Bankrupty and Scope Clauses

[shon7]

If a company (say UAL) were to declare bankruptcy what would happen to the scope clauses and union contracts. Can't they shift more of the flying to the regionals (airwis etc. ) while cutting on routes. Also, can they lay off more people if they file Chap. 11.

 

[spinup]

The unions will do whatever they can in an attempt to preserve their contracts in a bankrupcy . Unions will do this by presenting a concessionary / recovery plan to the company and ultimately to the presiding bankrupcy judge. The judge will make his or her decision on the presented package collectively among unions, and individually. Then a decision will be made as to what is in the best interest of the stakeholders. This usualy means selling of assets and routes which are unproffitable, and the loss of union contracts in their current form. Very quickly an airline reorganizing under chapter 11 achieves profitibility, all be it emerging smaller. This smaller size would most likely drive more furloughs. What effect this would have on the UAX remains to be seen. In AAA's case the regionals were given unprecented growth, allowed to reach 100% the size of mainline. UAX now opperates at 43% of mainline, DCI at 67% of mainline as allowed by respective scope. So I would speculate there will be more flying the way of the regionals even without BK at UAL.

Most likely in bankrupcy court the judge will opt to gut most all contracts held by the various unions. It is a very ugly thing as far as the employees are concerned. Especially when there is as much to loose as at UAL. A bankrupcy would most likely desimate ESOP, and remove the IAM and ALPA from their seats on the board.