UAL Mechs Reject Concessions/Auth. Strike

[Propblast]

Reuters
UAL Mechanics Reject Labor Deal -Union
Friday January 28, 4:08 pm ET
By Kyle Peterson

CHICAGO (Reuters) - The union representing mechanics at bankrupt United Airlines on Friday said its members overwhelmingly rejected proposed wage and benefit cuts and voted to call a strike if the court alters the current contract.

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The Aircraft Mechanics Fraternal Association said in a statement that members rejected a tentative agreement that would have reduced their wages and benefits. The rejection puts a fresh obstacle in the carrier's plans to exit bankruptcy.

Its members also voted in favor of calling for a labor strike if the court changes the conditions of the existing labor agreement, reached in 2003, which already contains concessions. United, a unit of UAL Corp. (OTC BB:UALAQ.OB - News), said it would try to terminate the mechanics' current labor contract.

"We're disappointed that membership did not ratify the agreement," UAL spokeswoman Jean Medina said. "Regretfully, we will be seeking to reject the current contract to achieve the savings we need."

UAL could ask for bankruptcy court permission at a hearing scheduled for Monday to end the contract.

The union's rejection of the labor deal, and especially the vote to call for a strike, augured poorly for the battered UAL, one analyst said.

"This harkens back to the demise of Eastern Airlines in the early '90s," said Stuart Klaskin of KKC Aviation Consulting, who called the AMFA's move "suicidal."

"A strike while in bankruptcy is an absolute death blow to a company," Klaskin said. "I just get the impression that the unions at UAL really do not grasp how tenuous the situation is."

The No. 2 U.S. carrier, which has been under Chapter 11 protection since December 2002, has said it needs an additional $725 million in annual labor savings to exit bankruptcy. Labor groups have already approved $2.56 billion in concessions to help the carrier restructure.

The airline industry has been hammered by soaring fuel costs, low revenue and competition from low-cost carriers.

The rejected five-year deal would have cut overall wages and benefits by 18.3 percent annually, AMFA spokesman Dave Quinn said. Such a cut would put the mechanics' pay well below the national average for U.S. workers with comparable skill sets, he added.

"AMFA is now preparing to go before Bankruptcy Judge Eugene Wedoff to present our proposals that we believe will provide significant saving for United without continuing to cut pay and benefits," AMFA National Director O.V. Delle-Femine said in a statement.

The union, which represents more than 7,000 UAL mechanics and related personnel, said its members have no faith in United's ability to return the company to profitability.

The AMFA rejection leaves United with tentative deals with only four of the six unions from whom it needs to win concessions. UAL's pilots and flight attendant unions are set to conclude votes on their agreements on Monday. United and the unions are negotiating pension issues separately.

The Elk Grove Village, Illinois-based carrier also has an agreement on a temporary 11.5 percent wage cut for members of the International Association of Machinists and Aerospace Workers (News - Websites) .

Judge Wedoff said in open court last week that he likely would approve the deals upon union ratification.

If the company fails to reach permanent deals with its unions on concessions, the airline hopes to void their collective bargaining deals. Wedoff scheduled a trial on the matter for May. UAL narrowly avoided a January trial on the labor pacts when it reached last-minute tentative agreements with its flight attendants and mechanics.

 

[F9 Driver]

I don't know what to do about it, but...

After talking to a few United “grunts” with 20+ years on I’ve heard the same theme. They CAN get another job (and with maybe better pay compared to post cut levels), but they CAN’T get another pension. I’ve not spoken to any mechanics – only ground / logistics folks.

I know the PBGC will guarantee most smaller pensions to their full amount (pilots’ big pensions not withstanding), but that is either lost or not believed on this level.

 

[JimBo480]

I believe what the AMFA rejected only amounts to around $100 million in additional savings. This isn't enough to make or break UAL, and with that thought in mind....if the AMFA holds their ground, backed up with the threat of a strike they could win this battle to see who blinks first.

It's refreshing to see a group finally draw a line in the sand, I wish them the best.

Jim

 

[labbats]

The union, which represents more than 7,000 UAL mechanics and related personnel, said its members have no faith in United's ability to return the company to profitability.

 

[N1atEcon]

Wow! It is always the mechanics who say enough is enough. Got to hand it to those UAL guys. It is about time a labor group took a stand with managment.

 

[enigma]

Wow! It is always the mechanics who say enough is enough. .

That would be because there isn't an oversupply of qualified maintenance techs. Those guys could probably go to work at their local BMW/M-B/Caddy/etc dealer and make more than UAL wants to pay. I saw a Ford Motor Company advertisement in B/CA (or some other industry mag) a few years back that was actively recruiting A&P's to change over to the auto industry.

Now, if every little boy had have grown up dreaming of working on big jets, they might have the same problem that those of us who grew up dreaming about flying big jets have. (sorry for the poor grammer, that's just the way my poor brain works at midnight.)

enigma

 

[JohnDoe]

as I posted in the other thread about this subject:


They'll eventually cave just like every other employee group at every other carrier has.

Not that long ago I remember reading that the mechanics (or was it ramp workers?) at Usair would never agree to concessions, and if a contact was imposed by a judge, would result in the failure of the airline as they would walk. Well, they gave in too.

 

[pilotyip]

Central America from WSJ

More and more heavy maintenance is being done in Costa Rica, El Salvador. Jet Blue being one of the biggest users of those services. If you want to complete with LLC's you to do what the LLC's do. Without wages concessions, outsourcing becomes a more viable option for UAL’s survival.

 

[dogg]

I say more power to those guys......The job that United mgmnt. proposes is not one worth having......United mgmnt, even with the concessions that they were hoping to get, will squander that as well.....end result.....I hope these guys don' flinch and if that means putting a bullet in the beast then by all means they should....way to go AMFA

 

[Tim47SIP]

Sometimes Unions can be their own worst enemy.

