Negotiating while in bankruptcy

[Beetle007]

Just shooting from the hip here, but I think that most airline employee groups seem to be overly afraid of having a contract imposed upon them (in bankruptcy). So afraid, that they are "negotiating" horrible contracts that should have never seen the light of day. Maybe I am missing something, but what is the big deal? You have a horrible contract for a year or two? Ironically, not striking when a contract is imposed is more dangerous to management (and the company) than striking.

Lets use the Northwest flight attendants as an example. Lets say that the NWA flight attendants openly claim that they will not strike when the contract is imposed and will wait until the first day the company exits bankruptcy (or at first legal opportunity). What would you think as an airline executive? How are you going to get investors? How are you going to raise exit financing?

The end game is that the airline management would need to negotiate in good faith (sooner or later), or the company will liquidate. We need to be stronger as a labor group. Stop the insanity of negotiating while in bankruptcy just to save face of having an imposed contract. I am not a bankruptcy expert, but I think it is debatable whether an imposed contract would even be valid after the company exits bankruptcy. Has this ever been tested in the courts?

Northwest would much rather have the flight attendants go on a half-assed strike and break the union. Just as they did to the mechanics (Although I respect the mechanics for their courage). Or better yet, they would like the union to approve a crappy contract. Even though the contract that would have been imposed was EQUALLY crappy.

 

[AA717driver]

The 1113 process is very scary to pilot groups. Having caved to the first useage of this in the airlines, I can tell you that when it comes down to it, you really don't want some judge to be responsible for your working agreement for the next several years.

Clearly, since none of the pilot groups under Ch. 11 has opted to force the company to invoke 1113, no one wants to tempt fate.TC

 

[320AV8R]

Just shooting from the hip here, but I think that most airline employee groups seem to be overly afraid of having a contract imposed upon them (in bankruptcy). So afraid, that they are "negotiating" horrible contracts that should have never seen the light of day. Maybe I am missing something, but what is the big deal?

Are you suggesting that all the UAL, USAir & NWA employees groups deliberately negotiated bad contracts while in CH 11?

The "negotiating" is done under the Federal Bankruptcy Law, instead of the Railway Labor Act. It's not just the union & Mgmt. You have to throw in the Judge, the Creditor's committee, etc... who all must approve of all financial transactions, contracts, dealings, etc. So the "leverage" is in Mgmt's favor. The very fact that you're in BANKRUPTCY should be a clue that you're not going to get a 50% pay raise. Then there's the LCC competition, the price of oil, etc that doesn't weigh in your favor.

NWA Mgmt wanted $195 million from the FAs. They rejected their first "deal", switched unions, & cut another deal. Some $$$ was shifted around, but they coughed up...... $195 million.

Also, AA717 is correct. Noody wants a Judge to determine your working conditions for you. The only SCOPE they know about is a mouthwash.

 

[Beetle007]

The "negotiating" is done under the Federal Bankruptcy Law, instead of the Railway Labor Act. It's not just the union & Mgmt. You have to throw in the Judge, the Creditor's committee, etc... who all must approve of all financial transactions, contracts, dealings, etc. So the "leverage" is in Mgmt's favor.

Yes, you need to continue negotiating in good faith. If you reach an agreement, then great. But, it is not the end of the world if the judge imposes a contract. Although technically the judge just imposes work rules and pay. A judge does not impose a contract in the technical sense of the word.

Why enter into a 7 year (or whatever) contract while negotiating in bankruptcy that gives away job protections and scope. As you said, while in bankruptcy, the leverage is in Mgmt's favor. Just because a contract is
imposed, doesn't mean they will stop negotiating. Managment needs "closure" if they want to exit bankruptcy. They know that, but apparently we do not.

Based on what is happening now, you could expect the judge to imposes the last best offer made by the company. So you get the same scope, work rules and pay, but you are not locked into it. And, it puts pressure on the company to keep negotiating.

Work with the company until you get something fair for yourselves and the company. Job protections should never be on the chopping block. It is just not necessary.

 

[WMUSIGPI]

The 1113 process is very scary to pilot groups. Having caved to the first useage of this in the airlines, I can tell you that when it comes down to it, you really don't want some judge to be responsible for your working agreement for the next several years.

Clearly, since none of the pilot groups under Ch. 11 has opted to force the company to invoke 1113, no one wants to tempt fate.TC

Actually all 3 unions (pilots, FA, Mechs) all had their contracts set to be voided by Mesaba. The company just needs to give 10 days notice and it's Mesa-10%, or more likely no more Mesaba... Comair also won their case against thier FA's and can now void that contract, but I an not sure on their details. Now it's just a question of will management use the rulings and impose their terms at risk of a strike.

