Ktflyhome:
The United Airlines AFA contract requires all United flying be done by United F/A's. Previously, United management attempted to bypass this clause when the company acquired Air Wisconsin. AFA filed a grievance and won thier argument and then obtained a multi-million dollar settlement from the airline, following the last merger attempt termination between US Airways and United.
What's interesting is how this clause effected the previous merger between the business partners.
During the July 23, 2000 meeting at the Justice Department, assistant attorney general for antitrust Hewitt pate offered a solution for the previous deal to proceed with a government “no action†letter. The proposed changes included eliminating DC Air, selling Washington National gates/222 slots to an established carrier(s), if this carrier was AMR eliminate the Shuttle Joint Venture/limits on American Airlines growth to permit AMR to create its own independent Shuttle, and sell approximately 13 PHL gates to provide effective competition for both the post-merger route monopoly/duoply issue.
Informed sources said United was agreeable to the governments requirements provided their would by no labor interference. Why? Simply put UAL found itself in a “catch 22â€. The Chicago-based airline was projected to lose over $1 billion for the year, it was experiencing a serious increase in its costs, like other airlines has witnessed a stunning year-over-year revenue loss of approximately 10%, and it had limited access to capital markets. With open labor contracts for the mechanics and ramp workers, coupled with the AFA mid-term wage increase demands/scope clause issue, United could ill afford to complete the transaction and pay $4.3 billion for US Airways (minus the capital obtained from the post-merger divestitures) plus assume $8.1 billion in debt, if the airline was going to face continued labor unrest.
People close to the discussions indicated United chief executive officer Jim Goodwin approached the unions about United’s predicament and the IAM was generally agreeable, but the AFA was not. The AFA said they would support the transaction and waive their scope agreements provided the company would provide the F/A's with pilot type wage increases of 20%. The company rejected the AFA demand and when the union filed its lawsuit in U.S. District Court on July 26, United could not accept the governments brokered plan to complete the merger transactions and the deals collapsed.
By spinning of the wholly owneds US Airways could eliminate a potential scope clause and labor integration problem, provided a corporate combination occurs.
Respectfully,
USA320Pilot
The United Airlines AFA contract requires all United flying be done by United F/A's. Previously, United management attempted to bypass this clause when the company acquired Air Wisconsin. AFA filed a grievance and won thier argument and then obtained a multi-million dollar settlement from the airline, following the last merger attempt termination between US Airways and United.
What's interesting is how this clause effected the previous merger between the business partners.
During the July 23, 2000 meeting at the Justice Department, assistant attorney general for antitrust Hewitt pate offered a solution for the previous deal to proceed with a government “no action†letter. The proposed changes included eliminating DC Air, selling Washington National gates/222 slots to an established carrier(s), if this carrier was AMR eliminate the Shuttle Joint Venture/limits on American Airlines growth to permit AMR to create its own independent Shuttle, and sell approximately 13 PHL gates to provide effective competition for both the post-merger route monopoly/duoply issue.
Informed sources said United was agreeable to the governments requirements provided their would by no labor interference. Why? Simply put UAL found itself in a “catch 22â€. The Chicago-based airline was projected to lose over $1 billion for the year, it was experiencing a serious increase in its costs, like other airlines has witnessed a stunning year-over-year revenue loss of approximately 10%, and it had limited access to capital markets. With open labor contracts for the mechanics and ramp workers, coupled with the AFA mid-term wage increase demands/scope clause issue, United could ill afford to complete the transaction and pay $4.3 billion for US Airways (minus the capital obtained from the post-merger divestitures) plus assume $8.1 billion in debt, if the airline was going to face continued labor unrest.
People close to the discussions indicated United chief executive officer Jim Goodwin approached the unions about United’s predicament and the IAM was generally agreeable, but the AFA was not. The AFA said they would support the transaction and waive their scope agreements provided the company would provide the F/A's with pilot type wage increases of 20%. The company rejected the AFA demand and when the union filed its lawsuit in U.S. District Court on July 26, United could not accept the governments brokered plan to complete the merger transactions and the deals collapsed.
By spinning of the wholly owneds US Airways could eliminate a potential scope clause and labor integration problem, provided a corporate combination occurs.
Respectfully,
USA320Pilot