 

[xanderman]

Sometimes Unions can be their own worst enemy.

Im curious as to what solution you have in mind? Do you really think that when there are better paying jobs in the same field these guys should work for wal-mart wages!? I hope these guys stand by their word. The management teams of the various airlines have got to learn that they can no longer finance their poor performance with the pay and benefits of the labor groups.

Just how much have the unions given in concesions at United? How much more does Tilted want?

Andy

 

[drag]

How refreshing, it's about time someone drew a line in the sand. Maybe the race to the gutter will bottom out. Thank god for mechanics because ALPA is a joke. I still can't believe people where the pin.

 

[pilotyip]

all the management bashing

What would you all do if you were management, to counter the forces of the marketplace?

 

[WhiteCloud]

What would you all do if you were management, to counter the forces of the marketplace?

They have more than enough management personell and I'll bet they could replace the ones they have for less. I imagine they could find someone willing to be the CEO for less too. Cut management personnel.

 

[Tim47SIP]

Im curious as to what solution you have in mind? Do you really think that when there are better paying jobs in the same field these guys should work for wal-mart wages!?

Andy, my post was in respons to pilotyps WSJ article about outsourcing maintenance. I should have been more clearer. We need unions. But sometimes we make ourselves a comodity no one can afford.

 

[merikeyegro]

Pilots continue to give in because - and let's be honest - these skills aren't so portable. If pilots lose their jobs, what do they do? HVAC? Mechanics can go elsewhere if the brown stuff hits the fan. Pilots can't. That being said, if you had elsewhere to go, would you sell your brothers down the river? I certainly wouldn't.

Unions don't exist to accept all mgmt demands. They exist to bargain for the betterment of their members' working environment. If they don't think that cuts will do any good, they reject the terms. Real simple.

Honestly, United is getting shellacked lately. Their business plan sucks - CRJs from ORD-ATL? Ted? COME ON!!! - Southwest is invading Chicago some more, Frontier keeps up the pressure in Denver, and they're badgering their unions. Not a good thing for customer service. So, if they survive through the end of 2006 at better than 50% their original size, I'll be surprised.

Unions are their own worst enemies? Put yourself in that position and tell me what you'd do.

 

[Frac Daddy]

What would you all do if you were management, to counter the forces of the marketplace?

Outsource my own job to a far more intelligent Indian CEO who would do the job for 1/5th of what I get paid.

 

[BeCareful!]

What would you all do if you were management, to counter the forces of the marketplace?

Glad you asked: If I were management, I would create a corporate culture based on trust and accountability. Those are the qualities so lacking at the old-school trunk carriers, and so much more prevalent at the start-ups and SWA.

If your employees trust you, they will bail water with their hands if necessary to save the ship; no trust = mutiny.

Good luck, UAL folks.

 

[Big Duke Six]

Exactly! I was on the van this morning with a UAL crew in Orange County. According to them, Mgmt there just received (collectively) $30 million in bonuses. I didn't get any more info than that but even if it's not true, it definitely shows the bitterness UAL labor has for their mgmt team.


Again, HOORAY for the mechanics! If mgmt is really committed to saving the airline, let THEM work for free for awhile. D@mn this pisses me off every time I hear about "needing more pay cuts" from labor. The arrogance of Mgmt (not just at UAL) has to end. Make it a team effort, and it would work. It's not rocket science!

 

[pilotyip]

If managment doesn't do it who will?

This is a pilot board so saying anything in defense of management is like peeing into the wind, that it is going to come back on you. CEO's are not intentionally running airlines into the ground. They would very much like to succeed. For lack of other reason it would make their resume look great, they would be doing something no other CEO had ever done. Top management includes many besides the CEO, the CEO sets direction as requested by the board. The CEO has little control over the airline, the airline is run by regulation and union contracts. They are at the mercy of the purchasing public, who with Internet access has made the airline ticket a perfectly elastic commodity. There is little they can do inside their structure. Other high paid top management personnel, in Operations, Maintenance. Marketing, Legal, Finance, etc. have unique skills in dealing with large organizations. This makes them marketable when shopping for a job, unlike pilots whose skills are nearly universal. An issue of ATW in the last year had an article about "Airline Management a dying breed", the article basically said no one wants to do it. The good track record CEO’s are going to other industries. With tremendous, payrolls, overhead burdens, and extremely low margins, there is no tried and true path to success. Most have tried to increase market share, but this has lead to low price and ridiculous breakeven load factors in 95% range. AA tried to take seats out of the airplanes, to attract people with more room, did not work. UAL and USAirways have used BK in an attempt to start with a clean slate, it is probably not going to work. ATA tried getting a fleet of new fuel-efficient airplanes, which did not work. What is management supposed to do? Without management you could not operate the airline, The FAA would shut it down without approved Part 119 key management. Would the pilots step up and become management for free in their spare tim? Work 6 days a week 10-12 hours a day. Why is it every time, pilot salaries come up, they are immediately compared to top management. Eliminating management will bring the end quicker for the airplane industry, and their salaries are insignificant to the airlines operating costs. I saw an article in ATW in the past couple years that stated at DAL there were 17 members of top management made more than the top DAL Captain. The combined top 17 salaries equaled less than 1/6 of 1% of the combined pilot salaries. If those 17 in management worked for free all pilots in the company would get a 1/10 of 1% raise. (for a $100K per year pilot that would be $3/wk increase in take home) Boy that raise would really make the pilot group happy. Top management possesses skills that allow them to move from job to job and command high salaries. And every one of these managers wants to see his/her airline prosper. They just can not do it.