Airline Merger Worries Pilots

By TOM DAYKIN

Midwest Airlines Inc.’s union pilots are concerned about the company’s possible sale as the result of a pending corporate merger, and they’ve been lobbying members of Wisconsin’s congressional delegation to protect the airline.

Midwest Airlines is owned by Oak Creek-based Midwest Air Group Inc., which was sold on Jan. 31 to investment group TPG Capital, of Fort Worth, Texas, and Eagan, Minn.-based Northwest Airlines Corp. Northwest’s 47% stake will be acquired by Atlanta-based Delta Air Lines Inc. if Delta’s pending purchase of Northwest wins antitrust approval.

Members of the Air Line Pilots Association’s chapter at Midwest Airlines are worried that U.S. Department of Justice officials could require Northwest to sell its stake in Midwest to a party other than Delta in order to win antitrust approval, said Jay Schnedorf, chairman of the chapter.

If that happens, Midwest Airlines could face a difficult situation, Schnedorf said.

With skyrocketing fuel prices eliminating airline profits and forcing carrier consolidations, there could be a lack of buyers that would want to operate a smaller player like Midwest as a stand- alone airline, he said. At worst, a forced divestiture of Northwest’s stake could result in Midwest’s demise, Schnedorf said.

Another concern is what role Midwest Airlines would play if the Delta-Northwest merger is approved, and if Delta acquires the 47% stake in Midwest Air Group.

Midwest and Northwest started a code-sharing agreement last year in which the carriers sell seats on each other’s flights.

That agreement, which was recently expanded, is supposed to generate additional revenue for Midwest.

A similar agreement between Midwest and Delta would be subject to labor negotiations between Delta and that company’s pilots union, Schnedorf said. So far, there’s been no discussion of those negotiations, he said.

"That revenue piece is critically important to our airline," Schnedorf said.

Midwest executives do not believe a Delta-Northwest merger will have any bearing on their company, spokesman Michael Brophy said.

He referred additional questions to Delta.

Delta spokeswoman Susan Elliott declined to comment, other than to say the plan is to maintain Midwest’s independence if Justice Department officials approve Delta’s purchase of Northwest.

It could be months before the Justice Department issues a ruling on the Delta-Northwest merger. Department officials this week requested additional information from the companies about the proposed sale.

Northwest is the second-largest carrier at Mitchell International Airport, where it had a 13.2% market share in 2007.

The combined Delta and Northwest operations would have a market share of 19.4%, with Midwest Airlines/Midwest Connect remaining dominant with a 54.2% share.

Meanwhile, Midwest pilots have been contacting members of Wisconsin’s congressional delegation to make clear their opposition to a forced sale.

Congress has no direct say on company mergers, but Wisconsin’s senators and representatives do have some influence on the matter, Schnedorf said. He said the lobbying effort has been well received.

Midwest, like other carriers, is reducing routes and trimming its work force as a reaction to record-high fuel prices.

In April, Midwest said it would cut 109 employees, amounting to a 3.5% work-force reduction.

On Tuesday, Midwest Air announced that its No. 2 executive, Chief Operating Officer Joseph Kolshak, had resigned to pursue another job. Schnedorf said Kolshak’s sudden departure, after just four months at Midwest, was a loss for the company.

United Airlines announced Wednesday that Kolshak will oversee services, flight operations and operations control at United, and will be based in San Francisco.

Prior to coming to Midwest, Kolshak was at Delta for 20 years, where he last served as executive vice president of operations.

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