Airline union concessions hit more than $30 billion
By Lee Sustar | May 16, 2003 | Page 11
AFTER EXTRACTING tens of billions of dollars in concessions from unions, airline executives are out to permanently break the power of organized labor in the industry. "We are at the very beginning of a multi-event, multi-year shakeout of the industry," Fred Reid, chief operating officer at Delta Airlines, said at a recent conference.
Unions--which represent 60 percent of airline workers, compared to less than 10 percent in the rest of private industry--are in management's crosshairs. "The fact is that we are an old, established industry that has evolved pay and benefits over time that are in the top 5 percent of Corporate America, and our results are in the bottom 1 percent," Reid said. "That has got to change."
Delta's plan for "change" is to demand a nearly one-third cut in pilots' pay--and to launch a new low-wage airline, Song. But Reid's concern over high pay levels didn't apply to Delta's executives, who have a $25.5 million trust fund to protect their pensions.
Disclosure of a similar fund at American Airlines--hours after workers voted to accept concessions--led to the resignation of CEO Donald Carty. But union leaders at American decided to accept the $1.6 billion in concessions--including pay cuts--anyway.
The labor givebacks at American followed soon after workers voted to accept concessions at bankrupt United Airlines, where workers ratified a contract allowing pay cuts, layoffs and work rules worth $6.6 billion over six years. As part of the deal, United will close its maintenance facilities in Oakland, Calif., and Indianapolis.
For its part, Northwest Airlines is seeking $1 billion in annual wage and benefit concessions over six-and-a-half years. The company invoked the SARS health crisis to justify layoffs--and then petitioned Washington to fly a route to Baghdad.
US Airways emerged from bankruptcy after getting more than $8 billion in concessions--not including its handover of pilot pensions to a government agency, which will greatly cut benefits. According to Rodney Ward, a laid-off flight attendant at US Airways and union activist, the total for union concessions in the airlines amounts to approximately $36 billion--about half the estimated cost of the Iraq war.
Already, more than 100,000 airline workers have lost their jobs since the September 11 attacks. There is a crisis. But the problem wasn't September 11, but vast overcapacity in the industry and the chaos of deregulation. "The industry is potentially headed toward its largest loss year ever, and there is absolutely no evidence of fundamental improvement on the horizon," said Samuel Buttrick, an analyst at the investment firm UBS Warburg--the day before the attacks.
If airline executives have their way, they'll gut union power in the same way bosses in the steel, trucking and auto industries have.
Of course, Washington is firmly behind the employers. George W. Bush announced preemptively banned airline strikes upon taking office. And the government's Air Transportation Stability Board, set up after September 11, refused emergency loans to United on the grounds that the company hadn't won sufficient cuts from the unions.
Today, Sen. John McCain (R-Ariz.) is backing legislation to amend the already restrictive Railway Labor Act in order to ban strikes in the industry. At the same time, the airlines are proposing legislation in Congress that would allow them to leave union pensions underfunded for decades.
Given this onslaught--including company threats to use bankruptcy courts to impose pay cuts or even void labor contracts--airline workers have their backs to the wall.
Defeat is not inevitable. Mechanics at United Airlines, for example, voted to reject a contract a year ago because of the threat of concessions. Union leaders then agreed to givebacks months later--only to reverse themselves amid rank-and-file anger. But repeated layoffs and the threats by a bankruptcy judge to impose cuts wore down morale. And the deer-in-the-headlights approach of International Association of Machinist (IAM) leaders only emboldened management to ask for more givebacks.
At US Airways, for example, IAM officials forced mechanics to vote twice on a concessionary contract after it was rejected once.
This picture is similar for unions across the industry. Virtually every airline union leader accepts the premise that unions and management share a common interest in restoring profitability to airlines--even when that means pay cuts for labor while executives get multimillion-dollar bonuses and pension guarantees.
But even deeper cuts may not be enough to stop one or two major airlines from going out of business. The only way to fight to preserve jobs and pay is to challenge the free market itself. Even the conservative Economist magazine had to admit recently, "stark as it seems, America's airlines may face liquidation or nationalization."
If a right-wing business magazine can say it, why can't organized labor? It's time for labor to raise the demand: Nationalize the airlines to protect decent jobs and pay.