A billion dollars is literally a nice round number — lots of zeroes. That’s the amount of “annual synergies” that a merger between Delta and Northwest will be able to create, according to Ben Hurst, the general counsel and senior veep of corporate affairs for Northwest. Hurst was the lead speaker in front of the Minnesota Senate’s Business, Industry and Jobs Committee Wednesday morning, and he was full of good news. The Delta-Northwest combine will be “a merger of addition, not subtraction,” he said, between airlines that are “the two strongest, by any measure.” The hub operations at the Lindbergh Terminal “will be strengthened, and grow.” Why, last year Northwest made $760 million in profits and was able to give $125 million of that directly to its employees. Delta likewise profited by hundreds of millions of dollars.
Then it was time for questions. Sen. David Tomassoni (DFL-Chisholm), wanted to know the future status of the Northwest reservation center currently employing 500 people up on the Iron Range. Why, that reservation center “is one of the jewels of the airline, “Hurst replied. “I don’t believe the future of that reservation center is in doubt.” But Hurst’s final thought on the subject? “You should talk to Delta.”
Then Tomassoni cut to the chase. “How many jobs do you see Minnesota losing?” he asked. After some hemming and hawing, Hurst responded, “That is a conversation you have to have with Delta.”
Bottom line, it really didn’t matter what happy talk Hurst provided; if and when this “merger” occurs, the people at Delta will be the ones calling the tune. Hurst provided some unintentional comedy in this regard when he enumerated the three conditions Delta laid out for the deal: The “merged” company would be named Delta, the current CEO of Delta would be the CEO of the merged company, and the corporate headquarters would be in Atlanta, where Delta is currently headquartered. A real meeting of equals.
For the record, both Delta CEO Richard Anderson and Northwest CEO Doug Steenland have publicly stated that they don’t envision any more than 1000 jobs being cut, and that none of them will be “front line” employees, such as pilots, mechanics, flight attendants, customer service agents, and so forth. As we just noted, it doesn’t matter what Steenland says — he’ll be paid $18.3 million to vacate the premises once the deal goes through. But one wonders how Anderson and the Delta executives plan to reap a cool billion every year without whacking more than 1000 mostly white collar jobs.
Wednesday’s testimony from the union representatives of Northwest employees reinforced that skepticism. Stephen Gordon of International Association of Machinists and Aerospace Workers (IAM) District 143, and Rene Foss of the Association of Flight Attendants-CWA, AFL-CIO, represent precisely the front line employees Hurst had just claimed would be “the primary beneficiaries of the merger,” holding down jobs that Anderson and Steenland implied would be safe.
Yet Foss claimed that “Delta has made it clear they anticipate only one union on the property and that is the ALPA, the pilots union. It seems their agenda is to eliminate our union…and destroy our contract.” She reported that Delta flight attendants currently waging an election for union representation are “being harassed and intimidated in this voting process” by Delta.
Gordon spelled it out in his words to the committee. “Northwest and Delta’s top executives claim no hubs will be closed, no employees will be involuntarily laid off, but nevertheless the new company will enjoy unprecedented success. They either take the American people and their own employees for fools or think we suffer from amnesia and don’t remember what has happened in recent mergers…If this merger is approved, the combined carrier will begin with 80,000 employees. Delta’s Atlanta hub and Northwest’s Memphis hub are less than 400 miles apart. Delta has a hub in Cincinnati while Northwest has one 300 miles away in Detroit…It is too much to believe that they are going through this massive and extremely costly undertaking simply to maintain the status quo.”
As for Anderson’s claim that only management and administrative personnel will involuntarily lose their jobs, Gordon called it “today’s fairy tale,” and then went through a litany of broken promises previously made by Northwest. He concluded his formal statement by noting that through its bankruptcy proceedings, Northwest was able to squeeze $190 million per year in wage concessions out of his members over a five-year period, dwarfing the $125 million Northwest gave back as part of last year’s profits.
During the question-and-answer period, Gordon further sought to make the distinction between jobs that paid $18 an hour and provided benefits and a pension plan — union jobs — with jobs that paid half that much per hour and scrimped on benefits. This, he suggested, is how non-union Delta plans to cull its workforce as the unionized Northwest workers “voluntarily” reject those lesser terms. At this point, committee chair Sen. James Metzen (DFL-South St. Paul) inexplicably took offense, telling Gordon he “didn’t like your tone” and invoking his own blue collar roots and past union support. “We are here to help you,” Metzen spat.
Yet the ever-helpful Metzen opened the meeting by stating that two pieces of legislation that attempt to hold Northwest to the terms of its previous covenants and agreements — which would be broken if the airline was no longer headquartered here — would not be taken up because “there is not enough info on the two bills to pass them out.” Last Tuesday the House Commerce and Labor Committee disagreed, passing the companion to one of the bills out of its committee.
After stalling the legislation, Metzen then opened his remarks by saying he wanted to be “positive if we can” about the proposed “merger” and “not use a shotgun approach.” In introducing Ben Hurst, he acknowledged that “Mr. Hurst and I have had a couple of meetings.” Maybe if he’d met with Stephen Gordon beforehand, he wouldn’t have misconstrued what Gordon was saying and turned into such a pompous ass.
Today’s two-hour session didn’t even scratch the surface of what’s to come. Metzen has promised to have in representatives from Delta and the Metropolitan Airports Commission-the real players in the legal contracts Delta would be breaking if it pulled the headquarters out of Minnesota-sometime next week. In addition, Sen. Steve Murphy (DFL-Red Wing) said he will take up the matter in the Senate Transportation Committee that he chairs. “And our committee is probably going to be more aggressive than this one,” Murphy stated.