Merger Watch

Machinists Call for Airline Re-Regulation

The International Association of Machinists and Aerospace Workers (IAM) today urged lawmakers to resist appeals to approve additional airline consolidation, calling instead for measured re-regulation of fares and capacity as the only way to ensure safe and reliable air transportation in the United States.

“Limited re-regulation is the only long-term solution for an industry that is continually seeking government assistance,” said IAM General Vice President Robert Roach, Jr., at a Senate Commerce Committee hearing on the state of the airline industry. “This industry is simply unable to turn away from pricing its product below the cost of providing it, further perpetuating the chaotic spiral that brings us here today.” The IAM’s complete testimony is available at www.goiam.org/mergers.

“Airlines today compete by cutting standards, eliminating services and reducing ticket prices to the bone, which makes a profitable industry impossible,” said Roach. “The Government Accountability Office estimates that median ticket prices have dropped nearly 40 percent since 1980, while the costs of aircraft, airport leases and fuel have increased dramatically.”

“When an industry essential to the national economy can no longer function, it is the responsibility of elected representatives to step in and provide the necessary guidance and stability,” said Roach.

Machinist President Urges Congress to Reject Airline Merger Scams

International Association of Machinists and Aerospace Workers (IAM) President Tom Buffenbarger today urged members of the House Judiciary Committee to oppose consolidation plans currently being proposed by airline CEOs.

“If allowed to proceed, Northwest and Delta will form the world’s largest airline, creating the world’s biggest corporate headache,” declared Buffenbarger in testimony before the committee’s Task Force on Competition Policy and Antitrust Laws. “Consolidation is not the solution for this troubled industry, more competent management is. This industry is in disarray and the executives in charge are only making things worse.”

Buffenbarger’s complete testimony is available at www.goiam.org/mergers.

Today’s hearing, titled ‘Competition in the Airline Industry,’ follows the April 14, 2008 merger announcement by Delta Air Lines and Northwest Airlines and featured testimony by Northwest Airlines CEO Doug Steenland and Delta Airlines CEO Richard Anderson.

“Some form of limited re-regulation is necessary if this country has any chance for a safe, reliable, profitable and competitive air transportation industry,” said Buffenbarger. “There is too much at stake to let executives and their legacy of failure try and solve the industry’s problems.”

The IAM has been working closely for months with other labor unions, lawmakers and consumer groups to oppose reckless consolidation schemes designed to enrich executives at the expense of passengers, employees and airport communities.

“It would be difficult to find anyone outside of a small group of airline executives who expects to benefit from additional airline consolidation,” said Buffenbarger.

The IAM represents 12,500 Northwest Airlines Ramp Service Employees, Stores Clerks, Customer Service Agents, Reservation Agents, Flight Simulator Technicians and Plant Protection employees.

The Machinists Union is the largest Airline and Rail Union in North America, representing more than 170,000 Flight Attendants, Customer Service Agents, Reservation Agents, Ramp Service Personnel, Mechanics, Railroad Machinists and related transportation industry workers.

Additional information about the Machinists Union is available at www.goiam.org/transportation.



If you have questions regarding mergers please feel free to submit them. We will do our best to get answers and post them here for review.

Just Say No! To Airline Mergers The Machinists union strongly opposes mergers among the major airlines for the following reasons: airline hubs will be eliminated, service frequency will be reduced, competition will be diminished, jobs will be lost, customer service will deteriorate and pension obligations will be jeopardized and fuel prices will remain unaffected by a merger. The IAM is part of a coalition of consumer advocates, political leaders and passenger rights groups who oppose the mega-mergers, but we need your help. All IAM members are asked to contact their elected representatives and urge their opposition for airline mergers that will only benefit airline executives and bankers.		Click here to send a message to your elected representatives

