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Continental-United Merger: How the Airline Emboldened Its Pilots

Integration of the newly merged Continental and United (UAL) is well underway, but pilot integration is just getting started. This past week, the pilots gained some additional leverage thanks to an arbitrator's decision that Continental had violated the pilots' contract with some recent scheduling moves. That's going to force the airline to deal directly with the pilots instead of going around them on the all-important issue of outsourcing.

In this merger, both pilot groups are represented by the Air Line Pilots Association (ALPA), but the individual groups have very different work rules. From the company's perspective, the biggest issue involves the use of outsourced pilots to fly particular routes. The pre-merger United pilots had a very liberal rule on that, and management took full advantage by contracting out an army of sub-70 seat airplanes to fly routes that United pilots used to fly. On the Continental side, the pilots have strict rules that don't allow any jets with more than 50 seats to be outsourced. That 70-seat category has become the battleground.

The new United management started moving airplanes around and thought it could be clever by flying airplanes outsourced by United in and out of Continental hubs. Since it flew them as United and not Continental, the airline argued that it was within its rights. But the fact that the flights were sold as both United and Continental flights had the pilots crying foul.

The case went to arbitration and the pilots came out victorious. The arbitrator did not mince words:

Placing the [Continental] designator code on the [United Express] jet aircraft with a certification of fifty-one or greater seats to and from [Continental hubs] is a violation of Section 1 of the Continental/ALPA collective bargaining agreement. The Company is ordered to cease and desist advertising and placing the [Continental] code on such flights.
The company now has to scramble to undo the schedule that it has built using those airplanes and it has to go back to the table to work more closely with the pilots. It apparently thought that it could just go around the rules that were negotiated with the Continental pilots, but that door has been shut.

The company can still technically fly the flights under the United name, but it can't sell them as Continental, and that hurts their viability tremendously. So now, United is going to have to negotiate the right to outsource airplanes with the Continental pilots.

You would think that the spirit of the rules would have been enough for the new United management. Even if United had found a loophole that would have technically allowed it to fly the flights, that effort has done nothing but damage the relationship with the pilots during a time when you would think the airline would want to build the relationship up.

So United gambled and lost, damaging its relationship with the pilots. At the same time, the pilots are now emboldened by the arbitration ruling. Management is going to have to accept this loss and now work to mend fences if it hopes to develop any kind of good working relationship. If not, it's going to be a tough road, to say the least, toward outsourcing 70 seat airplanes.

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