BATNA Final Report
Case study: The Muse/TransStar and Southwest Airlines BATNA
Case Overview
Muse Air was struggling amid the 1982 traffic controllers’ strike, a massive debt to service and shrinking cash reserves. By the end of 1984, they were looking for a merger to keep it afloat. In 1985 culminated the purchase of Muse Air by its long time nemesis and rival, Southwest Airlines. Southwest Airlines paid USD 60.5 millions in stock and cash for Muse Air when Muse Air was on the verge of collapse in 1985. After completing the acquisition, Southwest Airlines renamed Muse Air as Transtar Airlines in 1986. Transtar Airlines became a wholly owned subsidiary of Southwest Airlines and operated as an independent airline. Southwest acquired the company and a series of complex negotiations between Southwest Airlines and Transtar instigated. An agreement on combined master seniority list is reached in the last negotiation between pilot groups. Nonetheless, Transtar Pilots Association (TPA) Board of Directors (BOD) rejected the proposed Integrated Seniority List (ISL) believing that such act would create more leverage for their Merger Committee to obtain a more favourable ISL. The rejection however, resulted in escalation of anger and distrust between union presidents and causing entire breakdown to the negotiation.
Analysis
In the first round of discussion, in 1985, Transtar pilots were unrepresented so the negotiations ensured only between Southwest Airlines and the Southwest Airlines Pilot Association (SWAPA) causing unfavourable outcomes of the negotiation. In the agreement proposal, both parties came out with Integrated Seniority List (ISL), causing the Transtar pilots seniority become the bottom of the list and pay parity in 5 years combined with a card campaign to represent the Transtar pilots. The management of Transtar pilots rejected the proposal on the basis of Duty to Fairly Represent.
In November 1986, an agreement on Combined Master Seniority List was obtained through the second
Case Overview
Muse Air was struggling amid the 1982 traffic controllers’ strike, a massive debt to service and shrinking cash reserves. By the end of 1984, they were looking for a merger to keep it afloat. In 1985 culminated the purchase of Muse Air by its long time nemesis and rival, Southwest Airlines. Southwest Airlines paid USD 60.5 millions in stock and cash for Muse Air when Muse Air was on the verge of collapse in 1985. After completing the acquisition, Southwest Airlines renamed Muse Air as Transtar Airlines in 1986. Transtar Airlines became a wholly owned subsidiary of Southwest Airlines and operated as an independent airline. Southwest acquired the company and a series of complex negotiations between Southwest Airlines and Transtar instigated. An agreement on combined master seniority list is reached in the last negotiation between pilot groups. Nonetheless, Transtar Pilots Association (TPA) Board of Directors (BOD) rejected the proposed Integrated Seniority List (ISL) believing that such act would create more leverage for their Merger Committee to obtain a more favourable ISL. The rejection however, resulted in escalation of anger and distrust between union presidents and causing entire breakdown to the negotiation.
Analysis
In the first round of discussion, in 1985, Transtar pilots were unrepresented so the negotiations ensured only between Southwest Airlines and the Southwest Airlines Pilot Association (SWAPA) causing unfavourable outcomes of the negotiation. In the agreement proposal, both parties came out with Integrated Seniority List (ISL), causing the Transtar pilots seniority become the bottom of the list and pay parity in 5 years combined with a card campaign to represent the Transtar pilots. The management of Transtar pilots rejected the proposal on the basis of Duty to Fairly Represent.
In November 1986, an agreement on Combined Master Seniority List was obtained through the second
References: 2. Craver C.B, The Intelligent Negotiator, Three Rivers Press, 2002. 3 4. Best Alternative to A Negotiated Agreement, Wikipedia, 2015 http://en.wikipedia.org/Best_alternative_to_a_negotiated_agreement ( 62361115028) NUR QURRUL AIN BINTI RUSLAN (62361115023) NOR FARHANA BINTI MUHAMAD DON (62362115017) SUBJECT : NEGOTIATION AND ETHICS