The IAM is interested in knowing your opinion regarding airline mergers. Click here to participate in an IAM Merger Survey
IAM Merger News:
Machinists Call for Airline Re-Regulation The International Association of Machinists and Aerospace Workers (IAM) today urged lawmakers to resist appeals to approve additional airline consolidation, calling instead for measured re-regulation of fares and capacity as the only way to ensure safe and reliable air transportation in the United States. “Limited re-regulation is the only long-term solution for an industry that is continually seeking government assistance,” said IAM General Vice President Robert Roach, Jr., at a Senate Commerce Committee hearing on the state of the airline industry. “This industry is simply unable to turn away from pricing its product below the cost of providing it, further perpetuating the chaotic spiral that brings us here today.” The IAM’s complete testimony is available at www.goiam.org/mergers. “Airlines today compete by cutting standards, eliminating services and reducing ticket prices to the bone, which makes a profitable industry impossible,” said Roach. “The Government Accountability Office estimates that median ticket prices have dropped nearly 40 percent since 1980, while the costs of aircraft, airport leases and fuel have increased dramatically.” “When an industry essential to the national economy can no longer function, it is the responsibility of elected representatives to step in and provide the necessary guidance and stability,” said Roach. Machinist President Urges Congress to Reject Airline Merger Scams International Association of Machinists and Aerospace Workers (IAM) President Tom Buffenbarger today urged members of the House Judiciary Committee to oppose consolidation plans currently being proposed by airline CEOs. “If allowed to proceed, Northwest and Delta will form the world’s largest airline, creating the world’s biggest corporate headache,” declared Buffenbarger in testimony before the committee’s Task Force on Competition Policy and Antitrust Laws. “Consolidation is not the solution for this troubled industry, more competent management is. This industry is in disarray and the executives in charge are only making things worse.” Buffenbarger’s complete testimony is available at www.goiam.org/mergers. Today’s hearing, titled ‘Competition in the Airline Industry,’ follows the April 14, 2008 merger announcement by Delta Air Lines and Northwest Airlines and featured testimony by Northwest Airlines CEO Doug Steenland and Delta Airlines CEO Richard Anderson. “Some form of limited re-regulation is necessary if this country has any chance for a safe, reliable, profitable and competitive air transportation industry,” said Buffenbarger. “There is too much at stake to let executives and their legacy of failure try and solve the industry’s problems.” The IAM has been working closely for months with other labor unions, lawmakers and consumer groups to oppose reckless consolidation schemes designed to enrich executives at the expense of passengers, employees and airport communities. “It would be difficult to find anyone outside of a small group of airline executives who expects to benefit from additional airline consolidation,” said Buffenbarger. The IAM represents 12,500 Northwest Airlines Ramp Service Employees, Stores Clerks, Customer Service Agents, Reservation Agents, Flight Simulator Technicians and Plant Protection employees. The Machinists Union is the largest Airline and Rail Union in North America, representing more than 170,000 Flight Attendants, Customer Service Agents, Reservation Agents, Ramp Service Personnel, Mechanics, Railroad Machinists and related transportation industry workers. Additional information about the Machinists Union is available at www.goiam.org/transportation.	IAM Merger Watch Bulletins: Latest: June 16, 2008
	May 16, 2008 April 24, 2008 April 23, 2008 April 15, 2008 April 7, 2008 April 1, 2008	Mar. 20, 2008 Mar. 10, 2008 Mar. 6, 2008 Feb. 28, 2008 Feb. 26, 2008 Feb. 25, 2008
	Machinists Urge Airlines to Focus on Business International Association of Machinists and Aerospace Workers (IAM) General Vice President Robert Roach, Jr. today issued the following statement on current airline industry maintenance and customer service concerns: "The recent grounding of aircraft and stranding tens of thousands of passengers due to maintenance compliance issues are just symptoms of a much larger industry problem. Airlines are increasingly outsourcing critical aspects of their maintenance programs, replacing customer service representatives with computers and failing to provide passengers with the service they pay for. The airline industry is providing the worst customer service in its history after slashing jobs and cutting employee wages. Consumer complaints were up 60 percent last year, and more than a quarter of all flights experienced delays. This is all occurring while executives at major airlines are considering mergers to create even larger, more unmanageable carriers, producing bigger headaches for passengers. The Machinists Union is urging executives at all airlines to refocus their efforts to provide superior safety and customer service to passengers. This industry is in chaos and senseless mergers will only make things worse."
Company Merger News:
