United Airlines’ CEO: Union Pacts To Take Year Or More
The head of the new United Airlines said Friday union rules are hampering the company by preventing it from flying larger regional jets, a key headache as the world’s largest carrier starts an integration process expected to last up to 18 months.
Jeff Smisek, chief executive of United Continental Holdings Inc. (UAL: 24.50 ,0.00 ,0.00%), said it would take at least a year to secure new joint collective bargaining agreements with staff at the legacy Continental and United airlines, which merged Friday.
The new deal hammered out with pilots will be key in determining the future size and shape of the merged airline, with flight crews already pushing for a pact that limits outsourcing of flying to regional partners.
The old Continental had one of the industry’s most restrictive pilots’ deals, effectively barring it from operating regional jets with more than 50 seats, while the legacy United was able to outsource flying of larger 70-seat aircraft. Hundreds of 50-seat jets have been taken out of service across the industry as high fuel prices made them uneconomic.
“We have been hampered and competitively disadvantaged,” said Smisek of the 50-seat rule at Continental, where he was chairman and CEO. “This has not been for us a competitive product.”
Smisek, talking to reporters Friday, declined to comment on the state of union negotiations. He reiterated that the two airlines will continue to fly separately for at least 12 months while they seek approval from the Federal Aviation Administration for a single operating certificate that will allow them to mix their planes, crews and maintenance programs.
Pilots from United and Continental are in the same union and have been in joint talks with management for two months. They will decide later this month whether they can maintain what labor officials have described as the rapid pace of progress, or step back to reconsider positions.
Flight crews on Friday reiterated what is seen as a bold initial stance against outsourcing flying, and said the merger wouldn’t be properly completed until joint labor deals have been agreed.
“When customers choose an airline, they rightly expect to receive service from that airline, with pilots employed and trained by that airline at the controls,” said the pilots’ union leaders in a joint statement.
Cabin crews from United and Continental are members of different unions and have yet to agree on future representation.
The stock started trading under the UAL ticker used by the legacy United before its bankruptcy filing, and was recently up 3.4% at $24.46, valuing the company at $4.1 billion. This compares to $9.3 billion for Delta Air Lines Inc. (DAL: 12.00 ,0.00 ,0.00%), which it leapfrogged to become the global market leader, and the $9.8 billion of Southwest Airlines Co. (LUV: 12.93 ,0.00 ,0.00%), the most valuable U.S. carrier.
Source: Fox News and Dow Jones News Wire