More than three years after America West Holdings Inc. completed its deal for US Airways Group Inc. (NYSE:LCC) and took the larger company's name, the company is still operating without a combined pilot labor deal. And if a court ruling from earlier in the week is any indication, the dispute seems unlikely to be resolved any time soon.
The dispute stems from an arbitrator's decision to blend seniority following the 2005 deal. Pilots at the legacy US Airways, known inside the company as "East," objected to a decision that they said would put veteran flyers behind America West pilots who had years less seniority.
Pilots from the East, which was a larger company prior to the merger, successfully broke away from the Air Line Pilots Association and founded a new group, the US Airline Pilots Association, that rejected the arbitration decision and has been trying to resolve integration on a straight date-of-hire basis.
The former America West pilots have been fighting date-of-hire, and on Wednesday
won a verdict in a civil trial at the U.S. District Court in Phoenix. They are asking the court to compel the union to honor the arbitrator's decision, which they say was binding. The judge is expected to issue rulings based on the jury's decision next week.
Whatever the judge rules, expect further court dates. The USAPA vowed to appeal the decision all the way to the Supreme Court, if necessary, saying holding the trial in America West's hometown gave those pilots an unfair home field advantage and complaining that the judge wrongly limited what evidence it could show.
"Since we were required to argue our case with limited evidence and were hamstrung by questionable rulings and incorrect instructions, USAPA, quite literally, fought this battle with both hands tied behind its back," union president Mike Cleary said in a
statement. "Given the circumstances, we have a hard time accepting the idea that we encountered truly unbiased impartiality."
For US Airways, it means the clock is still ticking to complete integration. The company actually benefits financially from the lack of integration because former East pilots remain on US Air's bankruptcy-induced low pay scale. But the airline has said it would prefer to get a deal done because it would ease scheduling and planning if the pilots were all under one contract.
And the dispute remains a cautionary tale for other airline execs contemplating their own deals, and a reminder of why airline mergers are so rare. -
Lou Whiteman
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