US Airways isn’t done with mergers yet

But many employees question if adding United makes sense

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updated 7:51 p.m. ET April 29, 2008

PHOENIX - Though he's still merging work forces from his last airline deal, US Airways CEO Doug Parker hasn't stopped eyeing other carriers and thinking of the possibilities.

He tried to woo Delta Air Lines last year, offering $9.8 billion in a hostile bid that eventually failed. Now, US Airways is in serious talks to join forces with UAL Corp.-owned United Airlines, according to people familiar with the negotiations.

A US Airways-United combination, and the flight cuts that likely would follow, could bolster the faltering airline industry grappling with steep fuel costs. Yet industry observers wonder if Parker should be at the vanguard of the consolidation movement.

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"At one level, it makes you say 'why bother finishing anything?'" said Robert Mann, an airline consultant who advised America West pilots when their airline acquired the former Virginia-based US Airways in 2005.

"They really don't have a single airline today," Mann said of US Airways. "It's really two airlines operating."

Tempe, Ariz.-based US Airways Group Inc. functions under a single Federal Aviation Administration certificate, but its flight attendants and pilots are still working under pre-merger contracts.

The pilots have had an especially rough time during the past three years. A disagreement over seniority last year led to an arbitration hearing, then a lawsuit, and then to the ouster of the Air Line Pilots Association union.

Meanwhile, pilots from the West (America West) and the East (former US Airways) have cursed each other at airports and engaged in shoving matches at hotels as each side jockeyed for position in the company pecking order.

If United joined the mix, "you'd have three sets of employees who are more or less doing the same thing, under three sets of contracts, three different work rules, flying three different sets of airplanes," Mann said.

An airline can make itself look like a united carrier on its balance sheet. But disgruntled employees have always been good at making customers aware that they're unhappy, Mann said.

"What if people start working to rule? If they don't show up to work?" Mann said.

Parker and his counterpart, United Chief Executive Glenn Tilton, haven't spoken about any merger rumors.

In a statement Tuesday, United's pilots union said a tie-up with US Airways would be "extremely negative from United's perspective."

Steve Wallach, the union leader who also sits on UAL's board of directors, said in a statement that while United has its own problems, "US Airways' problems run even deeper."

CONTINUED: Mergers can be tough on employees

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