United Airlines wants a steady stream of pilots. It also wants to avoid the labor costs it pays to mainline flight attendants. The result is a convoluted acquisition of a regional airline that really takes some unpacking to understand.
Newly-formed ManaAir, LLC will purchase ExpressJet from SkyWest. ManaAir is a shell company owned by United Airlines and KAir Enterprises, Inc. KAir Enterprises is an entity we know almost nothing about at this point. United will own a minority stake in the new company, which will see ExpressJet operating exclusively for United Airlines. But we don’t know how much of a stake.
Why so complicated? Blame the recently-ratified flight attendant contract (.pdf).
As Cranky Flier points, the contract specifies that United must use mainline flight attendants on any commuter airlines it owns “in significant part.”
… to the extent permitted by law, the Company will recognize the Union as the exclusive bargaining representative for the Flight Attendants on any commuter airline (primary 135 carrier) which it establishes or purchases in whole or in significant part. Upon recognition, the Union and the Company agree to negotiate in a timely fashion a competitive agreement no less favorable than area standard contracts for similar flying operations.
The key is the definition of “significant” which is not defined. Does that imply a majority ownership or just a seat at the table? United clearly believes its ownership stake does not violate the contract, but look for a fight from the AFA flight attendant union.
Pilots will not protest because no ExpressJet aircraft will violate the 76-seat scope clause in the pilots’ contract. That clause mandates that mainline pilots operate any aircraft with more than 76 seats. ExpressJet will soon acquire 25 Embraer E-175s. With an expanded EconomyPlus section, these aircraft will have only 70 seats onboard.
Why United Is Acquiring ExpressJet
It makes perfect sense why United wants to own ExpressJet. This sort of horizontal integration allows United to better control its operations and creates a stable and steady source of mainline pilots as baby boomers accelerate retirement.
United also owns a 40% stake in Commutair under similar circumstances. In fact, Subodh Karnik has been named president and CEO of ExpressJet. Up until earlier this week, he held that position at Commutair. Look for closer collaboration between Commutair and ExpressJet, with United pulling the strings. United may have a minority stake, but who do you think is going to make key decisions? All decisions directly affect United. Talk about a powerful minority stake…
CONCLUSION
Trying to distill it down to a short, digestible snippet was no easy feat and perhaps I still failed. It underscores the lengths airlines like United will go to avoid labor costs. That’s not a shot at United, but does represent the most likely explanation for why a new shell company owned by a mysterious new company would purchase a regional airline.
It’s the same deal with Delta and Endeavor Air.
Interestingly Continental used to own Express Jet but peddled it for a lot of cash. Now United Continental successor to UAL and CAL are buying it back.
This is one of the most convoluted storys I’ve ever read.
I am a retired united flight attendant. We got a payout in the early nineties for a similar violation of the scope clause of our contract when united purchased air Wisconsin. Maybe the wording of the new contract is different.
The most ironic thing is that Expressjet used to be owned by Continental and was spun off. Kind of reminds me of the Aeroplan story.
I used to fly for ExpressJet. Lots of good memories but Continental Airlines seemed to hate us and then United via SkyWest owned XJT and the company went down hill. I left a year ago and I’m thrilled not to work for a company not associated with UAL, DAL or AA. I’m not sure why any pilots remain at ExpressJet. They are so underpaid even with a new contract and the flight attendants are not treated well or respected by the company. Regional flying is a dead end. I hope the rest of my previous co-workers get out soon.
In short They are avoiding Labor cost yet exploiting pilots, flight attendants and the last but not the least aircraft maintenance technician. What sad is they don’t even recognize nor mention the mechanics. Yet these mechanics work odd days and hours in increments weather making sure flights are ready and on time. Sad that professionals are treated like peasants and nothing will ever be done. Knowing the cost of living in new Jersey is high and the paid offer is way below the marginal line. Unbelievable.
United needs to fully purchase ExpressJet and offer a flow program for ExpressJet pilots if they are serious about keeping a streamline of pilots.