Union leaders representing pilots employed by would-be merger partners Delta Air Lines Inc. and Northwest Airlines Corp. appear to be making slow progress in talks on how to combine employee seniority lists, keeping the airlines on track to announce a transaction in the coming weeks, according to sources. Delta and Northwest reportedly have agreed to the outline of an at-market stock swap deal, according to sources, but
went to union leaders before announcing the transaction in hopes of winning employee backing of a deal. Unions in years past have greatly complicated airline attempts at consolidation, demanding higher wages and benefits that can outweigh cost cuts extracted via a deal.
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Sharing details with the unions ahead of time is risky, since pilots seemingly have little to lose from delaying proceedings by holding out for the best deal possible and resisting efforts to compromise. However, pilots from both sides have indicated their support for the right deal, and the union appears reluctant to pass up on a chance to recoup concessions made by pilots during both companies' recent bankruptcies. With investors eager to see both Delta and Northwest participate in airline consolidation, the pilots run the risk of scuttling this deal in which they have been given a voice only to see their employers pressured by investors into another transaction where employees may not be offered the same level of input.
The inclusion of the unions in merger talks may explain Delta CEO Richard Anderson's announcement that he would voluntarily give up accelerated or enhanced compensation that he would be entitled to in the event of a merger. The airline in a Securities and Exchange Commission filing said that Anderson's offer to forgo an undisclosed sum had been accepted by the compensation committee of Delta's board. Anderson's move might have won some goodwill from workers. - Lou Whiteman
See Dealscape post on Delta and Northwest going to their unions
See Delta SEC filing on Anderson's compensation
