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Home » Law In Travel » The Real Reason United Airlines Is Buying ExpressJet
Law In TravelUnited Airlines

The Real Reason United Airlines Is Buying ExpressJet

Matthew Klint Posted onDecember 22, 2018November 14, 2023 8 Comments

a plane flying in the sky

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.

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About Author

Matthew Klint

Matthew is an avid traveler who calls Los Angeles home. Each year he travels more than 200,000 miles by air and has visited more than 135 countries. Working both in the aviation industry and as a travel consultant, Matthew has been featured in major media outlets around the world and uses his Live and Let's Fly blog to share the latest news in the airline industry, commentary on frequent flyer programs, and detailed reports of his worldwide travel.

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8 Comments

  1. Brian Reply
    December 22, 2018 at 3:44 pm

    It’s the same deal with Delta and Endeavor Air.

  2. Mike Porter Reply
    December 22, 2018 at 4:25 pm

    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.

  3. William W Reply
    December 22, 2018 at 5:30 pm

    This is one of the most convoluted storys I’ve ever read.

  4. Jonathan Jochem Reply
    December 22, 2018 at 5:38 pm

    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.

  5. CP@YOW Reply
    December 22, 2018 at 6:08 pm

    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.

  6. David Deshler Reply
    December 24, 2018 at 5:28 am

    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.

  7. Trueman Reply
    December 30, 2018 at 7:24 am

    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.

  8. Tom S Reply
    January 20, 2020 at 6:40 pm

    United needs to fully purchase ExpressJet and offer a flow program for ExpressJet pilots if they are serious about keeping a streamline of pilots.

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