DAL/NWA: It's Official

[Doug Taylor]

Originally Posted by wheelsup

Apparently the NWA pilots are trying to stop it (the merger).

In This Hotline

NWA MEC Opposes NWA/DAL Merger Monday, April 14, 2008

Today the managements and Boards of Directors of Northwest and Delta Air Lines announced their intent to merge. In addition, a new pilot contract was agreed upon by the Delta MEC and Delta management without the participation of the Northwest pilot group. No details on this contract are available at present. The Northwest MEC strongly opposes the merger with Delta Air Lines as it stands.

Reasons for Opposition:

Northwest pilots will be disadvantaged in obtaining a joint contract and potentially in the seniority list integration process.
The current process is highly likely to recreate the USAirways-America West merger environment.
Northwest pilots are not brought to immediate parity with Delta pilots, potentially putting Northwest pilots on a B-Scale for years.


This merger announcement has come after months of negotiations which had resolved all joint pilot contract issues except for the differing views on the integration of pilot seniority. The NWA MEC, on numerous occasions, stated our willingness to resolve seniority integration by expedited arbitration. The Delta pilot leadership rejected arbitration as a means of resolving the seniority list issue at that time, but has now reversed its position. The Delta pilot leadership also abandoned the joint pilot contract approach and agreed to a new Delta pilot contract that increased the pay and benefits for their pilots only. Any previous value and synergy created by the merger is likely to be lost due to this one-sided agreement.



More information is available in a Ziplines from MEC Chairman Dave Stevens which will be published shortly.



This marks the end of today's Hotline.



Your MEC remains committed to protecting your jobs, your seniority and your future

Arbitration. Yeah whatever.

[Tram]

Originally Posted by Maximillian_Jenius

How (would/could) they stop it?

The brakes man.. The brakes...

[Doug Taylor]

A letter from the NWA MEC Chairman to the pilots of ALPA Councils 1, 20, 54, 55 & 74





TO: All Northwest Pilots

FROM: Dave Stevens

DATE: April 14, 2008





In the wake of the Delta-Northwest merger announcement today, I am writing to update the Northwest pilots. I will start by giving you the conclusion. Since January 2008, we have been working hard to put together a cooperative merger between the Northwest pilots, Delta management and the Delta pilot leadership. Agreement on the terms for a cooperative merger was in all stakeholders’ best interest in better times, with oil below $90 per barrel. With oil over $110 and an economy facing recession, and given the recent activities of the two managements and the Delta MEC, a merger with Delta may no longer be in the best interests of all Northwest stakeholders, including the Northwest pilot group. Northwest Airlines has strong standalone prospects given its cash position (best of the legacy carriers) and the flexibility of the NWA fleet, among other things. We are in a good position to weather the potential economic storm.



As a quick review, we started exploration of a cooperative merger with four key requirements from NWA MEC Resolution 08-01:



1. Creation of a profitable merged company with sufficient market presence and network scope to provide a stable platform for growth and sustainable profits;



2. Fair and equitable seniority list integration;



3. Collective bargaining agreement for the merged company with substantial improvements; and



4. Share in the equity of the merged company.



A cooperative merger provides a win-win formula for labor and management. By achieving a joint contract and seniority list prior to the effective date of the merger, revenue synergies and cost efficiencies are generated immediately (worth many hundreds of millions of dollars per year), and a portion of this economic upside could go to the pilot groups in the form of contract improvements and equity.



Since January, we have met with the Delta pilot leadership and Delta management in three extended efforts to accomplish the above requirements. By the end of the second session, we had accomplished requirements #3 and #4. However, we were unable to reach agreement on #2, an equitable seniority list, which is essential to accomplish #1. There was a great deal of collaborative effort expended by the Delta pilot leadership and Delta management to convince us to accept inequities in a seniority list in return for improved economics in a joint contract. As you know all too well, seniority is forever while economic provisions can be short lived.



The first two negotiations took place in New York City with oil below $90 per barrel. While we achieved agreement on a joint contract and equity and made progress on a seniority list, we did not achieve an equitable seniority list. The third negotiation took place in Washington, D.C., and while more progress was made on seniority, a seniority list agreement was not reached.