EMPLOYEE BULLETIN NO. 6 April 27, 2008 Dear Co-worker, We want you to know that our Board of Directors met today and has unanimously supported management’s recommendation that, in the current industry environment, the best course for Continental is to not merge with another airline at this time. Our recommendation, and the Board’s careful and considered decision, followed a comprehensive review of our strategic alternatives, assisted by our senior officers and advised by Continental’s outside financial and legal advisors. The Board very carefully considered all the risks and benefits of a merger with another airline, and determined that the risks of a merger at this time outweigh the potential rewards, as compared to Continental’s prospects on a standalone basis. We have significant cultural, operational and financial strengths compared to the rest of the industry, and we want to protect and enhance those strengths -- which we believe would be placed at risk in a merger with another carrier in today’s environment. We will, however, continue to review potential alliances and our membership in SkyTeam. We are considering alternatives to SkyTeam as we carefully evaluate which major global alliance will be best for Continental over the long term. While some would prefer to see Continental pursue a merger, we strongly believe we have made the right decision – one that is in the best interests of our stockholders, co-workers, customers and the communities we serve. Every U.S. carrier, including Continental, is under enormous pressure from record high fuel prices, a slowing U.S. economy and a weak dollar. In today’s harsh environment, we must continue to adjust our business model to ensure we successfully navigate through these difficult times, so that in the future we can once again grow and prosper. As we take actions, we will communicate them to you as soon as possible. In the meantime, we must all continue to concentrate on what we do so well: delivering clean, safe and reliable air transportation every day. Even in these tough times, we have great strengths. We have an enviable position in the New York market, a powerful hub in Houston, and hubs in Cleveland and Guam. We have a solid trans-Atlantic route network, which has recently been enhanced by our access to London Heathrow. We also have a great Latin American network and a growing portfolio of routes to India and Asia. We fly the youngest, most fuel-efficient fleet and have the best new aircraft order book among the major network carriers. Most importantly, we have our Working Together culture, and we will ensure it remains intact. We’ve achieved our industry-leading customer service reputation because of you – our co-workers. We will all work together to get through these tough times. We are both proud to be on your team. EMPLOYEE BULLETIN No. 3 - RE CONSOLIDATION April 15, 2008 Dear Co-worker, You have probably heard that Delta and Northwest Airlines last night announced plans to merge. This merger will change the competitive landscape for Continental and the entire airline industry. As we’ve said repeatedly for more than a year and a half, our preference has been to remain independent as long as the competitive landscape remained the same. However, the landscape is changing. We will review our strategic alternatives and make sure we remain a strong long-term competitor. As always, our goal is to do what is best for you, our co-workers, and our shareholders, customers and the communities we serve. Click here to read more. EMPLOYEE BULLETIN NO. 4 - EMPLOYEE Q AND A ON DL/NW MERGER April 15, 2008 1. What does the DL/NW merger mean to CO? As we have said repeatedly for more than a year and a half, our preference has been to remain independent as long as the competitive landscape remained the same. However, the landscape is changing. We will review our strategic alternatives and make sure we remain a strong long-term competitor. As always, our goal is to do what we determine is best for you, our co-workers, and our shareholders, customers and the communities we serve. Click here to read more.
Mergers in the News:
CEOs make it official: No United-US Airways merger Finally, there are confirmed sources saying that a United-US Airways merger is off … at least for now. In a story just in, The Associated Press says "the CEOs of United Airlines and US Airways have told their employees that a combination of the two carriers won't happen 'at this time.' The messages came a day after a meeting at which United disclosed to the smaller carrier its decision not to pursue a merger. United CEO Glenn Tilton says he remains a proponent of mergers. But he says the airline decided this one wouldn't work for now due to what he called issues that could significantly dilute the benefits. Doug Parker of US Airways also told his employees that he wouldn't preclude something in the future." In his letter to US Airways employees, Parker says: "After much work and many conversations with other airlines, we have come to the conclusion that consolidation involving US Airways will not occur at this time. This is not to say that something won't occur in the future –- as you know I strongly believe that consolidation is required in our industry and that US Airways would benefit from participating. Rather it is simply unlikely that anything will happen in 2008 as our industry continues to struggle with how to function in a world with $130/bbl oil prices." Click here to read more from USA Today. Report: Talks between United, US Airways NEW YORK (AP) — Consolidation talks between United Airlines and US Airways appear to have fallen apart, The New York Times reported late Tuesday, citing unnamed people with direct knowledge of the discussions. The board of United parent UAL, and its chief executive Glenn Tilton, raised questions about the arrangement in the past few days, according to three people the Times said had been briefed on the decision making. One person said senior executives at both airlines, as well as external bankers and lawyers working toward a deal, have put it on "permanent hold." Click here to read more from USA Today. ExpressJet nixes SkyWest bid; under pressure from Continental April 28, 2008 In a surprise move, SkyWest Inc. made an unsolicited bid to acquire financially beleaguered ExpressJet Holdings Inc. and revealed that it had negotiated a capacity purchase agreement with Continental Airlines contingent on the acquisition taking place. ExpressJet Holdings announced Friday that it had rejected SkyWest's offer of $3.50 a share in cash, which represented a 67% premium over the April 24 closing price of $2.09 per share. It called the offer an "opportunistic attempt to acquire the company" below its true value. Click here to read more. ExpressJet rejects bid from SkyWest Airlines ExpressJet Airlines (XJT) announced in a press release Friday that it has rejected a bid by SkyWest Airlines to acquire XJT for $3.50 per share in cash. A special committee composed of independent outside members of XJT's Board of Directors unanimously rejected the deal. SkyWest airlines confirmed the offer in a press release, indicating that it was “disappointed” about the rejection of the bid, and also that it was “dismayed” that ExpressJet did not honor its request to begin due diligence at the time SkyWest made its proposal. In its press release, XJT said "the value of the Company's stock is substantially higher than the current SkyWest proposal," and that "the price proposed by SkyWest does not fully and fairly reflect the inherent value of ExpressJet and its prospects, whether as a stand-alone company or part of a larger entity." In addition, XJT released a letter from Continental in which Continental confirmed that it had negotiated the principal terms of a revised capacity purchase agreement (CPA) with SkyWest, which would become effective upon SkyWest's acquisition of XJT, and discussing Continental's current expectations regarding the expiration of the current CPA and the possible early removal of aircraft. Continental Airlines tells employees it won't seek merger Continental Airlines Inc. said Sunday it would not pursue a combination with another carrier right away, a surprising move after weeks of growing speculation that it would join with United Airlines to create the world's biggest airline. Continental Chairman and Chief Executive Lawrence Kellner said in a message to employees that the Houston-based airline was better off alone than merging. Click here to read more. Airline CEO Promises Scorned at Senate Hearing After senators grilled Northwest and Delta CEO’s about the proposed merger of their airlines, IAM Transportation GVP Robert Roach, Jr. testified at the Senate Commerce Committee hearing and called on Congress to oppose further consolidation. Chief executives from Northwest Airlines and Delta Airlines got a frosty reception this week at a Senate Commerce Committee hearing to examine the state of the airline industry and the potential impact of a merger between Delta and Northwest Airlines. As he did at a House Judiciary Committee hearing last week, Delta CEO Richard Anderson pledged that no “front line” employees would lose their jobs as a result of the proposed NWA-Delta merger that would create the world’s largest carrier. Anderson specifically said that there would be no cuts among Northwest’s pilots, flight attendants, cargo or ground workers. The jobs “pledge” drew hoots of derision and even laughter from the hearing room, which was packed with airline employees who have heard such promises from airline executives before. As if on cue, Anderson’s pledge was followed by a carefully worded warning from Northwest CEO Doug Steenland, who said that unseen market pressures and the rising price of oil could influence any commitments regarding jobs. “The only thing we know is the world we see today,” said Steenland. “In terms of making commitments, we have to recognize there are variables outside our control.” The hearing room came alive as Senators on the committee rolled their eyes and workers in the audience appeared to choke on the wiggle words they had just heard. “I’ve been in this industry for 33 years and I’ve heard a lot of promises,” declared IAM Transportation GVP Robert Roach, Jr. “The promises that are made here today will mean nothing tomorrow. It’s time we fix the industry’s problem instead of short-term fixes that just provide millions of dollars for the people at the top of these airlines.” Roach urged committee members to resist appeals to sanction additional airline consolidation, calling instead for measured re-regulation of fares and capacity as the only way to ensure safe and reliable air transportation in the United States. “This industry is simply unable to turn away from pricing its product below the cost of providing it, further perpetuating the chaotic spiral that brings us here today,” said Roach.