UAL Files CH 11

[Publishers]

Now

A good deal of what happens here on out is the struggle for passengers between UAL and US. They can get into a competitive thing that tends to hurt those who are more secure like AA.

Meanwhile SWA will continue to pick off their better routes. Labor will change over all this.

No matter how this comes out, United has made the farthest fall from grace. The question is was it a suicide, a homicide, or manslaughter.

 

[goldentrout]

Suicide

The employees asked for outrageous compensation packages without apparently analyzing the long term viability of their requests.

And then all those super educated, Yale and Harvard management graduates agreed to their terms, along with trying to buy an airline that had almost as much debt as itself, if not more!

A UAL pilot told me today

"We and management did this to ourselves. Management pissed away a ton of money with the whole UAL merger thing, and then we in retaliation, stuck it to them with our demands in our last contract. Additionally, to "prove our point' to management, our work slowdown of 2000 drove off loyal business passengers, which have never come back."

Vengeance, greed, death (in the metaphorical sense)...this is starting to play our like a Greek tragedy.

 

[Majik]

I read an article several months ago that said, "During the year preceeding 9/11, had all of United's employees worked for free, United would have still lost money."
Sorry Hoss, but I gotta throw most of that blame in managements direction.

 

[VFR on Top]

I think it's time for these megabucks MBAs running these companies to start earning their keep; if they can't manage effectively, why should they make more than people who actually do their jobs effectively? The number of companies getting their money's worth out of their overpaid CEO has got to be pretty small.

 

[Dieterly]

One year ago...

 

[goldentrout]

Majik

Maybe...but they would have lost much less money without the 22-29% pilot pay hike of 2000.

Secondly, who knows how much revenue was lost due to the "employee induced" work slowdown? For all we know, had some of the employees not "proven their point to management," maybe the company might have acutally made money or at least broke even in 2000.

Third...if a company has a business plan, where even during average economic times, they can't pay their bills even if everyone worked for free...what kind of business plan is that????

Fourth...as long as us aviators keep totally blaming management, instead of taking partial responsibility for causing the current state of the industry, we'll just see more and more and more and more of us on the street every month...as is happening now...and as it will happen for at least the next six months, maybe longer.

Rumor is that UAL might knock off another 25% of their list. That would take them from a pre 9/11 total of about 10,000, to about 7,000. A 30% cut in 2 years.

Fine...sit around and blame mangement...I hope you're high enough up on someone's seniority list (that won't go bankrupt) to have that luxury.

 

[goldentrout]

Right after 9/11, I had this same discussion/argument with senior UAL guys on this very board.

I told them the company's business plan was broken and not sustainable.

I told them ALPA needed to be proactive and work with management then (not now) to reduce costs, before it was too late

I told them the other employee unions had to be on board too, because cost cutting was going to have to be across the board.

I told them who at Eastern or Pan AM or Braniff would have thought their company would cease to exist? (not that UAL is yet facing this prospect)

It didn't take a genius to figure this out...it's just business 101... revenues have to meet or exceed costs for a business to be viable. How the heck can a company lose 8,000,000 dollars a day and remain solvent? This bleeding didn't just start last month...the UAL MEC and UAL managagement should have been all over this 2 years ago!

Here's the typical response I got from the UAL senior guys:

1. It's management's fault...we helped them out with our contract in 1994...they've bungled it from then, it's not our fault.

2. We deserve every penny of our 22-29% raise...we deserve it because of our last concessionary contract.

3. We have to keep what we have to "preserve the profession." Otherwise, it will just be a free fall of wages and benefits (implying they're doing the rest of the UAL pilot list and all the other UAL employees a favor...that worked out well).

4. I deserve every penny I earn, and I'm not giving up a cent to anyone. I used to live 10 pilots to a crash pad, eating peanut and jelly, flying freight. I've paid my dues, and now I'm going to enjoy the rewards!

Not once in any of their commentary did I hear one word of concern for their fellow pilots...or their fellow UAL employees...or the viability of the company as a whole.

just me me me...I I I

Here's another lesson from business 101:

You're only worth what the market will pay you to produce your product or perform your services.

The large discrepancy between what many airline pilots think they "deserve" and what they're really worth, is now being dramatically demonstrated.

Pride goeth before the fall.

 

[PCL_128]

Right after 9/11, I had this same discussion/argument with senior UAL guys on this very board.

I told them the company's business plan was broken and not sustainable.

I told them ALPA needed to be proactive and work with management then (not now) to reduce costs, before it was too late

I told them the other employee unions had to be on board too, because cost cutting was going to have to be across the board.

