CEO of the Cockpit #80: The Urge to Merge


A folded newspaper fell into my lap as I was sitting in the “king seat” awaiting pushback in Newark. It was a USA Today with the headline, “Two Biggest Airlines Set to Merge,” appearing above the fold. My co-pilot, Chet, had dropped it onto my dormant daddy parts and then flopped into his own lambs-wool covered “co-king seat” in an unhappy funk.”I knew it!” he said. “It looks like the inevitable has happened and the airline world as we know it is coming to an end. Now I’ll never make captain. It is bad enough the retirement age is now 65, pushing me back five years in seniority progression; now we’re going to merge with these guys and they are all senior to me.”I normally don’t pay much attention to merger rumors. If I did, I would have no time available to worry about important things like who the next American Idol would be and how much money I’d have to pay for my next fill-up of the family’s eight-cylinder soccer shuttle. This particular rumor had the appearance of truth, so I decided to pay a little more attention to it. After all, USA Today doesn’t publish colorful pie charts about airline delays on their front page unless they have a reason … or if Britney has had a slow news day.Apparently, our group of large, subsonic, people movers would soon merge with their large group of large, subsonic, people movers to form an even larger group of large, subsonic, people movers. Unless, of course, you count the large, subsonic, people movers we would no longer have to own or use because we had combined our operations. That is where Chet’s fears were based.If the combined companies needed fewer subsonic people movers, they would need fewer pilots to pilot them. Because Chet is a pilot and because he is a relatively junior one who has just come off of furlough, it looked like he might be going back to his father-in-law’s Ford dealership to change oil and put cardboard floor mats into F-150 pick-ups instead of 777 school next year if this merger went through.

Why the CEO Bailed on Business School

I gave up any hope of getting a business degree in college way back when I tried to take Accounting 101 and had that argument with the teacher about why numbers didn’t always have to add up as long as you still had money in your account. Also, liberal-arts classes had better looking women. My decision resulted in me knowing a lot about the feminist movement and airplanes but damn little about business, mergers, sinking debentures, hostile buy-outs, casual Fridays, all-hands sales motivation meetings and quarterly whatnots.The only reason I can figure that airlines would want to merge is because the media has told them that it is a good idea. It can’t be a good thing for the senior managers. With fewer companies come fewer cushy jobs with golden parachutes. How could they possibly make their money and be on each other’s board of directors if there were fewer of them to go around?I was about to comment on this to Chet when I got further good news from Wanda, our senior flight attendant.

No Bottle, No Throttle

“Guys,” she said, “I hate to tell you this but we don’t have enough usable walk-around oxygen bottles to dispatch. The MEL (minimum equipment list) says we need four and we only have two with any oxygen in them — the other two are empty.”The crew that brought the airplane in must have used them on a passenger on the way up from Miami and forgot to put it in the logbook,” she said. “Can you call downstairs and have them send a couple more up?”No problem, we’ll put Chet right on it. I saw Chet putting on his headset and, as he leaned over to the center console to make sure the ramp frequency was on number two, I felt the urge to pontificate.I don’t know why we don’t just keep a few bottles of medical oxygen on board. We can’t come up from Florida without using at least one of our crew walk-around bottles to help out a wheezing geezer and we know they won’t pay the money that we charge them for pre-planned medical O2 anyway.”Ops says they don’t have any spare bottles,” Chet interjected as he took off his headset. “We’re dead in the water and can’t dispatch unless we can get spares elsewhere.”Are there any other planes coming in for a few-hours sit? Maybe we can steal a few from them and they can steal from yet another airplane until the geniuses down in our main base send some spares up. We used to have maintenance here along with beaucoup spare parts, but we gave them up years ago as a cost-cutting move. Why have adequate maintenance and spares when you can get away without them most of the time? What does the public think we are running here? A scheduled airline?

Will a Merger Help Passengers Breathe?

Just then, a ramp agent appeared behind my seat and told us we’d have to wait for our fuel today because the truck was broken. They had called out the ground-support equipment (GSE) mechanic and he had already arrived to fix it.”There you go,” said Chet. “Another win-win!”I was beginning to see a connection here. Would one really huge, poorly managed and money-losing company be a better deal for the world than two relatively smaller, poorly managed and money-losing companies?How did this merger thing work?I’ve been though my share of them. Like any other airline person, I have gotten my share of “Good news, we’re merging!” memos from Harvard and Georgia Tech business school grads. I know the drill, but if our airline can’t provide adequate oxygen bottles to operate, what makes us think that merging with another airline will get us more usable bottles? In other words, from an operational, airplane-flying standpoint, what is the point?Do merged airlines fly better? Are their pilots a happier bunch? Not in my experience. Even when our airline was the stronger of the two partners and bought another airline that was on the verge of death, their pilots weren’t happy campers at all. Many of them spent their time either bitching about the deal they got on the merged seniority lists or talked all day about how much better, easier and happier things were with their old airline.We had merged with four other airlines so far in my career and I’m still sitting here on the ramp in Newark without fuel and adequate oxygen bottles to go flying. Would buying one more airline make it better?I’m beginning to think we are the addicts of the aviation world … or worse yet, incompetent cannibals.

Merging Doesn’t Lower the Price of Gas

The GSE mechanic we had laid off last year and then rehired on a part-time basis — without benefits or retirement — had fixed the fuel truck. We were taking on one kind of gas — the Jet A variety — but were still awaiting the other kind of gas — the O2 — variety to get underway. Chet had picked up the paper he had given me and began to read me snippets of the merger article.”The main stumbling blocks,” Chet read aloud, “are the two pilot groups who said they were going to court tomorrow to sue each other over seniority-list integration issues. This haggling may delay or even kill the proposed merger between these two airline giants.”I find it interesting that the newspaper reporter has failed to mention that our proposed merger hasn’t convinced oil producers to lower the price of a barrel of oil by 50 bucks, I said. That is the real problem, not the size of the companies or their pilot’s seniority snit-fits.

The Clank-Clank of Dispatch Redemption

We sat staring out of our windows for a moment listening to the whir of the stand-by gyro and the whoosh of the radio-rack fans when we heard the wonderful sound of the heavy footfalls of a ramp worker boarding two walk-around oxygen bottles that he had gotten from somewhere.”Somewhere” turned out to be the MD-88 that had just docked next to us at an adjacent gate. They need three bottles for dispatch, but they weren’t scheduled to leave for another hour and with only a half-load of passengers to annoy. We were full of people who could write complaint letters and were already 10 minutes past push-back time.We were operating on a shoe-string, but an FAA approved and legal shoe-string. I only hoped that the next airline we bought and devoured would come with adequate mechanical and safety equipment spares, a competent management team and a clue.It was then, in my moment of pre-pushback bliss, that the agent told me we had another delay: To fix the fuel truck, the GSE mechanic had borrowed parts from the tug that was hooked to us to push us back. It was going to be an hour before he could get back to the airport with the parts to fix it.

Want to read more from AVweb’s CEO of the Cockpit? Check out the rest of his columns.