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Thursday
Nov272008

« Stuffing Romy's Thanksgiving “Turkey” »

Over the past month, news emanating from Wall Street has muted some of the stories taking place in the airline industry. So on this Thanksgiving morning, I thought I would stuff the bird with some stories that leave me scratching my head, shaking my head, laughing out loud, applauding or being saddened because it is just more of the same that never has provided for a positive outcome.

1. Lufthansa takes control of bmi and Virgin Atlantic potentially plays prominently in the deal on a going forward basis as Sir Richard would like to combine the short-haul operations of bmi with his long-haul operations. Lufthansa now effectively controls 12% of London Heathrow slots. In September, of 2008's shopping spree, Lufthansa buys a 45% stake in Brussels Airlines. Lufthansa is currently the only real bidder for the Austrian government’s 43% stake in Austrian Airlines. All the while Lufthansa is mentioned along with struggling carriers SAS and Alitalia.

2. Delta Air Lines’ opposes Continental Airline’s plans to seek antitrust immunity that would allow the carrier to deeply participate with United, Lufthansa, Air Canada and the STAR alliance. Sholnn Freemen writes about Delta's protests in this morning’s Washington Post. My favorite quote in the story: "From what we have seen, there's nothing new here," Continental spokeswoman Mary Clark said in a prepared statement. "It looks like another attempt by the world's largest airline to prevent others from competing with it. We are confident the government will see through Delta's attempt to suppress competition."

3. Other than Virgin Atlantic, Delta Air Lines was the only other carrier to immediately object to American Airlines, British Airways, Iberia, Finnair and Royal Jordanian’s application for antitrust immunity among the oneworld carriers. While Delta was generally supportive of the structure, of course the Atlanta-based carrier would want additional slots at London’s Heathrow Airport.

I only raise these issues because the mindset among the largest carriers has moved from a regionally-centric focus to a global one. And this is a positive as the industry desperately needs to consolidate in order to gain pricing traction that has hindered its structural development to date.

4. In my last post, I applauded the fast track Delta Air Lines is on to establish itself as a single airline system under the Railway Labor Act. In my conclusion, I wrote my reasoning as to why I thought a fast track was best for all involved. I wrote: Given that uncertainty breeds anxiety which undermines a focus on the job at hand, Delta is walking the talk that customers and employees are its next most important area of focus. My only fear in the labor space is that one of the parties works to slow the process underway. There is a calm for employees that know what their number is, what they will make and what rules govern that work and that calm will be undone if too much time is spent dealing with technicalities and mundane issues.

Well AFA filed suit earlier this week. I will be most interested as to how the risk-reward equation solves itself here as time is not on the union's side from my perspective.

5. A story that did not get near the attention that I thought it would was the departure of Frederic “Jake” Brace as United’s EVP and CFO. There are very few happenings in the labor relations world at United over the past 20 years where you cannot find at least a trace of Jake’s fingerprints. Beginning with the UAL ESOP; to the unprecedented contract negotiated with ALPA following the Summer of 2000; to the agreements made in their bankruptcy negotiations Jake could be found in the front row of the first car of the roller coaster each and every time. With Jake’s departure, United becomes Tilton’s United.

Does Jake’s departure represent a shedding of a negative labor relations’ past that largely fell under his watch? Moreover, it clears the way for Doug McKeen, UAL’s SVP of Labor Relations to put his fingerprints on United’s labor tomorrow. To know McKeen is to know a guy you can negotiate with. To shake hands with McKeen is to know that a deal is a deal.

Note: I worked with McKeen in my prior consulting life. Prior to that, I sat across the table from him in a consulting role.

6. Without question, the 2008 Turkey Leg goes to Captain Steve Wallach, Chairman of the United Airlines' ALPA Master Executive Council. In July of this year, United filed suit over ALPA’s targeted actions to cause harm to the airline’s operations through sick leave abuse; intimidating pilots from flying overtime; all of which were done with knowledge of the MEC Chairman and largely carried out by four United pilots.

For those of you that don’t know, Wallach is a protégé of Rick “Mad Dog” Dubinsky who brought the airline to its knees in the summer of 2000 through operational disruptions. It was these disruptions that ultimately caused United (and Brace) to buckle and give ALPA the contract that ultimately landed the carrier in bankruptcy. The judge’s decision in this case makes it clear that signaling and fatigue can lead to a violation of the Railway Labor Act. The 85 page decision is a most interesting read detailing the United pilot’s “too cute by half” actions.

So Steve, go start another website. Of course ALPA is totally innocent in shaping United's troubled labor past. Or, join the flight attendants and make some more bracelets as that will get you closer to a better contract. Or maybe, "signal" to all that the past is "fatiguing" and accomplishes little.

Happy Thanksgiving to all. Thanks for reading.

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