Delta-Northwest Merger

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May 14, 2008

House Subcommittee on Aviation:

Impact of Consolidation on the Aviation Industry, with Focus on the Proposed Merger Between Delta Air Lines and Northwest Airlines

AFA-CWA International President Patricia Friend Testimony before the House Subcommittee on Aviation

Congress grills Delta, Northwest CEOs

Execs defend $3.1 billion merger from concerns that the deal will stifle competition in the airline industry.

April 24, 2008

NEW YORK (CNNMoney.com) -- The CEOs of Delta Air Lines and Northwest Airlines defended their proposed $3.1 billion merger before House and Senate committees Thursday, addressing lawmakers' concerns that the deal would stifle competition in the airline industry or result in massive job losses.

Richard Anderson, CEO of Delta (DAL, Fortune 500), and Douglas Steenland, CEO of Northwest (NWA, Fortune 500), testified that rising oil prices and increased competition from foreign airlines in the U.S. fuel the need for the merger.

"Oil is a game changer, and this merger makes us stronger," Anderson told the House Judiciary Committee, noting that fuel prices have doubled in the last 12 months. "[The merger] gives us the ability to compete and win against foreign flag carriers."

Steenland said the merged airline would be more "financially stable and resilient," better able to meet customer needs and better able to provide benefits to workers. He also said no hubs would be closed as a result.

Representatives, especially those from areas where the two airlines concentrate their service, are worried about the merger's impact on the nation's air travel system.

"We've gone from a highly competitive structure to an oligopoly," said Rep. John Conyers, D-Mich., chairman of the House panel, noting that passengers have suffered increased delays and prices from prior industry consolidation.

"We need to consider where this merger will take us," he said. "I'm concerned that if this merger is approved it will simply result in a cascade of other mergers."

Job cuts for management
Lamar Smith, R-Texas, a member of the Judiciary Committee, asked the CEOs how many workers would lose their jobs, and expressed skepticism over their claims that only executives would get the ax.

"I have to tell you, that seems a little hard to believe," said Smith. "Are you absolutely sure that nobody would lose their jobs except for corporate executives?"

Anderson of Delta insisted that job cuts would be focused on finance and accounting managers working at corporate headquarters in Atlanta.

As for the projected number of layoffs, Steenland of Northwest said "we haven't really done that bit of granular analysis yet," but added that it would be "some number under a thousand."

Anderson of Delta added that 2,000 full-time jobs had to be eliminated. He said departing workers would receive one week of severance pay for each year of employment with the company and free airline passes for life, as well as medical benefits.

No representation for unions
Veda Shook, international vice president of the Association of Flight Attendants-CWA, and R. Thomas Buffenbarger, international president of the International Association of Machinists and Aerospace Workers, said they were concerned about union workers losing their livelihoods, and their lack of representation in merger discussions.

"We haven't been given a seat at the table," said Shook.

"Too much is at stake to take these airlines at their word," said Buffenbarger, who doubted that the airlines could merge "without eliminating service and purging employees."

Buffenbarger said the merger would "do nothing to address the problems of a failing industry," and attacked the CEOs oft-quoted reason for the merger: rising fuel costs.

"The cost of an individual gallon of fuel for two individual airlines will be the same as for one airline," said Buffenbarger.

Following the House hearing, the airline CEOs appeared before the antitrust subcommittee of the Senate Judiciary Committee. The committee chairman, Sen. Herb Kohl, D-Wis., said the purpose of the hearing was to address fears that the Delta-Northwest merger could prompt additional mergers, allowing a shrinking number of carriers to maintain a "strangle hold" on the market.

Delta agreed to buy Northwest on April 14, dubbing the new airline giant Delta. The combined carrier will have $35 billion in combined sales, with more than 800 airplanes and 75,000 employees, according to Delta.

Delta will continue to be based in its Atlanta headquarters. The newly merged carrier said it will operate the nine hubs of both airlines in the United States, Europe and Asia, serving 390 destinations in 67 countries.

First Published: April 24, 2008: 12:03 PM EDT

Media Advisory: April 23, 2008
Contact: Corey Caldwell 202-434-0586

AFA-CWA TO TESTIFY AT CONGRESSIONAL HEARING ON DELTA/NORTHWEST MERGER

Who: AFA-CWA International Vice President Veda Shook to testify
Delta and Northwest flight attendants also available for interview or questions

What: Testimony before House Judiciary Committee hearing on competition in the airline industry

When: Thursday, April 24, 2008 at 10:30 a.m.

Where: 2141 Rayburn Office Building, Washington, D.C.

**Can be viewed live at http://judiciary.house.gov/default.aspx **

Washington, DC - On Thursday, April 24 the announced merger between Delta Air Lines and Northwest Airlines will come under Congressional scrutiny when the Association of Flight Attendants-CWA (AFA-CWA) International Vice President Veda Shook testifies before the U.S. House Judiciary Committee. AFA-CWA’s testimony will focus on the effects the pending merger between will have on flight attendants and other employees, and potential solutions to the worst aspects of the merger. Representing the over 9,000 flight attendants at Northwest, and currently conducting an election at Delta to represent the over 12,000 flight attendants, AFA-CWA will be one of the only airline employee voices at the hearing.

Flight attendant careers at Delta and Northwest, as well as those of other aviation employees, are threatened by the merger due to the fact that there are virtually no federal protections for employees in these situations. Prior to deregulation in 1978, there were many protections in place for airline workers, often called Allegheny-Mohawk Labor Protection Provisions. When the LPPs were dissolved thirty years ago, employees were left to fend for themselves and the landscape of prior airline mergers and consolidations is littered with tens of thousands of jobs that were lost as a result of layoffs, base closures and fleet reductions.

The only protections employees have today is through their individual unions and collective bargaining agreements. Over the years, AFA-CWA has been successful in negotiating modified Labor Protection Provisions throughout various contracts which has lessened the effects on flight attendants, but there is little to no protection for non-union airline employees.

While airline management continues to maintain that there will be no layoffs, they refuse to put that commitment in writing. Employees today have little reason to trust the promises made by management as most are working more hours at reduced wages due to the concessions they were forced into while their carriers were in bankruptcy over the past few years.

For over 60 years, the Association of Flight Attendants has been serving as the voice for flight attendants in the workplace, in the aviation industry, in the media and on Capitol Hill. More than 55,000 flight attendants at 20 airlines come together to form AFA-CWA, the world’s largest flight attendant union. AFA is part of the 700,000-member strong Communications Workers of America (CWA), AFL-CIO. Visit us at www.afanet.org .

Delta - Northwest Merger Announcement

On the evening of April 14, months of speculation were put to rest as Delta Air Lines and Northwest Airlines officially declared their intent to create the world's largest carrier. This merger is far from final as there are still many hurdles to overcome, but as details emerge AFA will update this page with any new information.

Delta CEO Richard Anderson appeared alongside Northwest CEO Doug Steenland for their first appearance together since the announcement of the merger just hours earlier. Together, both CEO's outlined what the public can expect from the new carrier and what it means for the new airline itself.

April 14, 2008 - Richard Anderson & Doug Steenland on MSNBC