insists a labor contract won't hold up its proposed merger with
Delta Air Lines
, but Lee Moak doesn't see it that way.
Moak is the chairman of the Delta chapter of the Air Line Pilots Association, the union that represents more than 6,000 pilots at the Atlanta-based carrier. He says their contract will block a merger because it establishes a minimum number of flying hours for the pilots -- a number he believes would ultimately come down if the combination were to take place.
The minimum-hours provision, he says, would make it impossible for US Airways to cancel certain Delta airplane leases and then reduce flying at the joined airline by 10%.
"The bottom line is they cannot do what they are telling Wall Street they will do in this merger," Moak says. "You can't downsize the overlap by 10% and at the same time say you are going to fly the hours that we have to fly under our contract."
Moak says the contract also prevents US Airways from paying the pilots not to fly. "We will never agree to that," he says. "We are required to fly." And he says he doesn't anticipate that US Airways would reduce flying by its own pilots in order to comply with the Delta contract.
Meanwhile, US Airways spokesman Phil Gee counters that the Delta contract isn't a barrier to the merger. "Our model takes the block-hour issue into account," he said Tuesday. "In fact, the model takes into account all of the issues that the Delta pilots have thrown up as insurmountable."
Last month, US Airways unveiled a hostile takeover bid for Delta, barely a year after a 2005 merger in which America West Airlines took control of the former US Airways and assumed its name. Delta has been operating under bankruptcy protection since September 2005.
Delta's management opposes the bid, and Moak says he has had detailed discussions with CEO Gerald Grinstein in an effort to ally two sides that waged a bitter battle before pilots signed a concessionary contract in May.
"Right now, we have a lot in common," Moak says. "We have a threat that we face, and we need to deal with that and focus on it. Everything else is secondary."
Moak also has a friendship with Jack Stephan, chairman of the US Airways ALPA chapter. The two worked together when Stephan and other US Airways pilots assisted Delta pilots who prepared to strike during contract talks preceding a 2001 deal. "Those guys helped us out when they didn't need to and were getting nothing for doing it," Moak says.
Stephan says there has been minimal progress on merging pilot groups at US Airways and America West, and he questions what would happen if a third carrier were brought into the mix. "If how things are going in our world is any indication, we're skeptical," he says. "Labor is an afterthought."
Public debate over the impact of the Delta contract began last week, when Moak said in an interview that the agreement would prevent a merger not only because of the block-hour provision, but also because it prohibits the use of regional jets with more than 70 seats if a single Delta pilot is furloughed and because it gives pilots a say over code shares.
US Airways responded in an online employee publication, saying that all of the Delta pilot contract provisions "were assumed in our merger model." The company also said it would honor the block-hour provision, wouldn't fly any plane with more than 70 seats in the Delta network, and wouldn't need to code-share because "two networks can remain separate until a new contract is finalized."
Last week, on a conference call, US Airways President Scott Kirby said the Delta contract would be honored for its full term, which goes through 2009. He noted that the US Airways and America West merger involved a 15% capacity reduction, but brought no furloughs outside of management.
"We also expect to be able to manage this
merger through leaves of absence and through normal attrition," he said.
Kirby said the merger of US Airways and America West will be substantially completed in the first half of 2007, "so we won't be trying to merge three carriers at the same time."
As for labor talks with three key unions, he said, "We would love to have it done, but I don't think we will have completed all of the negotiations. It sometimes takes longer than either side would like to reach an agreement."