Airline Merger: I Was a Victim

The airline industry serves as a good example of what happens when the suits ignore the most important factor in creating a successful merger or acquisition: people.
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CHICAGO (TheStreet) -- Shares of Chicago-based United Airlines (UAUA) and somewhere-based (it says Delaware but that doesn't strike me as a major airline hub) US Airways (LCC) shot higher this week on rumors of a potential merger or acquisition.

And this will be the last good news you'll hear about this for years.

Hi. My name is Matthew Buckley, and I'm a victim of an airline merger/acquisition/something.

The merger and acquisition cemetery is filled with sad stories that looked great on paper but failed miserably in execution. The largest vault is stacked with the rusty hulks of airlines where executives with lots of letters after their names looked at numbers, did the math and pressed forward with visions of performance-based bonuses in their heads.

The airline industry is obviously not unique to M&A activity. The recent financial typhoon resulted in the shotgun wedding between Mother Merrill and

Bank of America

(BAC) - Get Report

. The technology sector has also seen a lot of activity.

Dell

(DELL) - Get Report

purchased Perot Systems;

Hewlett Packard

(HPQ) - Get Report

acquired EDS;

Xerox

(XRX) - Get Report

purchased Affiliated Computer Services.

But the airline industry serves as a good example of what happens when the suits ignore the most important factor in creating a successful merger or acquisition: people.

People are the backbone of any organization, and as such, operate in a system. These systems take on certain characteristics and become a way of life for the people in it. Not examining the culture of a potential merger partner and how it would integrate into the acquiring company is a recipe for trouble.

I left active military duty and flew

for

Fed Ex

(FDX) - Get Report

for 10 months and got my first taste of working at a post merger/acquisition company. Fed Ex purchased Flying Tigers in 1989 to establish a beachhead in the Pacific Rim. Eleven years later, Flying Tiger and Fed Ex pilots were still complaining about the merger and the resulting impact on their seniority.

For the uninitiated, seniority at an airline is everything. You're assigned a number on your first day of work and that number is your life; it controls how much you make, what equipment you fly, what your schedule is, whether or not you get your birthday off, even whether or not you keep your job.

Also on your first day at work as a pilot for an airline, you calculate when you're going to make it "to the left seat," or captain. The big money ... or at least it used to be. More on that in a minute. So on Day One you have a date in mind of when you can expect to make big money and command an airliner, responsible for the safety of hundreds of passengers.

When the airline suits decide that their horrible business model can maybe be saved by merging/acquiring a less horrible business model, they create a perfect storm by changing the set expectations of two groups of type A employees. Many airline pilots like me are former military aviators and not inclined to back down from a fight or give an inch.

Hilarity ensues, and years later, neither group is happy. The seniority lists are "merged" and people are bumped up, down, sideways, and even off (as in fired, or to use polite airline management speak, "furloughed"). This creates a lot of unhappy employees with long memories.

Delta

(DAL) - Get Report

purchased Northwest Airlines, and the integration of the seniority lists is still simmering. US Airways and America West merged, but their seniority lists remain separate, so imagine how it's going to look if the current deal goes forward.

I left Fed Ex (because I like my sleep) and went to work for

American Airlines

(AMR)

. The last time US Air and United dated, it scared American enough to purchase troubled TWA in 2001. The terrorist attacks further devastated an already struggling industry that continues to be on life support. Add the fake bankruptcy scare from former American CEO Don Carty in 2003, and to this day there exists tension between some American and TWA pilots about who got the raw end of the deal. I mean merger or acquisition.

Firing Line

: I've subtly used the terms merger and acquisition interchangeably and that's a problem. There's a big difference between a merger and an acquisition and not clearly examining the impact of either situation on the employees can mean the difference between success and failure.

Written by Matthew Buckley in Chicago

.

Matthew "Whiz" Buckley is the chief strategy officer of

Options University

, a provider of options education for options traders of all levels. . He is also the founder of Strike Fighter Financial, a business-consulting firm specializing in leadership development, risk management and strategic planning for Fortune 500 companies and related organizations. Buckley flew the F-18 Hornet for the U.S. Navy. He's a graduate of TOPGUN, has close to 400 carrier landings and flew 44 combat sorties over Iraq. After leaving active duty, he worked as managing director of strategy at a Wall Street firm and CEO of a financial media company. He is an internationally recognized speaker and combined his experiences in the military and corporate America in his book "From Sea Level to C Level."