I told them who at Eastern or Pan AM or Braniff would have thought their company would cease to exist? (not that UAL is yet facing this prospect)

It didn't take a genius to figure this out...it's just business 101... revenues have to meet or exceed costs for a business to be viable. How the heck can a company lose 8,000,000 dollars a day and remain solvent? This bleeding didn't just start last month...the UAL MEC and UAL managagement should have been all over this 2 years ago!

Here's the typical response I got from the UAL senior guys:

1. It's management's fault...we helped them out with our contract in 1994...they've bungled it from then, it's not our fault.

2. We deserve every penny of our 22-29% raise...we deserve it because of our last concessionary contract.

3. We have to keep what we have to "preserve the profession." Otherwise, it will just be a free fall of wages and benefits (implying they're doing the rest of the UAL pilot list and all the other UAL employees a favor...that worked out well).

4. I deserve every penny I earn, and I'm not giving up a cent to anyone. I used to live 10 pilots to a crash pad, eating peanut and jelly, flying freight. I've paid my dues, and now I'm going to enjoy the rewards!

Not once in any of their commentary did I hear one word of concern for their fellow pilots...or their fellow UAL employees...or the viability of the company as a whole.

just me me me...I I I

Here's another lesson from business 101:

You're only worth what the market will pay you to produce your product or perform your services.

The large discrepancy between what many airline pilots think they "deserve" and what they're really worth, is now being dramatically demonstrated.

Pride goeth before the fall.

You have to keep this in mind: pilots are willing to give concessions once or twice to help the company maintain viability, but if the mgmt won't fix the business model, then why continue to give concessions? Concessions will not fix a rotten business model. As usual, Eastern is a perfect example. In the early 80's Eastern was already losing enormous amounts of money. So what does Frank Borman do? He buys a bunch of brand new A300s for millions and millions of dollars!! How does this make sense? But again and again mgmt does these same stupid things. They beg for concessions and the employees give in. Then mgmt goes and spends a bunch of money or institutes a bad new policy that wastes money and the concessions end up doing nothing. At some point the employees have to put their foot down and say no more! Mgmt has to be accountable. In the end, if mgmt doesn't change the business model, the company will go out of business anyway whether the employees take concessions or not. Therefore, you might as well keep your current contract and hold mgmt accountable for the changes. If I've said it once, I've said it a million times, concessions have never saved a failing airline and they never will.

You're only worth what the market will pay you to produce your product or perform your services.

I guess I should work for free then, sense there are so many pilots out there just starting their careers that are willing to fly for free just to get multi time? You're not worth what the market dictates, you're worth what you negotiate.

 

[Publishers]

ownership

Let's blame it on the owners and who owns the 55%. Even if they, management is at fault, the employee slow down killed the business traffic that will end up being the fatal bullet.

 

[dogg]

I have a question. Can a company file for chapter 11 just because they feel that they are at a competitive disadvantage. I thought, as in United case, that there had to be dire straits. As in 875 million worth of lease payments that are due with no money to pay. It seems that all of the other Majors have cash on hand and are making their payments etc.. I don't think that they can file just to give them a competitive edge or to save money. Maybe one of the lawyer/pilots can comment on ch 11 requirements

 

[PCL_128]

Re: ownership

Let's blame it on the owners and who owns the 55%. Even if they, management is at fault, the employee slow down killed the business traffic that will end up being the fatal bullet.

Work slow downs and strikes are the only things at our disposal to threaten mgmt during negotiations times. If we refused to use these self-help actions then mgmt wouldn't even pay attention to us. Mgmt threatens us with pay cuts, furloughs, contracting out flying, etc... What are we supposed to do to counter this without self-help actions such as stikes and slow-downs? In the end work slowdowns really are mgmt's fault because we only resort to them when mgmt refuses to bargain in good faith.

 

[B1900DFO]

Anybody read where Ual announced that they have implemented a 2.8%-10.7% wage cut for management employees? Doesn't that seem grossly inadequete especially when they are about to ask pilots for 25%+. Reminds me of US airways giving out 6 million in bonusses to top managers while in bankruptcy because the money was "promised to them" before Ch11.

 

[goldentrout]

PLC_128

You say

"You're not worth what the market dictates, you're worth what you negotiate."

Well, the current UAL situation proves you absolutely wrong.

They negotiated a 22-29% pay raise. They negotiated a no furlough clause.

What they are going to get is probably a 20-25% pay cut, and 2000-3000 pilots on furlough.

They got paid what they "negotiated' for about 2 years. Then market forces came to bear...now they'll get what the market dictactes they are worth.

Same thing at US Air...they negotiated a certain pay scale...now, to remain competitive, they had to take a significant pay cut, and lose about 20% of their pilot list..

