Bankruptcy at United Airlines
By Lee Sustar | December 13, 2002 | Page 16
THE BANKRUPTCY of United Airlines highlights the destructive cost of free-market policies that lead to economic crises and destroy the lives of millions of working people. And now that a bankruptcy court judge could cut wages, benefits and jobs of some 80,000 workers at United, other airlines are demanding cuts, too.
"A bankruptcy reorganization would help United slash labor and other costs," the Wall Street Journal observed. "That could help its peers to convince labor of the need for additional cost reductions."
So when it became clear that United was about to file for bankruptcy, the new bosses at bankrupt US Airways--the Retirement Systems of Alabama--announced that they would liquidate the airline unless workers agreed to more layoffs on top of 12,500 job cuts already announced. And just hours after United filed for bankruptcy, the world's biggest airline, American, announced that it was seeking a wage freeze from unions worth some $130 million.
Fueling this assault on workers is the Airline Transportation Stability Board (ATSB), created after September 11 to bail out the airlines and run by three allies of George W. Bush. And because some 39.4 percent of workers in the air transportation industry are unionized--three times the national average--the ATSB's demands for concessions provide Bush with yet another weapon in his war on organized labor.
United sought $5.2 billion in givebacks from unions to try and obtain a $1.8 billion loan guarantee from the ATSB. In making the decision to deny the loan, "the Bush administration signaled that it intends to continue letting the market sort out the airline industry's considerable troubles," the Los Angeles Times noted.
And the September 11 attacks only gave a pretext for layoffs. "The industry is potentially headed toward its largest loss year ever, and there is absolutely no evidence of fundamental improvement on the horizon," industry analyst Samuel Buttrick told the Wall Street Journal--on September 10, 2001.
The reason for the airlines' massive losses isn't "high labor costs." United's unionized workers took pay cuts in 1994 in exchange for an Employee Stock Ownership Program--which is nearly worthless today--and didn't get a raise until this year. Unfortunately, airline union officials have bought the idea that concessions are necessary to help save their companies.
The real problem isn't workers' wages, but the insane scramble for profits made easier by deregulation of the industry over the last 25 years--and the overcapacity that resulted. In fact, the bankruptcies at United and US Airways are little different from the collapse of the energy company Enron and telecommunications companies WorldCom and Global Crossing, which were created amid deregulation in those industries.
Workers' concessions--no matter how large--can't solve a crisis created by deregulation and the free market . We need to step up the fight to defend jobs, wages and conditions in the airlines and every other industry--and challenge the corporate scramble for profits at all costs.