airplane.jpgIf there were a nuclear holocaust chances are we’d see tons of layoffs at corporations.


Yesterday, the CEOs of Delta Air Lines and Northwest Airlines wrote an opinion piece in the Wall Street Journal called, “Some Myths About Airline Mergers.”

The two men, Richard Anderson from Delta and Doug Steenland from Northwest, are on the hot seat trying to explain to the nation — regulators and legislators in particular – why a merger between the two airlines is good for anyone aside from the two CEOs and their pockets.

Many analysts believe the merger will be bad for customer service and really bad for the workers at the two airlines.

Indeed, one of the unions involved has vowed to kill the deal, because they believe they’ll be shafted if the marriage between the airline giants is allowed to happen.

In the opinion piece, the CEOs try to dispel all the fears out there, but their attempt seems disingenuous.

They try to make their points in a myth-reality format.

The first myth: “Airline mergers cause big job losses.”

The reality, according to them: “Bankruptcies and high oil prices have caused significantly more job losses than mergers.”

This comparison is ridiculous.

There are lots of things that cause layoffs but we’re talking about this particular merger. It’s like saying, “It’s a myth that a spicy burrito will really aggravate my peptic ulcer because chocolate and fried foods will cause more aggravation.”

Do they think we’re stupid?

The CEOs even throw in Sept. 11 in there as having been an even bigger layoff inducer. I think that’s a cheap shot.

People, we’re talking about a merger between Delta and Northwest. Let’s stick to the merger facts Jacks.

When airlines merge, and when companies of all sorts for that matter merge, layoffs are inevitable. That’s why mergers happen, so they can cut costs. Costs, at least a big chunk of costs at most corporations, are tied up in workers. You have to pay workers to work for you. That fact hasn’t changed, yet.

The next worker myth: “This deal will jeopardize employees’ benefits.”

Reality, they say: “The merger will create a financially stronger airline, better positioned to protect jobs, compensation and benefits. Delta and Northwest worked side by side with their employees to obtain passage of the Pension Protection Act of 2006, to make pension funding more affordable. The transaction will make employee pensions and benefits more secure.”

First of all, if you don’t have a job you don’t get benefits — well unless you’re a CEO with a golden parachute.

And as for the Pension Protection Act, it did little to shore up traditional pensions for workers in the United States. The Act did more for retirement plans such as 401Ks, where employees take on more of the risk, than pensions that pay out guaranteed amounts when workers retire.

This quote from the Wall Street Journal in 2006 referring to the Act:

“We don’t know whether it’ll make benefits more secure or hasten the demise of defined-benefit plans,” Alicia Munnell of Boston College’s Center for Retirement Research.

Haven’t these CEOs been reading all the stories about underfunded or frozen pensions? Hello?

At this point, the proposed merger just doesn’t look good for workers, or passengers for that matter, says Thomas Kochan, a professor at MIT’s Sloan School of Management.

“I think it’s going to fail unless the parties involved first put together a comprehensive strategy for all the labor and employment issues,” he says. “Both companies have deep employee relations problems.”

(See my story in about labor strife in the airline sector.)

The notion that the deal won’t lead to layoffs or more employee strife “is ludicrous,” he adds.

If the deal goes through as is, Kochan surmises it will be followed by years of worker-management fighting; and that won’t help customer service that’s for sure or the companies’ stock prices.

So, if investors think they’ll be getting a good deal for this marriage, think again, he cautions.

“My view is government shouldn’t approve this without a business plan or commitment by the company and labor leaders saying ‘here’s how were going to work out these issues.’”

It’s time for some real reality.

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