergers, it seems that major US airlines are hell-bent to come together.

Should Delta merge with current-partner Northwest, it would have access to, among other things, some very nice Boeing 787 delivery slots, some new Airbus narrowbodies and widebodies and a crop of old McDonnell Douglas DC-9s (some as old as 40 years – see one of my first blogs “40 Years Old But Still No Virgin”).

Should Delta opt for a merger with United, it.....SHEESH I'm worn out. Let's tackle this another time. I need a Guinness. Who's with me?

(Photo above right from Delta ALPA portal at http://crewroom.alpa.org/dal/DesktopDefault.aspx?tabid=2421)

Erecting Dysfunction: APA Says Allowing 65 Year Old Pilots to Fly is Dangerous, Calls For Veto

Well, it didn't take long for the Senate to pass companion legislation to the House bill that raises the US commercial pilot retirement age to 65.

Last night, the Senate received a copy of the "Fair Treatment for Experienced Pilots Act", read it twice, considered it, read it a third time, and "passed without amendment by unanimous consent".

Now the bill heads to the Prez for signature. But let's look at what the Allied Pilots Association (APA) thinks about all of this. American Airlines' pilot union says it is downright unsafe to let a bunch of 65 year old pilots fly the open skies. The union has sent Bush a letter urging him to veto the bill.

"The reality is no one knows what would happen with large numbers of 65-year-old pilots in the cockpits of modern commercial airliners operating in today’s demanding environment. The data doesn’t exist because it would be unprecedented. Prudence therefore dictates that we proceed with caution. For safety’s sake, it’s the right thing to do," says the APA.

Wow, those are some strong words. The APA makes it sound like these pilots should be put out to pasture. Never fear boys. There are plenty of ways to stay healthy at 65. And, apparently, a strong erection is still very much attainable.

Who Are You Calling Grandpa? House Moves To Raise Pilot Retirement Age

If 65 is the new 45, then the latest push to increase the mandatory commercial pilot retirement age to 65 shouldn't ruffle any feathers. But it has!

A hastily-created bill, called the “Fair Treatment for Experienced Pilots Act” was unanimously passed by the House of Representatives late yesterday evening.

Pilots are split on whether they want the legislation to move forward.

The Air Line Pilots Association (ALPA) was long opposed to proposed changes to the mandatory retirement age, but in May its executive board decided its resources would be better spent protecting pilots’ interests as new age rules are drafted.

However, American Airlines pilots' union, the Allied Pilots Association (APA), has been quick to bash the new bill.

This link will take you to the bill. But here are some key phrases from the legislation.

In General...a pilot may serve in multicrew covered operations until attaining 65 years of age.

(To meet ICAO standards) A pilot who has attained 60 years of age may serve as pilot-in-command in covered operations between the United States and another country only if there is another pilot in the flight deck crew who has not yet attained 60 years of age.

No person who has attained 60 years of age before the date of enactment of this section may serve as a pilot for an air carrier engaged in covered operations unless - such person is in the employment of that air carrier in such operations on such date of enactment as a required flight deck crew member; or such person is newly hired by an air carrier as a pilot on or after such date of enactment without credit for prior seniority or prior longevity for benefits or other terms related to length of service prior to the date of rehire under any labor agreement or employment policies of the air carrier.

Any amendment to a labor agreement or benefit plan of an air carrier that is required to conform with the requirements of this section or a regulation issued to carry out this section, and is applicable to pilots represented for collective bargaining, shall be made by agreement of the air carrier and the designated bargaining representative of the pilots of the air carrier.

No person who has attained 60 years of age may serve as a pilot of an air carrier engaged in covered operations unless the person has a first-class medical certificate. Such a certificate shall expire on the last day of the 6-month period following the date of examination shown on the certificate.

Each air carrier engaged in covered operations shall continue to use pilot training and qualification programs approved by the Federal Aviation Administration, with specific emphasis on initial and recurrent training and qualification of pilots who have attained 60 years of age, to ensure continued acceptable levels of pilot skill and judgment.

Not later than 6 months after the date of enactment of this section, and every 6 months thereafter, an air carrier engaged in covered operations shall evaluate the performance of each pilot of the air carrier who has attained 60 years of age through a line check of such pilot. Notwithstanding the preceding sentence, an air carrier shall not be required to conduct for a 6-month period a line check under this paragraph of a pilot serving as second-in-command if the pilot has undergone a regularly scheduled simulator evaluation during that period.

Not later than 24 months after the date of enactment of this section, the Comptroller General shall submit to the Committee on Transportation and Infrastructure of the House of Representatives and the Committee on Commerce, Science, and Transportation of the Senate a report concerning the effect, if any, on aviation safety of the modification to pilot age.

Bring it On: American Airlines Pilots' Union Seeks to Conduct All Flying at the US Major

American Airlines pilots' union, the Allied Pilots Association (APA), doesn’t tend to mince words.

It was pretty clear, therefore, what was being demanded when the APA last week issued a scope proposal to management, which states the union expects “all flying performed by or on behalf of the company shall be performed by pilots on the American Airlines seniority list – with no exceptions".

Be it flying mainline or regional service, the APA wants its members in the cockpit. Yep, that means feeder service too! The timing is clutch. American parent AMR Corp recently announced plans to divest regional feeder American Eagle Airlines next year.

The APA's proposal is part of a larger offer tabled by the union under collective bargaining negotiations with management.

This summer the union called for American to provide pilots a 30.5% pay increase, annual pay raises of 15% and signing bonuses to pilots. That was rejected, as was a proposal submitted in October that called for “adjusting current pay rates to account for post-1992 annual inflation, as reflected by the consumer price index”.

See for yourself if American’s pilots deserve a raise. This handy calculator, based on figures derived from the APA’s 2003 contract, tells you just how much the pilots are making now. (Photo above from APA web site)