 

[vtwo]

You guys are right when it comes to having your contract voided.
It is scary and the company knows that is how you feel. So what if the judge rules that the contract is void.
The scary part for the company is... No one knows for sure if it is legal for the employee's to strike when the contract is void. that has never been tested by the courts. If your company is already in BK. you better believe that is the last thing they want is a strike. So in short the company uses the 1113 process to scare you and wear you down to the point whe most people say "we will vote this POS contract in and get them next time":. or "live to fight another day". Bla Bla Bla.. then when the pay, benefits, and work rule changes start to hit home. you are stuck with a 4 year ( really 6 year) pos concessionary(sp) contract which your group voted for. Not one that the company didn't have the Ba11s to impose. New managment comes in and says let's all work together. The bad stuff wasn't our fault. so let's all hold hands and make this place great again.


Bla Bla Bla.

I know to the Us air guys, united, ata, guys have heard this already the nwa and delta guys are still in the final process of this mind game, but when all the negatives hit home it really sucks worse than you thought it would when your group voted for this. Oh yea then comes record profit for the airlines, bonus for ceo's and stock holders get a nice wind fall.. ANd the employees .....well you'll get them next time.

MY 2 Cents

 

[Beetle007]

When it comes to regionals negotiating, I have no idea. It should have never gotten to this point in the first place. Like I said earlier, job protections should NEVER be on the chopping block. Only having a single pilot group per airline will ever fix that. But, I don't see this happening at the legacy airlines.

Just saw an article that CHQ will be flying 86 seat jets for U.S. Airways while mainline has how many pilots on furlough? Ironically, the same pilots who voted for the crappy U.S. Airways contract will be pissed at the regional pilots for "stealing" their flying. I could be wrong, but I doubt it.

 

[njcapt]

Your assumption that the ability to strike exists immediately after exiting bankruptcy is incorect. The BK Court still wields control over the entities after the Plan Of Reorganization (POR) is certified. At ATA we were looking at an imposed contract with a duration into 2010. We signed a less onerous deal that had a guaranteed opener in 2007 in an effort to get back on solid footing as soon as was possible.

 

[Beetle007]

I do not make the assumption that you can legally strike immediately after bankruptcy. I make the assumption that an airline will have a difficult time raising favorable loans with a union poised to strike at first opportunity. Case and point is the Northwest flight attendants. The Billion+ dollar loan is contingent on the company successfully negotiating with the flight attendants.

If the flight attendants let the company impose a contract, and just say they will wait until after bankruptcy to strike, I guarantee the company will come back to them ASKING to negotiate. They will do this so they can get favorable loans. Of course, the company will just pretend that they are being nice

When you said that ATA was looking at an imposed contract that would have expired in 2010 what do you mean? Had the judge already authorized this?

Also, are you saying that you believe a pilot group can not strike if a contract is imposed upon them? Even if you can't legally strike, it has never been tested in the courts. Management (and lenders) are equally unsure of the legitimacy of a strike after an imposed contract, or following the exit of bankruptcy.

 

[njcapt]

When you said that ATA was looking at an imposed contract that would have expired in 2010 what do you mean? Had the judge already authorized this?

Also, are you saying that you believe a pilot group can not strike if a contract is imposed upon them? Even if you can't legally strike, it has never been tested in the courts. Management (and lenders) are equally unsure of the legitimacy of a strike after an imposed contract, or following the exit of bankruptcy.

Almost immediately after entering Bankruptcy in October 2004, ATA management met with the ALPA Negotiating Committee requesting contract relief. The proposed contract modifications involved a 20% cut in pay, severely weakened work rules across the board, and a duration until 2010. The Committee requested financial data to support the company's position before formulating a response. Numerous events occurred in the next several months that delayed resolution of this issue (FL, HP and WN deals, etc).

In the initial 1113e (emergency bankruptcy relief) filing ATA management enclosed a proposed contract that they wanted the BK Court to impose. Strangely enough, it looked almost exactly the same as management's WAG from October. We negotiated with the company for weeks, including up to and during the actual BK Court 1113 hearing at the Federal Courthouse in New Albany, IN. The Judge essentially told us that he wouldn't deny the company's claim, so we had better come to a consentual deal. As a result, the company got pretty much what they were looking for, just with a reduced duration of four months. Three months later, ATA management was back in front of the Judge with a request for long term relief (1113c) that, strangely enough, looked a lot like their WAG from October. After that, we bought them off with another LOA until the BK deadline of September 30th.

