The merger integration efforts of American Airlines and US Airways have not been perfect but progress has been steady and generally without too much pain. Sure, the unions put up a bit of a fight every now and then, sometimes even making tremendously awful and irrational decisions, but things marched on and generally worked out okay for everyone. Until a court ruling last last Friday.
A decade ago, when US Airways and America West merged, the integration was much, much less smooth. The pilots never really worked things out and there were many lawsuits, new unions established and general infighting about how to manage seniority integration. At one point the East and West pilots went to binding arbitration and in 2007 arbitrator George Nicolau issued a ruling which East saw as too favorable to West. So much so that the East pilots disbanded their union and started another one in hopes of ignoring the ruling.
And the ignoring part mostly worked, essentially running two separate airlines in the merged US operation. As part of the AA/US merger that was all supposed to go away and, indeed, the courts ruled that the new US union could represent the combined East/West groups as it saw fit, ignoring the Nicolau ruling. This latest ruling reverses that position, requiring that the US union’s efforts in planning integration between the US and AA groups must only focus on the Nicolau award. Needless to say, that ruling caught more than a few folks off-guard. Integration talks were scheduled to commence on Saturday but have since been postponed pending further review of the legal situation.
Previous Union issues, like the flight attendants not ratifying the more lucrative contract, were resolved easily enough. The company imposed the contract which the law allowed and eventually offered back some of the negotiated gains. But that was different because the courts didn’t get involved. This time around the legal wrangling is very, very different. And, while most of the discussion on merger integration has been about how the unions bought in from the very beginning which would make things easy, it turns out that isn’t 100% true. I don’t expect that this hiccup in the integration plans will seriously derail the overall integration process for too long, but the US pilot unions have shown they’re willing to be quite stubborn if needed. And this is a perfect opportunity for them to continue to do so.
And, unlike the lawsuit American Airlines faced from the TWA union pilots which recently settled. In that case it was simply a matter of a cash payment to make everyone happy. One has to wonder if a similar course of action would be more desirable for the current situation rather than dragging out the integration talks for an extended period of time. After all, operating with multiple union factions hurts the company, the passengers and the investors. And usually at least part of the union group, too.
Read More: Yet another airline lawsuit settles
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