The seniority negotiations broke down over the Delta pilot leadership’s desire to include aircraft options, not just orders, in the seniority integration ratio. We were not willing to adjust the seniority integration ratio in favor of Delta pilots based on options, particularly when such options were unlikely to be exercised, other than as replacement aircraft, in the worsening economic environment. There were additional problems concerning calculation of the number of active pilots at each carrier and staffing assumptions for the future. The resulting difference in our respective positions on a ratio was substantial. The actual breakdown occurred when, in response to my suggestion that we both compromise and bring that to our respective MECs for their consideration, we were advised that the Delta pilot group could not move off their last ratio proposal.



As we had several times before, we then suggested to the Delta pilot leadership that we agree on expedited arbitration of the outstanding issues by a date certain. The result of an expedited arbitration would have been functionally the same as an immediate negotiated agreement since there would have been one seniority list and a joint contract in place on the transaction effective date.



By use of this process, much of the transaction risk would have been taken out of the merger and additional funds would have been generated to pay for one-time transition costs. In the uncertain world of airline economics, this was a key consideration. When two airlines merge, they attempt to realize the benefits of the created synergies before they run out of cash on hand to pay for the transition costs. In our current environment, there is no more money to borrow and airlines have few assets left to encumber.



Unfortunately, the Delta pilot leadership rejected arbitration, whether expedited or not, as a means to resolve the seniority list dispute. From that point, Delta management, the Delta pilot leadership and Northwest management chose a different path. NWA management proposed a traditional merger to Delta management. Then Delta management entered into bilateral negotiations with the representatives of the Delta MEC. The representatives of the Northwest pilots were excluded from the negotiations. Inexplicably, the Delta pilot leadership reversed its position. They are now willing to arbitrate the seniority list issues under ALPA merger policy. At the same time, they abandoned the joint pilot contract approach and have, instead, agreed to a Delta pilot contract amendment which will increase the pay and benefits for only Delta pilots. The Northwest pilots are excluded from the economic benefits. Both managements have cooperated in this change in course.



Yesterday we met with Delta CEO Anderson, President Bastian and EVP Campbell. At that meeting, we suggested that they delay the merger announcement and spend a short period negotiating a joint contract with a focus on their harmonization issues. This suggestion was rejected in favor of the plan they are currently pursuing. In explanation, they said we were out of time to negotiate prior to a merger announcement date (despite the fact they found two weeks to negotiate a deal with the Delta pilot leadership).



As a result, there will be seniority arbitration in a traditional merger process and it may take a long time. The Delta pilot leadership may choose not to cooperate on a joint contract for the benefit of the Northwest pilots while they seek an agreement on seniority that favors the Delta pilots.



Now we reach the question your MEC considered at its meeting yesterday – Should the pilots, employees and customers of Northwest support this merger as it is currently contemplated? The managements are betting on the merger models of old: Pay the employees of one group less and focus on lowering costs (instead of many of the revenue synergies that are far more likely to improve the bottom line); hope for cost savings going forward from employee division with no concern for the dis-synergies caused by labor dissatisfaction. The point has already been made to us by Delta management that they already have a “B scale” at Northwest, and that they will need to maintain it by phasing in harmonized wages. Mergers based on this model have never worked well, but trying to make this work at $110/bbl fuel, with a looming recession and no access to credit markets, is putting everything at risk.



One can only conclude that the Delta pilot leadership and Delta management have made an arrangement to try to disadvantage the Northwest pilots economically and with respect to our seniority. No pilot group is going to put up with this. No amount of money can sustain a carrier which creates this level of discord. This is a recipe for failure. Under these conditions, Northwest Airlines and all the stakeholders, including the pilots, other employees and customers, are better served by a standalone airline. Under these circumstances, it is Northwest’s best option, with its strong international and domestic route structure, a flexible fleet, an order book with fuel-efficient aircraft and the best cash position of any legacy carrier, to remain an independent carrier.



Your MEC reached this conclusion with reluctance. We were very close to concluding a truly cooperative merger which would have served the interests of everyone. We regret that an agreement was not obtained. However, the past is past. The Northwest pilot group now has to face a difficult future. As hard as a standalone course may be in these economic times, it is our judgment that it carries less risk than the merger path which now lies before us. For that reason, we will be turning our efforts to stopping this merger. Over the course of the next few weeks, we will be sending you more information on the MEC’s plans. Look for a road show schedule to be posted soon.



Fraternally and in Unity,


Dave Stevens

MEC Chairman

[Doug Taylor]

That's all I know folks, so blowing up my celly!

[Maximillian_Jenius]

I'm not saying it is right. But if it happens maybe the red book guys will finally know what their green book brothers have felt like being locked out of widebody flying for decades.

