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An Interesting Week In The Industry…

August 17th, 2009 · 3 Comments

The last week has been an interestingly eventful one at work.

My airline attempted to purchase another airline out of bankruptcy. The auction was held a couple of days ago. My airline lost.

This is one of the few losses of a major business battle I can remember my airline taking. The funny thing is that I’m not all that disappointed. Even though the acquisition would have resulted in SIGNIFICANT renewed growth for my airline and the addition of a couple hundred fine aviators to our seniority list (behind me), I’m actually kind of glad it went the way it did.

Why? Well, there’s a couple reasons.

First, the union that represents the pilots at my airline went into the negotiation of a seniority list integration (SLI) with the other airline’s pilots with a very firm understanding of what our pilot group wanted.  The deal came down to approximately three hours of late-night negotiating, which resulted in a stalemate. The deal our pilot’s union offered theirs, although very good, wasn’t satisfactory to them (they wanted relative percentage seniority list integration, seat protection, domicile protection, and an outrageous and never-ending monthly pay compensation for their pilots on furlough). Essentially, any deal that could have been agreed upon would have been an absolute windfall for the pilots of the airline being acquired, due to their insistence on those four items. Handing the acquired carrier’s pilots a windfall like that on the backs of the pilots of the acquiring carrier is NOT a way to win friends and influence people in the world of airline pilot unions. For that reason, I’m glad my airline’s pilot union stood their ground and refused to allow itself to be walked on by an incoming pilot group that really had no leverage with which to bargain, anyhow.

Second, our company made it clear that they would not pursue the acquisiton unless the SLI could be agreed upon between the two pilot groups (for reasons of maintaining a strong management/employee relationship). My airline’s management team could easily have told the bankruptcy judge to delete the employee-group agreement clause from our binding offer after the two pilot groups negotiations stalemated. Instead, management stood by its word to only complete the deal if the two pilot groups came to an amicable SLI. When no deal came about, management let the deal go. That says a TON about our management’s loyalty to its employees.

The bankrupt airline ended up being purchased by the only other holding group to bid on their assets. However, from what it looks like to me, that holding group essentially doubled its debt to complete the deal. They have the intention of operating the acquired carrier seperately, which keeps all of their employees working conditions pretty much status-quo. However, I wonder how long that holding company will continue to operate the airlines it owns seperately. If (and when) they do decide to combine the six airlines that operate under the holding company, the SLI is bound to be contentious and messy. Pilot work rules are already questionable among the holding company’s airlines (the newly-acquired one excluded), and when you try and make a group of pilots who are used to a fairly good set of work rules work under some significantly less-optimum conditions, you’re bound to have a fight on your hands. Essentially, the holding company that won the bid over my airline will absolutely have its hands full.


Rumors abound.

During slow times in the industry, we airline pilots relish a good company or industry rumor, and right now they’re absolutely buzzing around the crew lounges of my airline. The Captain I have the pleasure of working with this month is a bit of a rumor-monger (in a good way), and has been collecting rumors regarding a certain new aircraft type since 2006. He was explaining to me last week that these rumors he’s been collecting all sort of fell into place recently, leading to a strong suggestion from our company’s CEO (who was in the jumpseat with my Captain last week) that this new aircraft type is indeed on its way.

What are these rumors? Everything from our company’s recent interest in fully-automated cockpits and navigation to manufacturing reps at our headquarters behind locked doors demonstrating new seating and interior designs to FAA Inspectors leaning into the cockpit to say, “Congratulations! I just saw paperwork at Springboard Airplane Builders saying you were getting the new ScreamWhiner.

This is one rumor where all available signs point to “True.”

Can you say: “BWI to LHR”?

It is my thought that something will be announced within the next two months. I have nothing to substantiate that statement, however. It’s just a gut feeling based upon the events of the last week.

Tags: Aviation · Business/Unions

3 responses so far ↓

  • 1 Dan in ALB // Aug 18, 2009 at 1:00 pm

    Thanks for the post. Interesting about the new aircraft rumor at your company. Certainly would be a change from the business model. I’ll believe it when I see it – exciting to think about though …

  • 2 gcalvin // Aug 18, 2009 at 2:42 pm

    Indeed, it would be quite the departure from the business model we had throughout the first 30 years of this airline’s existence. However, take a look at the destinations we’ve begun serving over the last five years. DCA? DEN? MSP? BOS? LGA? I think that business plan has been changed, and the long-term plan that top management (whom I trust implicitly) has going forward realizes that the current airframe is rapidly becoming old technology.

    Everyone reacts with skepticism when they first hear the rumors. However, were I better able to lay out all the rumors in the long logic chain the way my partner for the month is able to, you’d see pretty plainly that this is anything but pure speculation. Rest assured that I’m not one to post about simple crazy rumor (take a look through the rest of the blog) just for the sake of spreading them.

    Not that you were suggesting that, of course.

  • 3 Dan in ALB // Aug 18, 2009 at 4:01 pm

    As an aviation enthusiast, I do hope that the rumor is more than just that. Perhaps I’ve become jaded by the unending rumors on a certain popular aviation photography website? I would assume that any firm action would be several years in the making – considering current delays in aircraft delivery schedules.

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