And as for strikes...at least at the major airline level...what are they striking for...to top out at $300,000/yr instead of $275,000/yr? To get a minimum of 13 days off rather than 12 days a month? To get a work rule that says if my vacation touches my trip, my trip is dropped, and I get paid to sit at home and do nothing?

Come on.. major airline pilots are not the proletariat masses... fighting against the evil capitalist industrialists, who are working them to the bone for meager wages, under horrible work conditions.

As for work slowdowns...again the evidence proves you wrong, as evidenced by the significant decrease in UAL business traffic during and after their work slowdown.

Sounds good, "we'll who management we're serious!"

Meanwhile the customers loyaltly is shot after he misses two or three business meetings or weddings or whatever...and he figures out that, though he may not get free alcohol, SWA or Jet Blue will get him consistently to his destination for about 50% less than UAL.

I don't know how old you are, but a reading of recent history should show you that unions have all but destroyed a number of industries in this country...steel...automobile...airline.

I see even with only 900 hours, you've already bought into the "us against management mentality."

That concept has resulted in 11 major airline bankruptcies in the last 20 years...and thousands upon thousands of pilots/mechanics/FAs/ticket agents/baggage handlers etc. losing their jobs...many permanently.

The last twenty years of the airline history since deregulation proves your theory wrong...very wrong...unless you consider the state of the industry today a success story.

 

[PCL_128]

PLC_128

You say

"You're not worth what the market dictates, you're worth what you negotiate."

Well, the current UAL situation proves you absolutely wrong.

They negotiated a 22-29% pay raise. They negotiated a no furlough clause.

What they are going to get is probably a 20-25% pay cut, and 2000-3000 pilots on furlough.

They got paid what they "negotiated' for about 2 years. Then market forces came to bear...now they'll get what the market dictactes they are worth.

Same thing at US Air...they negotiated a certain pay scale...now, to remain competitive, they had to take a significant pay cut, and lose about 20% of their pilot list..

They are still getting paid what they negotiate. They are negotiating concessions. The labor contracts are not being thrown out the window because of the filing. Mgmt still has to go to labor and negotiate for the pay cuts. Everything is about negotiations.

Mgmt can't simply go to the pilots and say "I can find 1,000 pilots willing to fly the 737 for $10 an hour, so that's what we're going to pay you." That is what the market dictates and that is what it seems you would support. Thanks to ALPA we don't have to worry about this. We know we are worth more than $10 an hour even though that's what the market will bear, so we negotiate for it. And strikes and work slow-downs are what enable us to do this.

I hate to tell you this, but the magical utopian world of your fantasies doesn't exist in the real world. Mgmt will pay you nothing if they can get away with it. They won't pay you a fair wage because that's what you deserve. Maybe 300k a year is a little much. Maybe not. I'm not going to tell the 747 CA what he deserves to get paid for his job. I'm not in his shoes. But the fact remains that mgmt doesn't care what you deserve for your hard work, they only care about how little they can get away with paying you.

As I said, the market will bear $10 an hour 737 pilots, but we shouldn't settle for that just because that's what the market dictates. We should negotiate for a fair wage.

I see even with only 900 hours, you've already bought into the "us against management mentality."

Yes, that because after my "only 900 hours" I've already worked for a non-union carrier that paid it's first year FOs $10 an hour. The owner of this company had 3 private aircraft, a yaucht, several houses (one of which is on a private air strip), and several luxury cars. Meanwhile his employees are struggling just to eat. This is the way all mgmt would behave if they had the opportunity. Thank God for ALPA or all of us would be that way today.

That concept has resulted in 11 major airline bankruptcies in the last 20 years...and thousands upon thousands of pilots/mechanics/FAs/ticket agents/baggage handlers etc. losing their jobs...many permanently.

No, the Airline Deregulation Act of 1978 resulted in all of that. How many major airlines applied for bankruptcy during the years of regulation? The answer is none. The airline industry is a public service that is highly dependant on safety. As such, the regulated environment was the perfect fit for it. When regulation was removed all hell broke loose (Braniff, Eastern, Pan Am, etc...). Now it's picking back up again and the majors are dropping like flies.

 

[Publishers]

Argue

It is difficult to debate with those who see such an adversarial role between managment and labor.
In my experience in business, we paid our employees because we wanted the best employees. We treated them fairly and we all worked together.

You see I think you should not be working for someone who you do not respect nor should they employ someone who views his employment with the distrust you do. Where we differ is that I do not think that we should be forced to employ someone on the basis that they make the rules.

The key word here is balance. We get out of balance in situations where labor or management totally fail to read the other sides position and hence pursue it to a fault.

United's labor should have had more regard for the life blood of their business traffic and never put it in a situation where they win but lose. They own 55% of the company they killed. Sure management has a place in the blame game but they caved trying to protect the business customer.