What's the use of having a contract?

[blzr]

If this happens at US Air, will it also happen at Delta, United, ETC.?


US Air may seek court's help to rein in unions

REUTERS

[ MONDAY, SEPTEMBER 20, 2004 10:05:49 PM ]NEW YORK: Struggling air carrier US Airways may petition a bankruptcy court to impose temporary concessions on its unionised workers in the event they fail to agree quickly enough to cost savings, the Wall Street Journal reported Sunday. US Airways, the seventh-largest US airline, last week entered bankruptcy protection for the second time in as many years.

It is seeking to persuade its unions to accept deep cuts as part of a broad restructuring plan. According to the Journal, US Air will probably ask the court to impose emergency cuts on worker pay and benefits so that it can stay afloat and meet the requirements of a novel financing arrangement that is providing the carrier with cash to cover its day-to-day expenses.

Though US Airways is next scheduled to go to bankruptcy court on October 7, it is seen making the request for relief ahead of that date, according to the Journal. A call to the company was not immediately returned late on Sunday.

 

[Lear70]

If this happens at US Air, will it also happen at Delta, United, ETC.?

You'd better believe it. UAIR-Q will pretty much destroy its contracts and set hourly rates wherever the judge will let them (assuming they exit which seems 50/50). UAL is next, DAL, and now NWA is starting to turn green around the gills. CAL and AA will HAVE to do the same thing or they won't be able to compete.

It never ceases to amaze me, a company will come to its employees and say "Please work with us to get more competitive wages," the employees agree, then the company goes Chapter 11 anyway and uses the NEW lower wages as a STARTING point for bankruptcy court-mandated pay scales.

No wonder ALPA is pushing for an increase in the retirement age - they're about to lose a good chunk of their pay and all their retirement for their most lucrative "customers"...

Looks like Comair might end up being "Industry Average" for more than just the "Regional" industry...

 

[Publishers]

look

Let's look at this from another perspective.

When they file Chapter 11, they are saying they failed. Your company failed but it did not close the doors. At a small company with poor cash flow, it shuts down but these big companies can survive but nevertheless, as a employee you need to know your company failed.

That said, your contract with that old company means little. Creditors, lendors, suppliers, and others are getting hurt and losing what is owed. You however may still be employed although at a new deal. If they had failed completely, you are out of a job altogether. You fighure out which is better for you.

 

[TWA Dude]

Didn't this all start back in the '80s with Lorenzo and CAL? He took the airline into Chap 11 to bust the unions. New laws make it trickier now yet in 2001 AA used the threat to force the TWA MEC to give up successorship clauses (i.e., right to arbitration). Let's face it: Management has more weapons to fight with than do the unions and when the going gets rough the unions pay.

 

[Publishers]

company

You don't take a company into Bankruptcy to break a union even if you are Lorenzo. There is a bit more to it than that.

You can think that management has more tools but they are fighting more battles than their unions. Companies have many masters to serve and your employees are one but just one. You really do not need employees to lose your tail, you can do that all by yourself.

There is too much of this introspective management crushing and believing that business is this one big battle between unions and management. Not so. There is an environment that this takes place in that has tremendous impact.

 

[yaks]

Publishers,


In the past it was very easy to take a company into ch. 11 to break union contracts. That is what Frankie smooth-talk did and that is why it is much harder to do today. Incidentally, when he took them into ch.11 they had something like 200 mil. in cash on hand which would be like Delta trying to do it 2 yrs ago or so when they had 4 Bil cash on hand. Tell me it wasn't about breaking the union.

 

[bafanguy]

You have to look back even farther...1978...deregulation. That's when labor lost control of their fate. A lot of it had to do with getting rid of unions, particularly ALPA. It's taken a few years, but it's happening.


Contracts are now not worth the paper they're written on.

 

[Publishers]

Bankruptcy

I really don't know if it is harder or easier to take a company into bankrutcy today. Cash on hand is certainly not hte issue-- it is more liabilities exceeding assets.

Labor did not lose control of their fate due to deregulation. What did stop was the gravy train that airlines had been on where the incentive to keep costs under control were not there as there was not the competition for business.

Labor has lost generally over the last 20 years or so for a good many reasons, especially in businesses they cannot handle across the board. Automobile has remained strong but they have been killed by overseas competition that would not have ever gotten that strong if they did not have a strangle hold on the industry in America.

Airlines are giant moving businesses that have always had a terrible time adjusting to the movements in the environment in which they operate. Decisions take so long to work out that it means that a new guy with a new approach can kill the big guy.

 

[bafanguy]

Publishers,


I stand by my statement that airline labor began losing control of their fate with the advent of deregulation. Allow me to quote from an Atlanta Journal & Constitution article ( Oct. 19, 1986 ) by Prof. John Robson, Dean of the Emory University School of Business. Prof. Robson was involved with the airline deregulation effort.

He stated, "It is also a fact that since deregulation...pilots have lost considerable ground in terms of pay levels and work rules...".

In his personal reply letter to me, he said, "...pilots have suffered economically because of deregulation...".

As deregulation played out over the years, each individual pilot group was so busy fighting brushfires on its own property that national cohesiveness to protect the profession on the broader level became impossible.

We can argue all day about the efficacy, need for, or economic THEORY of deregulation. The fact is: with the advent of deregulation, airline labor began losing control of their fate. We see it continuing today....period.

 

[Publishers]

I have a hard time going with that one because initially it did not accomplish that at all. If you will recall, defregulation was followed by a tremendous growth in the industry due to the fact that everyone was trying to put routes on everywhere. Airlines like Braniff could not add aircraft, pilots, and routes fast enough and that led to ALPA actually getting bigger and stronger.

Ultimately though, deregulation allowed competition to flourish and new carriers to get started and a foothold that was all but impossible under regulation. Before, when a new contract came in, the added cost was just added to the consumers ticket, what choice did they have? After, a new carrier with much lower cost personnel could come in and have your lunch.

While you can make an argument that deregulation and bankruptcy law hurt pilot pay and unions, the fact is that it is an after the fact side issue and not germaine to either one.

From one perspective the professor may be right but I think that in terms of pure numbers the opportunity went way up/. Furthermore, the public would have forced this eventually anyway. There was a limit on where fares could go and when reached, the fat days of prior regulated employment were going to be over. You could only get so far with a closed end deal. With the automakers, it was foreign competition, with airlines, deregulation/

 

[bafanguy]

Wow...