Airline Merger Brings More In-House Work

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Smith, Gambrell & Russell partner and experienced airline representative Howard E. Turner has said, "What I would see is there would be no real reduction in the size of the legal departments because the amount of work would go up geometrically.

"There haven't been too many large airline mergers," he continued. "But the fact that they are airlines doesn't change it a great deal. It should be viewed as any other large corporate merger."

But there have been some holdups. Many unions, including pilot unions and those representing baggage handlers, ticket agents, and other employees, are planning on opposing or challenging the merger. Regarding the pilots, one main question arises: how will the two airlines merge their 11,000 pilots and "rank their seniority"?

Because of this and other complications, many are concerned about the increased workload for the in-house counsel and other departments. Delta's legal department consists of 42 lawyers, while Northwest's consists of 12. Delta has 11 firms as its outside counsel, including Alston & Bird; Davis, Polk & Wardwell; King & Spalding; McKenna, Long & Aldridge; Troutman Sanders; Kilpatrick Stockton; Munger, Tolles & Olson; Paul, Hastings, Janofsky & Walker; Rogers & Hardin; Thompson & Knight; and Pillsbury Winthrop.

One partner in Smith, Gambrell & Russell's aviation practice said, "Change is always good for the law department because there's always more work to do."

"The primary takeaway with the law department is with change; there's going to be more work, not less," he later added. "Folks are going to be very busy. And it's not a temporary spurt. There will be post-merger work to do for a long time."

Post-merger work indeed, especially with a potential new workforce of 80,000 employees, with Delta bringing 47,000 workers and Northwest bringing 31,000.

Turner said, "Generally, what you see in a large merger is that there would be a huge amount of work in melding the departments together."

Another concern is location. Which city would remain the airlines' corporate headquarters?

One area that doesn't appear to be problematic is payroll. Apparently, the point of the merger isn't cutting jobs but rather taking advantage of "opportunities for economies of scale."

Robert W. Mann, airline industry analyst, had this to say: "The public pronouncements have been that the deal is going to live on the upside, not by cutting head counts. This merger creates value by combining the companies."

Smith, Gambrell & Russell, LLP

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