Having said that, I hope cooler heads prevail and a joint contract is drawn up!

[wheelsup]

This is America West/US Airways all over again.

[Doug Taylor]

Originally Posted by wheelsup

This is America West/US Airways all over again.

Crouching Tiger, Hidden Dragon.

[Polar742]

Atlas and Polar have been working at a crew merger for almost 7 years.

The final arbitration is scheduled to be completed sometime late this summer.

It makes the US/AWA debacle look like a cakewalk....

[Doug Taylor]

You didn't know a Cameron Renter over there, did ya?

[Polar742]

Originally Posted by Doug Taylor

You didn't know a Cameron Renter over there, did ya?

No, is Cam a PO or 5Y?

[Doug Taylor]

Originally Posted by Polar742

No, is Cam a PO or 5Y?

I think he was Polar. Got furloughed from DAL, then to Polar, strike & furlough and back at DAL now.

Unless it was Atlas. I can't remember. I was supposed to call him back about the ER and the PHX-JFK commute but haven't gotten around to it yet.

BTW, I'm HORRIBLE at returning phone calls so don't take it personal.

[Polar742]

Originally Posted by Doug Taylor

I think he was Polar. Got furloughed from DAL, then to Polar, strike & furlough and back at DAL now.

Unless it was Atlas. I can't remember. I was supposed to call him back about the ER and the PHX-JFK commute but haven't gotten around to it yet.

BTW, I'm HORRIBLE at returning phone calls so don't take it personal.

Yeah, no prob. We had another DL cat that took the recall. You might have seen him in some movies. (never met him, but he's legendary)

[juxtapilot]

hmm... sexy...?




A320 http://www.cardatabase.net/modifieda...g/00009941.jpg

A330 http://www.cardatabase.net/modifieda...g/00009670.jpg

B744 http://www.cardatabase.net/modifieda...g/00009040.jpg

[surreal1221]

Eww. . .

Only thing I really want to know is will it be easier to non-rev places now?

[Polar742]

That just ain't right. No airline based south of the Mason-Dixon should fly Frog Jets. (Even though I think the 330 is a good looking bird, for a light twin)

IMHO

[Soku39]

At the tender age of 20 I've now seen it all . I can't believe that I am still fully ready to throw myself into this when I graduate in a year. As it turns out you really do have to be crazy to fly them aluminum tubes.

[Doug Taylor]

Nuts.

Sometimes I find myself babbling about the illuminati and hankering to trade precious metals!

[DZERO]

<=== Drink Meee!!!!!!!!drink Meee!!!!!

[fo4ever]

Originally Posted by SteveC

If that wasn't so funny I'd moderate the heck out of you.

Steve, your avatar compliments that post PERFECTLY.

I like the "discretion"

[ILSstud]

All I can think of is how long this will drag out in terms of consolidating seniority lists and coming up with viable agreements with pilots. A few of you have said it before, this will make the USAirways/America West deal look like a tea party!

[B767]

Originally Posted by Mad Doggy Dog

It will be Continental and Air Lingus.




All cockpits will be renamed "box office."

Call me naive or dumb, don't quite get it....want to though...

[Polar742]

Originally Posted by B767

Call me naive or dumb, don't quite get it....want to though...

Put on your dirty thinking cap and merge the name.

[B767]

I see said the blind man.

Got the CAL part...was kind of lost on Air Lingus...but good to go now.

[WalterSobchak]

Originally Posted by Maximillian_Jenius

I'm not saying it is right. But if it happens maybe the red book guys will finally know what their green book brothers have felt like being locked out of widebody flying for decades.

Having said that, I hope cooler heads prevail and a joint contract is drawn up!

Poor comparison. NWA has more wide body aircraft and with older crustier pilots. Not to mention NWA is finacially better than DAL as a stand alone. There are very few similarities to the red/green/blue tail days. This merger only happened to make a couple of people more wealthy.

[killbilly]

Originally Posted by PeanuckleCRJ

They are paid for, which makes up for the fuel they burn. It costs nothing to have them sit around while they aren't being used.

... all in all, this is gonna be a wild ride.

Question, because I don't know:

Doesn't it cost them in ramp space, insurance, maintenance, etc while they're sitting on the ground?

Follow-up question:

Can those birds be used as collateral to leverage financing for other stuff if they're already paid for?

These may be overly simplistic questions, and I'm no finance guru, but I'm curious.