Four months of miserable negotiations later we found ourselves back in front of the BK Judge - sans agreement. The company had not moved one percent on wages, had conceded only minor points in their request for work rule relief, and was sticking to their demand for a five year deal - even though they couldn't provide costing data beyond 2006. In the hearing, the Judge interrupted our Counsel in the middle of his opening statement, and asked what he thought the court's options were. The Judge answered his own question by saying that he could either allow the company's motion, or disallow it (though BK Judges had, in the past, cherry picked elements of motions for relief). Our case was essentially over. That week we hammered out a slightly-less-$hitty deal that had a 18% pay cut, minor work rule concessions, a 36 month duration, structured pay increases, profit sharing (assuming there were any profits), and stock options/grants. It was like negotiating while strapped in the electric chair. During the 10 months of negotiations, we kept trying to determine exactly how much leverage the company had in bankruptcy. By the time we arrived at a long term relief TA, we found out it was nearly absolute. The 1113 process did essentially nothing to level the playing field for labor, in fact, it seemed to remove our options for self help.

Though untested in court, the right to strike while under the supervision of the Bankruptcy Court still has to pass muster with the Railway Labor Act. The only way for a RLA labor group to legally withold their services is after a release by the National Mediation Board. Is an imposed contract legally binding under the RLA? Don't know, it hasn't been tested in court. A slim majority of the ATA pilots were not willing to risk the next five years of their careers in order to be the poster children for the erosion of organized labor's leverage in the Federal Courts. We negotiated a three year deal that has a 24 month early opener for negotiations. Subsequently, and pretty much as a direct result of the work rule changes I helped negotiate, I was furloughed.

 

[HalinTexas]

I voted against this T/A. It was not good enough, and I was willing to help the company out, till then.

 

[HalinTexas]

Since then, the company has done nothing to ensure our future as an independent airline.

 

[320AV8R]

Yes, you need to continue negotiating in good faith. If you reach an agreement, then great. But, it is not the end of the world if the judge imposes a contract. Although technically the judge just imposes work rules and pay. A judge does not impose a contract in the technical sense of the word.

Why enter into a 7 year (or whatever) contract while negotiating in bankruptcy that gives away job protections and scope. As you said, while in bankruptcy, the leverage is in Mgmt's favor. Just because a contract is
imposed, doesn't mean they will stop negotiating. Managment needs "closure" if they want to exit bankruptcy. They know that, but apparently we do not.

Based on what is happening now, you could expect the judge to imposes the last best offer made by the company. So you get the same scope, work rules and pay, but you are not locked into it. And, it puts pressure on the company to keep negotiating.

Work with the company until you get something fair for yourselves and the company. Job protections should never be on the chopping block. It is just not necessary.

We approved a TA in May.

I don't really understand your advice.

 

[HalinTexas]

I think what he's trying to say is that the judge can impose work rules and pay while the company is under bankruptcy protection. At the same time he can enjoin a union from striking, just like he can keep a lease holder from taking his airplanes and go home. After bankruptcy protection has ende it is argued by some and disagreed to by others whether or not a contract is in force once a company exits BK protection. This has never been tested. Unions are too risk averse to try it.

However, job protections are always on the chopping block. They are as negotiable as pay and benefits. Or enforced to the degree union leadership wishes to enforce it.

You are stuck with your TA until its amenability date.

 

[Beetle007]

I was talking about the Flight Attendants.

Do you think it is in their best interest to accept the new TA, or let the judge impose it? I know the judge was planning on imposing the previous TA, so not sure which TA would get imposed. They are monetarily equal.

If they let the judge impose it what are they losing? What is the downside? I don’t see any downside other than the possibility of NWA going belly up.

And, I still say that job protections should never be on the chopping block.
I am talking about scope, double-breasting (not combining a merged airline), and other such items. Job protections are like holding a flank (almost literally). Because when you get divided, you get conquered. U.S Airways has like 8 or 9 regionals. How many of you think things will get better for any of them? Please tell me how their negotiating position will ever be improved.

Even in 331 B.C. Alexander knew that losing a flank (being divided) was the critical point in a battle. This is how he massively defeated armies sometimes more than twice his size.

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[Freight Dog]

Hal, actually, if the judge throws out your CBA, you enter the uncharted territory. You lost your collective bargaining agreement. Does RLA apply? Experts disagree on this issue. Unfortunately for us, it's never been tested.