APPLE VALLEY, Minn. -
Over an 18-month period, Wings has been courting Continental's board and management team but has been rebuffed. Unwilling to take "no" for an answer just yet, the $1.6-billion CU decided to publicly appeal to Continental's membership. Wings is also promising a payment of $200 to CFCU members if the credit unions merge. Both Wings, originally founded to serve Northwest Airlines, and Continental have TIP charters allowing them to serve airline industry employees.
In addition to issuing a press release about the merger proposal, Wings has established a website where CFCU members can sign an online petition that Wings hopes to forward to the Continental board as proof of member interest in the combination of the two credit unions. The website contains a chart claiming members of CFCU would benefit by $1,000 a year through membership in Wings.
Wings officials have also been passing out literature about the merger proposal to employees Continental Airlines and other airlines at airports in Los Angeles, Detroit, Houston, Newark and Phoenix.
The move by Wings prompted officials at Continental to label it a "hostile takeover" and blasted the action as "anti-credit union."
"Anytime you get a proposal for a third time, and you've said 'no' three times, well, that's not exactly friendly," said Renee Sheflin, VP-marketing and business development at the $177-million Continental. "We still feel that we are better equipped to build a future for our credit union members. We are trying to communicate with our members that the credit union is made up of us along with them.
"I think it's divisive," Sheflin continued. "I know credit unions have been vocal about bank mergers in their communities and have told consumers 'when banks merge, you lose.' How does this make the credit union movement look? We're supposed to be a cooperative movement."
But Wings CEO Paul Parish said his credit union's overtures are anything but hostile and that what he most wants is to cooperate for the benefit of both CUs' members.
"We believe that the value this merger would bring to both credit unions' members is significant," he said. "We both serve the airline industry, airline employees have been faced with tremendous challenges since Sept. 11. They've seen a 30% reduction in wages, reductions in the benefits and pension plans. There isn't anything about this plan that isn't about bringing more value to members who really need it."
As for the $200 one-time merger payment, those funds would be paid out of Continental's capital in the event of a merger. "That is money that belongs to them," Parish said.
In a letter to Continental members on the Continental FCU website, CEO Tom Glatt, Sr., said the CFCU board has studied the merger proposal and determined it is not in CFCU members' best interests. And he minced no words in what he thought of Wings' decision to appeal directly to the Continental membership.
"We have just learned that this credit union, Wings Financial FCU (formerly Northwest Airlines FCU), has embarked upon an aggressive campaign to take over your credit union by approaching our members directly with misleading information," Glatt wrote. "This is an unprecedented, inappropriate, unethical and underhanded way of Wings FFCU taking your credit union away from you-our members-simply to achieve its own growth objectives."
