Mergers are Tough — Especially Integrating Union Workforces
Mergers are tough in any industry, bringing together large enterprises. It’s tough to realize the paper gains that were used to justify the merger.
Things become even harder merging unionized enterprises, since the layers of negotiations and contract complexity are far greater.
Unions of both airlines generally supported the American Airlines-US Airways merger because they were promised raises if it went through.
US Airways Never Managed to Complete it in Their Last Merger
US Airways never managed to integrate its pilots after its merger with America West… even though its pilots were represented by the same union. US Airways, in its second bankruptcy, was deemed a ‘failed carrier’ and union rules dictated that American West pilots would rank higher in seniority.
So the more numerous US Airways pilots, with enough votes to do so, created a new union whose purpose was bumping back down the senior of America West pilots. (Instead of fighting against
the Romans management, they were fighting each other.)
This Merger Was Supposed to Bring Lake Wobegon to Labor: Everyone Gets Raises, Becomes Above Average
An American Airlines merger is supposed to bring big pay raises, and finally buy everyone out of the labor acrimony. The challenge of integrating two pilot workforces (US Airways and America West) is supposed to get easier by integrating three pilot workforces.
Meanwhile, American’s pilots favored the deal. They were promised pay raises and a rollback of some of the contract concessions from American’s bankruptcy. They also developed a personal dislike for American management, and got the psychic win of flexing their muscles and tossing management.
American’s pilot slowdown from September-October 2012 basically forced the merger. It laid bare that American wouldn’t continue as a standalone under current management. A merger may have happened anyway, in fact by July 2012 American was signaling as much by telegraphing that the merger with US Airways was actually their idea originally. But the pilots made it inevitable, greased of course by Doug Parker’s willingness to overpay such that not only would unsecured creditors be made whole in the American bankruptcy but equity holders wouldn’t get wiped out entirely.
How well a merger predicated on cost increases will do remains to be seen. But, somewhat predictably, labor peace already seems unlikely to be achieved. In fact, we’re already seeing labor acrimony.
Labor Is Already Squabbling Though
Terry Maxon reports that the President of American’s flight attendants union “blasted the [US Airways flight attendants’ union] for wanting to change the rules on how the two work groups would be combined and get a single contract.” The US Airways union leadership says that American flight attendants don’t want enough out of a new contract.
It appears to come down to the US Airways union wanting a new representation election, so that they might be able to represent all of the flight attendants at both airlines. They’re going to be combative and promise members more, to convince flight attendants to support them. American’s union leadership doesn’t want to be pushed out. So we’re beginning to see a power struggle.
I love that the dueling letters between the two union leaders end “In unity,” and “In solidarity.”
I don’t love that the merger might not be all unicorns and roses. I greatly prefer happy employees who enjoy their jobs and don’t take squabbles out on customers. Here’s hoping!