Delta Labor Votes Buck Nonunion Culture Dating to Crop-Dusters
September 29, 2010, 12:02 AM EDT - BusinessWeek
By Mary Jane Credeur
Sept. 29 (Bloomberg) -- Delta Air Lines Inc. may soon have unions
representing a majority of its workforce under elections that could boost costs
and reshape the culture at a carrier long resistant to organized labor.
Voting starts today and runs through Nov. 3 for 20,000 flight
attendants under new federal rules relaxing the standards for approving union
representation. Balloting begins Oct. 14 for 14,000 fleet-service workers who
handle baggage and cargo.
The elections stem from Deltafs 2008 purchase of Northwest
Airlines Corp., which had more union employees. With fewer work restrictions in
labor contracts, Delta has been nimbler than competitors in scheduling workers,
said William Swelbar, a research engineer at the Massachusetts Institute of
Technologyfs International Center for Air Transportation.
gOne of the things Delta has always had with their workforce is
flexibility, and that drives their culture,h Swelbar said in an interview.
Scheduling changes under a union contract would gprove to be very costly to
Delta,h he said.
Deltafs non-union culture dates to the companyfs origin in the
1920s, when C.E. Woolman helped buy a crop-dusting company later renamed for the
Mississippi Delta region it served. Now based in Atlanta, Delta is in one of the
least-unionized states, with 5.9 percent of Georgia workers represented by
organized labor, according to the Bureau of Labor Statistics. About 12 percent
of U.S. workers belong to unions last year, BLS said.
Merger Fallout
Before buying Northwest, Deltafs only unionized workers were
pilots and flight dispatchers, or about 12 percent of the workforce, the company
said. By the end of 2009, with the addition of unionized Northwest workers, that
figure roughly tripled, according to a Delta regulatory filing, and union wins
in the latest voting would push the total to more than half.
The comparable totals were 68 percent at AMR Corp.fs American
Airlines and 82 percent at UAL Corp.fs United Airlines, with pilots, attendants
and most ground workers in unions.
The Delta votes are the first after a change by the U.S.
National Mediation Board that allows the majority of votes cast to determine the
outcome. Previously, abstaining from voting was counted as a gno,h setting a
higher threshold for unions to win approval.
A direct relationship with employees works best, Chief Executive
Officer Richard Anderson told attendants at a town- hall meeting last week.
Unions gdrive a wedgeh in a companyfs culture, he said.
An increase in labor costs from work-rule changes may add to
Deltafs expenses for each seat flown a mile, the industryfs benchmark. Deltafs
costs on that basis were 12.31 cents in the first half, second highest among the
6 biggest U.S. carriers behind American, based on data compiled by
Bloomberg.
Betting on Unions
Most investors assume that attendants and fleet workers will
vote to organize, so the potential for higher labor costs is priced into the
stock, said Michael Derchin, an analyst at CRT Capital Group LLC, who recommends
buying Delta.
gIf the unions donft get in, that will be the surprise and it
might be a small positive for the stockh because Delta would retain more
flexibility, said Derchin, who is based in Stamford, Connecticut.
Delta rose 20 cents, or 1.8 percent, to $11.59 yesterday in New
York Stock Exchange composite trading. The shares have gained 1.9 percent this
year, trailing the 16 percent advance for the Bloomberg U.S. Airlines Index of
12 carriers.
Organizing Attendants
The voting that starts today centers on efforts by the
Association of Flight Attendants, which represents Deltafs former Northwest
attendants, to cover original Delta employees.
Northwestfs 7,000 attendants work under a reserve system that
requires the most-junior employees to be on call for 18 or 19 days a month to
make whichever trips Delta needs on those days, and guarantees them 80 hours of
pay whether they fly or not. Attendants can only pick up extra trips to make
more money on their days off.
Deltafs 13,000 attendants receive computer-generated schedules,
with preferences based on seniority and three on-call days a month. They can
swap or drop trips, giving them more control over workload and pay. An AFA win
would mean that pay rates and work rules would have to be negotiated.
Deltafs first-year flight attendants fly about 83 hours a month
on average, and the average rises to 100 hours a month in years two through four
as they make more trips to earn more money, said Gina Laughlin, a spokeswoman
for the airline.
Maximum Pay
Northwest attendants reach maximum pay after 15 years, while
their Delta counterparts achieve it in 12 years.
In the past year, Deltafs most-senior attendants flew an average
of 941 hours and made an average of $61,153, while their peers at Northwest flew
933 hours and earned $54,292, Laughlin said. Delta gave employees 15 percent of
the airlinefs equity after buying Northwest, and workers get monthly bonuses if
the carrier meets operational goals such as on-time performance.
The AFA has twice failed to organize Delta flight attendants.
The union gathered support from about 30 percent of attendants voting in 2002,
and 40 percent in 2008, after Delta agreed to buy Northwest.
Of those who cast ballots two years ago, 99 percent backed the
union, meaning that if the new NMB rules had been in place, the Association of
Flight Attendants would have won.
gFlight attendants have worked hard over their careers and this
is about protecting that,h said Corey Caldwell, a spokeswoman for the
Washington-based AFA.
A favorable vote could mean an additional $500 a year in AFA
dues from each of the 13,000 legacy Delta attendants, or $6.5 million.
eSouthern Culturef
Former Delta attendant Milly Hastings said the voting pits
tradition against the security of collective bargaining.
gItfs that Southern culture, which has always been nonunion, and
Delta is a very Southern company,h said Hastings, 63, who retired in 2002 after
33 years of service and lives in Ellijay, Georgia.
gWe were always told, eWefre a family. Wefll take care of you.f
But you canft depend on that,h Hastings said. gWith a contract, you would know
that your paycheck is going to be a certain amount.h
Anderson also appealed to attendantsf sense of heritage at the
Sept. 23 meeting. He sits at founder Woolmanfs desk every day, and adheres to a
gfaith-based set of principles around treating people respectfully,h he
said.
gRespect each other, act with honesty,h he said. gThese are the
important fundamental values of our company.h
--Editors: Anita Sharpe, Ed Dufner
To contact the reporter on this story: Mary Jane Credeur in Atlanta at
mcredeur@bloomberg.net.
To contact the editor responsible for this story: Ed Dufner at
edufner@bloomberg.net.