June 06, 2007

No Pact Yet for US Air Pilots

A controversial ruling on seniority integration for pilots at US Airways (LCC - Cramer's Take - Stockpickr - Rating) and the former America West Airlines is threatening to delay the full operational implementation of the airlines' merger.

The May decision by a federal arbitrator came after an interpretation the merger policy of the Air Line Pilots Association. Many pilots at the former US Airways say it favors less experienced pilots at America West, and they may seek to delay or prevent it from going into effect.

"A specific goal of the ALPA merger policy is to avoid windfalls to one group at the expense of the other, but this integration policy does not do that," says Arnie Gentile, spokesman for the US Airways chapter of ALPA, which for now remains separate from the America West chapter.

Last month, US Airways pilots convinced ALPA's executive council to postpone passing the arbitrator's seniority list to the company, which would have implied endorsement. The next step is unclear, but various scenarios are possible, and most of them are time-consuming.

For instance, US Airways pilots could move to leave ALPA. Or they could seek to delay the pact on a joint contract, which must come before members of the two groups can work together in the cockpit or fly aircraft from the other carrier.

To get an idea of how tedious the process can be, consider that at UPS (UPS - Cramer's Take - Stockpickr - Rating), it took four years to reach an agreement on the contract signed last year, partially as a result of intraunion battles.

Bill Swelbar, a research engineer in MIT's International Center for Air Transportation and an airline industry consultant, says US Airways pilots have made sacrifices in salary, schedule and pension benefits, and now face making more. But to impede the merger process would raise questions about future combinations, which "would be harmful to labor long-term" Swelbar says.

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