PSA Teamsters Miss Ratification Deadline
USAir Group’s $400 million acquisition of Pacific Southwest Airlines was put on hold late Sunday night when Teamsters Union officials were unable to meet a midnight deadline for ratifying modified labor contracts that USAir has demanded as part of its deal for the San Diego-based airline.
USAir, which had given the union until midnight to ratify the contracts, earlier had pledged to walk away from the deal if any of PSA’s seven union-represented employee groups failed to accept the modified contracts by midnight on Sunday.
It was uncertain late Sunday night what effect the delay would have on USAir’s acquisition of PSA.
Teamsters Union Local 2707, which represents 3,800 PSA employees, was scheduled to announce the results of the special elections this morning during a press conference.
A USAir spokesman on Sunday night declined to comment on the election results, but both airlines are expected to issue statements this morning.
PSA, in documents filed earlier with the Securities & Exchange Commission, said it could be forced to substantially alter the “course and scope of its business” if the merger with USAir does not go through.
PSA has acknowledged that it lacks the capital to compete with industry giants such as American Airlines, which recently acquired AirCal, and United Air Lines, which is bolstering its flight schedule on the West Coast.
The airline could lose as much as $5 million and four gates in Los Angeles and San Francisco if the merger does not go through, because PSA has agreed to pay USAir $5 million if the acquisition fell apart because of labor difficulties.
It also granted USAir options to acquire the gates--two in Los Angeles and two in San Francisco--if the deal fell apart. If USAir exercises that option at Los Angeles International Airport, PSA “will be adversely impacted unless (the airline) is able to make arrangements to share gates or obtain additional gates,” according to the documents filed with the SEC.
PSA operates about 115 flights each day out of Los Angeles.
Several months ago, PSA’s 695 pilots, who are represented by the Air Line Pilots Assn., and some 50 members of two small unions ratified the contract modifications being demanded by USAir. PSA’s shareholders voted to sell the airline to USAir during an April shareholders meeting and federal regulators have approved.
