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…
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.