Airline pilots could kill Delta (DAL) merger with Northwest (NWA)
Posted by: in Latest NewsFiled under: Deals, Competitive strategy, Employees, Delta Air Lines (DAL)
The conventional wisdom is that labor unions in the US are close to dead and no longer have much influence on the managements of large companies. Tell that story to the boards at Northwest (NYSE: NWA) and Delta (NYSE: DAL). Disagreement at the pilot’s union might undermine a merger between the two airlines.
According to The Associated Press ,“the pilots unions have agreed on a comprehensive joint contract, but they’re unable to concur to how seniority for the 12,000 pilots would work under a combined carrier.”
The dubious theory behind airline mergers is that putting two carriers together saves money, but concessions to labor to get a deal done my undermine that. It is also not clear that a newly combined airline can avoid the customer service problems early in the process. These troubles often drive customers away.
While the industry looks at a number of business combinations, pilots and other unions are pushing their agendas. The message is easy. If you want a merger, it is going to cost you.
Douglas A. McIntyre is an editor at 247wallst.com.
Entries (RSS)