United Labor Issues Cloud Merger

United labor/merger story updated with information about the assignment of a mediator to the Continental/IAM talks.

CHICAGO ( TheStreet) -- The merger between Delta ( DAL) and Northwest may have created the false impression that it is easy to put two airlines together.

The United ( UAL)/ Continental merger could well cause that concept to be rethought.
United Airlines

Already, the two pilots groups are bickering. The leader of the International Association of Machinists, the biggest union at United, is calling for snapbacks to 2002 wage and benefits. In several cases, work groups must negotiate contracts, then vote in union representation elections and then negotiate new contracts.

The stakes are particularly high for the Association of Flight Attendants and the IAM because both recently lost members they had at Northwest, which merged with Delta in 2008, and both face union representation elections to retain United or Continental members they already have.

In union elections at Delta this month, the merged carriers' flight attendants and fleet service workers voted not to organize. AFA had 7,000 Northwest flight attendants and IAM had 4,700 Northwest fleet service workers. Both unions are expected to appeal the results: Delta has said it followed the rules.

United does not require contract deals to complete the merger, already approved by regulators. . But United does not want the sort of conflict among work groups that continues to separate pilots at US Airways ( LCC), who are bitterly battling over seniority integration five years after a 2005 merger between US Airways and America West.

But let's not get ahead of ourselves. Before work group mergers can begin to occur, open contracts must be signed at the two predecessor carriers. So far, just one of the 13 unionized work groups has a signed contract.

At old United, the IAM represents about 8,100 customer service agents as well as 7,900 fleet service workers. These workers, like most in the airline industry, signed concessionary contracts around the middle of the decade when four major carriers filed bankruptcy.

"We're not going to be the pawns that make it easy by saying 'we should take less so their merger can work,'" said Robert Roach, IAM general vice president. "We intend to get the best contracts for our members who are working under sacrifice contracts. We intend to snap back to where we were and get enhancements as well."

Snapbacks would be costly for United. In 2002, a top-scale fleet service worker earned $23.79 an hour and paid nothing for a family health care plan. Today, the same worker earns $21.01 an hour and pays $212 a month for the plan.

At Continental, about 9,500 IAM-represented flight attendants reached a tentative agreement in September. Then members rejected it. Tom Brickner, IAM airlines coordinator, said the agreement was a good one, with a no-furlough guarantee, profit sharing and wage hikes of 2.5%, 2.5% and 2% over three years. Compensation would have been $11.50 hour higher than what United flight attendants make, he said.

The problem? Brickner said the union "viewed this agreement as a down payment on what the merger could produce with a second bite at the apple" after a representation election. Members would have a good contract in place as the process played out, he said. But too few flight attendants were convinced, and only about 60% turned out to vote.

On Friday, the IAM said that, at its request, the National Mediation Board has assigned a mediator to the negotiations, which are set to resume on Dec. 8. After a year of talks, "requesting the help of a federal mediator is the next logical step in the bargaining process," said negotiating committee member Sheila Hammond, in a prepared statement.

United's 13,500 flight attendants are represented by the Association of Flight Attendants. "There's a lot of optimism about how this merger will be going forward," said Sara Nelson, spokeswoman for the United AFA chapter. "But at this point, people are still hurting, like they have been for the past decade, while waiting for contract improvements."

AFA's position in the representation election will be that it is best qualified to represent flight attendants, its only constituents. "We negotiate contracts based on priorities determined by flight attendants," Nelson said. "No other union offers that direct relationship." For their part, the IAM and the Teamsters, with more diverse memberships, say bigger is better. (IAM members also have the only defined benefit pension plan at United.)

The Teamsters represent mechanics at both United and Continental as well as 8,000 Continental fleet service workers. They will battle the IAM to represent the combined fleet service group. Currently, "we own everything under the wings except United fleet ," said David Bourne, Teamsters airline division director. "That's a lot of clout."

Bourne said the Teamsters have good relationships with both Continental and United where, after replacing a weak AMFA local, the union brought back outsourced maintenance work. Bourne wants intensive United negotiations during the week of Dec. 6. "I don't like that the pace has slowed since we got the agreement with Continental," he said. "We want to resolve this and move forward."

As for pilots, they must negotiate both a new joint contract and an integrated seniority list, and the effort has hit a snag.

In a letter to members, Jay Pierce, chairman of the Continental chapter of the Air Line Pilots Association, said he will not accept the United pilots' contention that 747 pilots should be paid more than any other pilots. United has two dozen 747s and Continental has none. Pierce also said Continental pilots are willing to separate seniority list issues from contract negotiations, but some United pilot leaders are balking.

In another letter, Wendy Morse, head of the United ALPA chapter, contends that Continental pilots want compensation levels associated with groups of aircraft rather than single aircraft. She said she too wants seniority list integration and a new contract to be separate matters. But she noted that "while this has been advertised as a merger of corporate equals, that does not make it a merger of pilot groups with equal career expectations," reflecting the view that United pilots have greater prospects at the bigger airline.

-- Written by Ted Reed in Charlotte, N.C.

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