Merger Watch
February 15, 2008
As we reported in our February 6, 2008 bulletin,
there have been ongoing discussions among Delta and Northwest, as well
as United and Continental regarding plans to merge. Last Thursday, the
Wall Street Journal reported that while talks between Delta and
Northwest had momentarily stalled due to a disagreement over whether
Northwest’s top management, including Northwest CEO Douglas Steenland,
would remain in place after the merger, the issue had been resolved and
the talks have resumed, with an announcement expected in a couple of
weeks. It has also been reported in the press that pilots at both Delta
and Northwest, who are all represented by ALPA, have been negotiating to
obtain equity in the combined airline and improved terms in their
collective bargaining agreement in exchange for their support of the
deal. However, Northwest, to date, has adamantly refused to meet with
the IAM to discuss the impact of such a merger on our members claiming
it is because we do not represent employees at largely non-union Delta.
I have made it clear to Northwest management that if they think that
they can freeze this union out of this process and disrespect the
members we represent, they are sadly mistaken. You should also be aware
that the Northwest/Delta talks have also triggered merger discussions
between United Airlines and Continental.
As we have stated before, if an IAM-represented
airline merges with an airline whose employees in comparable work groups
are not represented, or if the other airline’s employees are represented
by another union, the terms of your contract and union representation
itself, may be in jeopardy. Furthermore, major mergers that have
occurred in the airline industry have often resulted in significant job
loss, higher fares and lower levels of customer service. Here it is
anticipated that we may well lose the Memphis hub in its entirety and a
downsizing of Northwest’s presence in Michigan and Minnesota. History
has shown that newly-combined carriers also face substantial operational
problems as well as difficulties in the integration of IT systems,
equipment, employee benefit plans, routes,management, practices and
policies, frequent flyer programs, hubs and facilities, just to name a
few.
However, before any airlines may complete a merger,
they must first obtain approval from the Department of Transportation
(DOT) and the Department of Justice (DOJ). These agencies will conduct
an investigation of the proposed merger to determine whether it presents
antitrust problems, or in other words, whether the merger will
substantially lessen competition, or create a monopoly. Many factors
will go into this analysis, and both the DOT and DOJ will gather and
review information from both the airlines and other interested parties
before making a final decision. If the agencies conclude that the
merger will violate antitrust laws, the DOJ may file suit in federal
court to block the merger. The Wall Street Journal has
reported that Delta and Northwest, as well as United and Continental,
are aiming to come to agreements as quickly as possible as the
executives of the airlines believe that it will be easier to get DOJ
approval while President Bush remains in office.
The IAM and your District Lodge are committed to
using all the resources at our disposal to oppose any merger that does
not protect the interests of our members. To that end, the IAM Merger
Team has spent the past week communicating and meeting with key members
of the House of Representatives and the Senate. Representative James L.
Oberstar, D-Minn., as well as other members of Congress, have strongly
expressed opposition to a merger between Delta and Northwest, and
Congressman Oberstar has announced his intention to conduct hearings to
review any such proposed transactions. While Congress cannot directly
block the mergers, it has important oversight authority. Substantial
congressional opposition to a merger in the past has resulted in a
decision from the DOJ to block the merger in federal court, as it did in
the merger attempt of United and US Airways in 2001, or may result in
the airlines abandoning the proposal, as it did in US Airways’ bid for
Delta last year.
While no merger has yet been announced, we expect an
announcement shortly and are making every preparation for a struggle to
protect the jobs of the members we represent. We will continue to update
the membership as more information becomes available. |
