Airline pilots could kill Delta (DAL) merger with Northwest (NWA)

February 20th, 2008 | Category: Deals, Competitive Strategy

The conventional wisdom is that labor unions in the US are shut to dead and no longer have much influence on the managements of big companies. Tell that story to the boards at Northwest (NYSE: NWA) and Delta (NYSE: DAL). Disagreement at the pilot’s union may undermine a merger amoung the two airlines.

According to The Associated Press ,“the pilots unions have agreed on a comprehensive joint contract, but they are unable to agree to how seniority for the 12,000 pilots would work under a combined carrier.”

The doubtful theory behind airline mergers is that putting two carriers together

saves money, but concessions to labor to get a deal done my undermine that. It is additionally not clear that a newly combined airline can avoid the customer service problems early in the process. These troubles often drive customers absent.

While the industry looks at a number of trade combinations, pilots and other unions are pushing their agendas. The report is simple. whether you want a merger, it is going to cost you.

Douglas A. McIntyre is an editor at 247wallst.com.

Original post by Douglas McIntyre

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