Contract talks cool pilot support for Continental-United dea

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Contract talks cool pilot support for Continental-United dea

Unread post by bimjim » Tue Jul 06, 2010

Contract talks cool pilot support for Continental-United deal
By: Michael Fabey
July 02, 2010

The airline merger deal that United and Continental CEOs described as "built to close" is in need of some tweaking.

The Air Line Pilots Association this week throttled back its support for the deal, which would create the world’s biggest airline, after negotiations with management over a transition agreement broke down.

A transition agreement would temporarily protect the jobs, pay and benefits for both pilot groups until an agreement could be hammered out for a permanent, combined contract that covers all of the pilots. It is the first step toward forging a joint collective-bargaining agreement and integrated seniority list.

It’s not clear why the talks broke off or when they will resume.

Jay Pierce, chairman of Continental’s ALPA chapter, said in a statement, "It is unbelievable that contract talks have stalled so early in the process and for such a basic item as a transition agreement.

"We are stalled because of management’s unwillingness to compromise on matters that have little financial impact," Pierce said. "We have heard the recent statements by [Continental CEO] Jeff Smisek proclaiming the virtues of the upcoming merger, touting the benefits coming to labor because of the expected synergies and promising to work with labor in good faith to complete our contracts. However, if this is an indication of management’s approach, I have serious doubts about how long it will be before any of the touted synergies can be achieved."

Those comments are a 180-degree turn from those Pierce made in June, when union officials expressed support for the merger during hearings on Capitol Hill.

Analysts said the conflict appeared to be more than just a play for better leverage during merger contract talks.

"This is a very big deal," said analyst Darryl Jenkins, founder of the Airline Zone, an industry economic website. "Obviously, somebody’s ego has been bruised."

The real question now is how deeply this tussle will bruise negotiations between pilots and management to close the merger deal.

Just how vital pilots' support for an airline combination can be became apparent last year, when Southwest backed off from its plan to acquire Frontier because the two airlines' pilots were unable to work out a transition plan to address seniority and other pilot issues, Southwest said.

What’s frustrating now, Jenkins said, is that neither the pilots nor management will say exactly what the conflicts are.

But what’s clear is that there was no conflict in June when Pierce and his counterpart at United, Wendy Morse, sat before members of Congress and the Senate and implored lawmakers to approve the merger.

"The merger of these two companies provides opportunity for success," Pierce told members of the Aviation Subcommittee of the House Transportation Committee at the June 16 hearing.

Morse said during the same hearing that the merger "represents not only an opportunity for both airlines but a possible sea change in the economic direction and customer satisfaction for the airline industry."

The turnaround in tone in this week’s comments better aligns the pilots with the mindset of the International Association of Machinists and Aerospace Workers.

"Congress has spent a considerable amount of time debating the issue of entities that are too big to be allowed to fail," Robert Roach Jr., the association’s general vice president, testified June 17 before the Senate Committee on Commerce, Science and Transportation.

"Our concern is we are creating airlines that are too big to succeed," he said.

In their respective testimonies, Pierce and Morse did hint that their support for the airlines was far from unconditional, both warning that no matter how big the newly merged United would be, the carrier needed to recognize the importance of its pilots and other labor groups and to negotiate with them fairly.

"Both Mr. Tilton and Mr. Smisek stated recently before Congress the importance of recognizing labor in this deal," Morse said in a statement last week. "At this juncture, their words ring hollow."


Lawyer back for another merger suit
Another proposed merger, another lawsuit spearheaded by San Francisco antitrust lawyer Joseph Alioto.

Alioto, who represented a group of passenger plaintiffs suing to block the Delta-Northwest merger in 2008 on antitrust grounds, filed another lawsuit in a federal court in San Francisco on behalf of 49 passengers this week to challenge the proposed merger of United and Continental.

In his first go-around against Delta and Northwest, Alioto settled with the airlines shortly before he was set to depose the two carriers’ chief executives about comments he said showed they would increase fares after the merger. The settlement required the terms be kept confidential in the Delta-Northwest lawsuit, Alioto said.

Alioto is taking the same tack in the lawsuit against United and Continental, saying the merger would lead to fare increases and service cuts. The merger would lead to other mergers, the lawsuit argues, which would further cut capacity and service and raise fares.

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