US Airways' Biggest Union Wants Contracts Before It Backs Merger

CHARLOTTE, N.C. (TheStreet) -- Hundreds of US Airways employees are in Washington, lobbying members of Congress to support a planned merger with American , despite opposition from the Justice Department.

Supporters do not, however, include leaders and members of the International Association of Machinists, the largest union at US Airways, representing about 3,500 mechanics and 5,800 fleet service workers.

"I think it raises a red flag with members of Congress when the largest labor group is not involved with the lobbying," said Bill Wise, president of IAM Local 1725 in Charlotte.

The Justice Department's 57-page complaint opposing the merger focuses on protecting consumers by preserving the low fares offered on some one-stop routes by US Airways. But it doesn't mention that US Airways earns lower revenue per available seat mile on comparable routes than bigger competitors do, and that it compensates for lower revenue by paying its employees less than their peers at bigger rivals.

Many employees were to receive contract improvements triggered by the merger: US Airways has estimated the gain in employee compensation at about $400 million annually. The biggest beneficiaries would be US Airways pilots. Pilots from both US Airways and from the former America West -- the two airlines merged in 2005 -- have below-industry standard contracts. East pilots have had bankruptcy contracts since 2003. For them, a merger means a new contract that over six years would provide $1.6 billion worth of benefits, including pay raises of 13% to 35% over existing rates and lump sum payments around $10,000 each.

But US Airways mechanics and fleet service workers are looking to make contract gains through negotiations, which have been stalled since their two contracts became amendable 21 months ago on Jan. 2, 2012. IAM members, primarily fleet service workers, picketed Friday at Charlotte Douglas International Airport.

Talks have been delayed by the airline's merger efforts and by a failed effort by the International Brotherhood of Teamsters to organize the mechanics. That effort began late in 2012 and ended in August, when the Teamsters lost a representation election.

Source: TheStreet.com