Leaders of the Northwest Airlines pilots union have notified their members that "a merger involving Northwest may soon be upon us."
Northwest pilots agreed to two pay cuts -- 15 percent in late 2004 and an additional 23.9 percent in mid-2006 -- to help the airline dramatically reduce operating expenses.
Now, eight months after emerging from bankruptcy, Northwest is in formal merger talks with Delta Air Lines. Northwest pilot leaders said in a Sunday memo that their pilots must "secure financial and contractual gains in exchange for our cooperation in a merger."
Citing high oil prices, a weakening economy and pressure from shareholders, Northwest pilots union officers said there is a need for airlines to grow to "critical mass" so they are better able to cope with "cyclic recessions and high oil prices."
Northwest union Chairman Dave Stevens and his fellow officers portrayed a possible Northwest merger as an opportunity for pilots to acquire wage and other contract improvements in the short term as well as work for a larger airline that would offer them greater job opportunities in the long term.
Both Northwest and Delta pilots are represented by the Air Line Pilots Association. Northwest has about 4,500 pilots and Delta has slightly more than 6,000.
Northwest union leaders indicated that pilots from both carriers would need to receive stock in the merged company as a condition of winning their political support for the deal.
"Due to the shortage of available investment money in today's market, one likely way to merge two airlines is through a stock swap," the Northwest pilots memo said. Merger benefits, they said, would be an increased market presence, cost savings from blending the two carriers and optimized international networks.
"The value of the stock in the new company would be worth significantly more than the stock in each of the old companies if the investment community believed the benefits of a merger would be realized on a timely basis," the Northwest pilots said.
After the 1986 merger between Northwest and Republic was announced, there was an expensive process used to merge the pilot groups. "The animosity created by that three-year seniority integration and contract combination process still lingers for some today," the Northwest pilot leaders said.
They favor a process by which Northwest and the other carrier's pilots union would negotiate "a fair seniority integration" in an "expedited" fashion.
If that goal could be achieved, they said, pilots would benefit by more quickly obtaining stock and contract improvements.
While Atlanta-based Delta is not identified as Northwest's merger partner in the Sunday memo from the Northwest union officers, the substantive message that they delivered mirrors one that Delta pilots Chairman Lee Moak sent to Delta pilots on Jan. 9.
Even the language is similar. Moak wrote that a Delta merger "may indeed be at our door."
Kelly Regus, a spokeswoman for the Delta pilots union, said that Moak's Jan. 9 memo is the union's framework for evaluating and taking part in any merger.
To gain Delta pilots' support, Moak wrote that a merger must "produce an even stronger and growing airline" that would successfully compete "in the international marketplace for years to come," reward pilots for taking part in the deal and provide a "platform for long-term growth in pilot earnings and career progression."
Liz Fedor • 612-673-7709