Who Is the Real Loser in Delta’s Flight Attendant Union Vote?

The simple answer to that question would be fairly easy to identify:  The Association of Flight Attendants.  The AFA, who, in this zero-sum game, not only lost 13,000 potential dues paying members of Delta’s flight attendant group, but also lost the 7,000 already-union former-Northwest flight attendants, is surely smarting over the loss of $43.00 per month in union dues times 12 times 20,000.    Given my score of 380 on the math section of the SAT back in 1983, I don’t even attempt to figure those numbers in my head.  (Never fear though, I slammed the verbal section with a gaudy 490.)  But my trusty computer calculator suggests a loss of about $10m annually to the AFA.  So the big loser is the AFA?  Wrong.

The real loser in this election is quite simply Delta’s competitors.  Why?  Glad you asked.  Back in 2005 I had the incredible honor of accompanying Gerald Grinstein, then Delta’s CEO, and Delta’s BOD in every board meeting as part of a hybrid group at Delta called the Delta Board Council – brilliantly formed in 1996 to give non-union workgroups the same “representation” at the senior leadership levels as the unionized pilots had negotiated.  This access afforded me an insight into Delta’s fundamentals unheard of for middle managers at other companies.  One fascinating fact I learned through this experience was that as part of the valuation process that Delta’s September 2005 bankruptcy required, an independent firm valued Delta’s non-union workforce as contributing over a billion dollars in operational efficiency.  You read that right.  As Dr. Evil himself once mangled:  ONE BILLION DOLLARS.  For unencumbered by union rules and their inefficient mandates around negotiating virtually every bodily function of frontline employees, coupled with the ability to move quickly in the market again sans the time-consuming quid pro quo union rule negotiations, Delta was able to quantify the the value  of its tens of thousands of non-union scale employees.

Fast forward to 2010.  All of the indicators show Delta ripe for union representation.  Industry consolidation is everywhere providing fertile ground for the pro-labor platform.  Delta’s leadership is relatively new in some places.  A very strong pro-union (some would say downright hostile) workforce has been integrated into Delta’s frontline.  Employees are still smarting from two paycuts in 2005, increased health benefit costs, and the dumping of their defined benefit pension plan.  And the result?  The AFA loses under the most favorable circumstances it may find ever at Delta.  While I suspect the ramp workers may fare differently, I’ve seen enough to know that Delta’s post-merger mojo is showing.

Don’t think for one second that the folks who operate out of Love Field weren’t watching this closely.  With its own union battles looming and with its attention pointed directly at Atlanta, this cannot be good news for Southwest.  A major union on the property at Delta may have provided the momentum to secure organization for other work groups.   Instead, Delta and its ONE BILLION DOLLAR labor efficiencies survives a major insurgency.  Yes, this was a huge, deserved victory for Richard Anderson, Edward Bastian, Mike Campbell, and Joanne Smith.  And it shows that rumors of the Delta family’s demise may have been greatly exaggerated.  Delta’s competitors may want to take notice of how to pull off a successful merger and keep the troops in the fold.  Anything short of this type of herculean effort that Delta pulled off could prove to be a competitive disaster.  (Just ask the basket case out in Phoenix where 6 years later US Airways and America West still operate as two airlines causing Doug Parker to market his company for sale everywhere short of Craig’s List.)

Time will tell.

Chris

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