PSA/USAir Merger Pivots on Teamsters
There could be some mid-merger turbulence in USAir Group’s $400-million bid for Pacific Southwest Airlines, as PSA employees who belong to the Teamsters union find themselves in the powerful position of being able to stall or possibly block the proposed acquisition.
Despite last week’s quick approval of contract modifications by PSA pilots, the San Diego-based airline has yet to obtain changes in the Teamsters’ contracts that are necessary before USAir can complete its pending acquisition of PSA.
The Teamsters, who have not begun bargaining with PSA, are likely to seek a court order that would force PSA into binding arbitration over the contract modifications being demanded by USAir as part of its proposed acquisition, according to Marvin L. Griswold, secretary-treasurer of Teamsters Local 2707.
Pilots Were Pleased
That is in contrast with the attitude of the Air Line Pilots Assn.’s 600 members at PSA. They were “extremely pleased” with the job security guarantees negotiated in return for contract modifications demanded by PSA and USAir, according to ALPA spokesman Pete Pettigrew.
PSA’s 3,200 Teamsters are “opposing anything that takes away the protection we’ve negotiated on behalf of employees,” Griswold said during a telephone interview. The Teamsters have separate contracts with PSA covering maintenance workers, flight attendants, reservations agents and operations personnel.
PSA and ALPA reached a quick agreement because ALPA’s contract “didn’t have the very, very involved (merger and acquisition) language that we have,” Griswold said. “If they had the protective language, they might be taking another look.”
PSA, which earlier this month gave the union “32 pages of proposed (contract) modifications, . . . is reneging on a commitment they made to employees in exchange for concessions,” Griswold said. According to a recent Teamster newsletter, PSA proposes, among other things, to alter seniority benefits and the so-called labor protective provisions.
Unlike ALPA, the Teamsters union holds contracts that guarantee financial protection to its members if they lose their jobs because of a merger. The contracts would force USAir to incorporate the protective provisions into contracts covering employees represented by the Teamsters after the airlines are merged.
And, the contracts would allow the union to continue representing its PSA members until after seniority issues generated by the merger with USAir are sorted out.
PSA officials would not comment on the negotiations, but one airline source said PSA believes that major sections of the Teamsters’ contracts “are simply unenforceable” because they run counter to established labor law.
In Department of Transportation filings, USAir has indicated that it will grant the protective provisions to former PSA employees, but the airline has refused to incorporate them into its labor contracts, Griswold said.
The Teamsters won the unusual merger and acquisition contract clause from PSA in 1984 as part of a package that cut wages and benefits by 15%, eased work rules and gave stock to PSA employees.
Key to Merger
According to Griswold, PSA Chairman Paul Barkley once described the Teamsters’ protective provisions as “the finest protective language in the industry.”
If the contracts prove to be binding, the Teamsters “hold the key to this merger,” said Charles Rehmus, a former dean of the Cornell University School of Industrial Relations who arbitrates airline and railroad labor disputes.
USAir has charged PSA with negotiating the changes but “the contracts seem to be USAir’s problem,” Rehmus said. “If they don’t like the contract, they don’t have to acquire PSA.”
“I think (USAir Chairman Edwin) Colodny holds the key to this merger,” Griswold said. “We do not have the ability to . . . make it fly or stop it.”
The legality of the merger and acquisition clause “is up in the air” according to one airline industry source familiar with the contracts. “It’s not a cut-and-dried issue (because) there’s case law on both sides of the fence.”
The Teamsters are arguing that “PSA has contracted with the unions and employees to do certain things and they’ve contracted with USAir to change those things,” according to the attorney who wrote the Teamster contracts. “If (USAir wants) the merger to go though, then this dispute has to be resolved.”
PSA’s Teamsters members “could find themselves on the bottom of another carrier’s seniority list in a subsequent merger” if the language is dropped, Griswold said. “Or, even worse, (employees) could find themselves without jobs and without any . . . protective provisions.”
According to airline sources, PSA has maintained that its contractual obligation to provide the protective provisions to Teamster employees would not be binding in the event that the merged PSA/-USAir carrier were subsequently acquired by still another airline.
