To make a merger between US Airways and American happen, US Airways CEO Doug Parker turned to American’s labor unions, big players in one of the most heavily unionized U.S. industries.
Those unions created the momentum that brought Wall Street on board with Parker’s audacious plan to take over the world’s third biggest airline in bankruptcy court, overcoming that airline’s initial commitment to resist.
Now, Parker once again needs help from the labor movement, following a stunning, last-minute decision by the Obama Administration’s Justice Department to oppose the merger that, until Tuesday, seemed all but done.
Obama’s Justice Department looked at the merger plan and focused on a perceived effort to raise the cost of a fairly limited set of airline tickets, tickets sold in markets where US Airways operates one-stop flights that compete with non-stop flights.
The Justice Department did not see, or chose not to see, that selling tickets more cheaply than competitors do means that many of US Airways 35,000 employees make less money than peers at Delta and United. If a merger occurs, most US Airways and American employees are slated to receive pay and benefit increases as well as increased job security, as Parker has consistently sought to distribute perceived merger benefits to workers.
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To preserve its merger gains, the labor movement is more than willing to show its opposition to the DOJ’s lawsuit: Planning is already underway, although specifics have not been revealed.
“The DOJ’s premise is to (seek) cheap airfares on the backs of labor,” said Dennis Tajer, spokesman for the Allied Pilots Association, which represents American pilots. “The DOJ decision puts at risk our working families’ livelihoods, and we will not be silent.
”Labor has led this merger before because it’s the right thing for our passengers and our families,” Tajer said, adding that APA is “in full planning mode” as it seeks to determine a response. “We’ll be everywhere, in DC or wherever our advisors think would be effective and relevant to our cause,” he said. American pilots were due to get a new contract with an 8% initial raise in January.
Roger Holmin, president of the US Airways chapter of the Association of Flight Attendants, said it is not the Justice Department’s role to force a company to pay lower wages so that consumers can benefit from cheaper products. Holmin has consulted with Laura Glading, president of the Association of Professional Flight Attendants, which represents flight attendants at American, and said demonstrations are likely.
"We’re working on strategy,” Holmin said. “The AFA and APFA are willing to do whatever we have to do. And I can assure you that the AFA will have the support of our international office. We represent 20 airlines and I am sure they will join with us.”
A spokesman for the Transport Workers Union, which represents mechanics and other ground workers at American, said demonstrations are planned. The union is also pushing the AFL-CIO to become involved. “These are protests against not just the Obama Administration but also against the state attorneys general' who backed the lawsuit, the spokesman said.
About 22,000 TWU members had been slated to receive pay raises and equity in the new carrier once it receives single carrier status. “The DOJ threw a giant monkey wrench into everyone’s gears,” the spokesman said.
US Airways pilots would suffer the most if the merger fails. Those pilots, both east and west, have been working for below-scale wage for a decade. Bankruptcy Court approval of a merger on Thursday, which had been expected, would have triggered implementation of new contract with $1.6 billion in wage and benefit gains over six years. The US Airline Pilots Association was meeting Friday to decide what course of action to pursue.
A weak link for US Airways is that it had delayed completion of contracts with its largest union, the International Association of Machinists, while Teamsters sought to raid the IAM mechanics. On Monday, the IAM overwhelmingly won a representation election: now, the union is calling for rapid movement on a new contract, after two years of negotiating, so that it too can join in the effort to quash the DOJ lawsuit.
"Our position today is the same as it was when the merger was first announced: our members need a contract,” said IAM spokesman Joe Tiberi. “US Airways is not supporting our members, so our members cannot be asked to support US Airways' merger.”
LOS ANGELES, CA -- American Airlines passenger planes sit on the tarmac at Los Angeles International... [+]
