Wave of Mergers Could Benefit NWA Workers

The ground workers union president at Northwest Airlines said Thursday that he views US Airways' move to acquire Delta Air Lines as merely the opening salvo for industrywide consolidation.

Stephen Gordon, who represents more than 14,000 Northwest employees, said that if mergers "remove the overcapacity of seats from the sky and make the airlines a more competitive business, it would be good for our membership."

While the prospect of a Northwest merger creates huge uncertainty for the airline's employees, who have just gone through the agony of protracted labor negotiations, a merger could benefit them in the coming years.

Gordon figures that Northwest's ticket-pricing power would improve if some carriers combine and get rid of duplicate routes, which would then free up more money for employee pay increases.

All Northwest employees have taken pay cuts over the past few years.

Since June, Northwest's pilots union has had a merger committee in place that union spokesman Wade Blaufuss said is prepared for "all possible scenarios."

United Airlines and US Airways slashed their labor costs in bankruptcy ahead of Northwest. Delta and Northwest tried to restructure outside of Chapter 11, but later followed the same path and filed for bankruptcy Sept. 14, 2005.

Northwest and Delta both belong to the SkyTeam alliance, which allows consumers to easily book trips using either carrier. Many in the industry, including Gordon, had figured Delta was the most likely merger partner for Northwest, because their domestic and international routes are complementary.

That marriage may not be out of the question, even though US Airways has made a bid for Delta.

"I am a little bit of a cynic over whether this Delta thing can get done, having been through the United-US Airways transaction. It never got done," said Ralph Strangis, a Minneapolis attorney who represented US Airways. In 2001, the federal government blocked that consolidation over antitrust concerns.

Strangis was an attorney for Republic Airlines when Northwest and Republic merged two decades ago.

In today's environment, Strangis said, an airline merger "makes all the business sense in the world to try and combine these companies and get some efficiencies of size."

But he's not sure regulators would want to see the industry "contract to two or three mega-carriers and some low-cost carriers, or whether they still want to keep in place four or five good-sized airlines."

A future merger was on the minds of Northwest union negotiators as they took part in concessionary bargaining this year. The Air Line Pilots Association succeeded in retaining some job protection language in the event of consolidation.

The International Association of Machinists and Aerospace Workers was unable to preserve provisions to limit layoffs in a merger. The Association of Flight Attendants is still bargaining with Northwest for a new contract.

The pilots' Blaufuss said that, in a straight merger, the union's new contract says Northwest pilots will negotiate "a combined seniority list so that one airline does not receive significantly better terms than the other airline."

John Remington, a labor expert at the University of Minnesota, said that "any merger creates a sense of uncertainty for employees at both carriers." When it comes to pilots, he said, there is natural competition over who gets to fly the largest planes with the highest pay, so the combined company wants to avoid one group of employees feeling like "second-class citizens."



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