D. Siegel Defines Labor Friendly


Dec 7, 2002
[BR][A href=http://www.iacwashington.org/siegel091702.pdf]http://www.iacwashington.org/siegel091702.pdf[/A][BR][BR]Step #3: Define the Terms for “Labor-Friendly†Recovery.[BR][BR]I’ve repeatedly shared with my US Airways colleagues a lesson taught to me by Gordon Bethune: [STRONG]Don’t fight with your spouse, and don’t fight with your employees. From Day One, I have expressed my desire to implement a labor-friendly restructuring, where labor was a partner with management, and we work constructively to achieve mutually beneficial results.[/STRONG][BR][BR]If I polled this audience, I imagine I would get multiple – probably even contradictory definitions of “labor friendly.†I know there were multiple opinions within the US Airways family when we started this process. Therefore, it was vital that just as we needed to lay out a vision of where we were trying to take the company, it was also critical that we defined just what “labor friendly†meant within the context of trying to save a company operating in a rather desperate environment. [BR][BR]“Labor friendly†does not mean labor sets the agenda, or management gives employees everything they want in order to achieve labor peace. Frankly, labor peace achieved through acquiescence is a cop-out. Responsible management must develop the plan, articulate the vision, communicate the goals, debate the merits, and hopefully convince the stakeholders – including employees. It may not be easy or fun. But if successful, it will be meaningful.[BR][BR]But “labor friendly†does mean a number of other things that are important to labor – and thus, to the overall success of the company. So we defined a labor friendly restructuring as one that involved: Insuring the company’s immediate survival[BR][BR]•[STRONG] Providing for long-term success[/STRONG][BR][BR]•[STRONG] Saving as many jobs as possible[/STRONG][BR][BR]• [STRONG]Preserving as much pension and benefit compensation as possible, in combination with com-petitive wages [/STRONG][BR][BR]To this last point, we took this point of view: Wage cuts are painful, and giving up benefits is hard. But given the economy and the state of the industry, most employees were still going to be better off keeping their current US Airways job with a pay cut, than the alternative. [BR][BR]So we never started any conversation with the goal of “How are we going to save all the existing jobs at US Airways?â€[BR][BR]That wasn’t the choice. The choice was between 35,000 jobs and no jobs. And we said emphatically that we would rather choose 35,000.[STRONG] To their credit, union leaders also made that difficult but smart choice. So while our recovery is going to involve furloughs and job reductions, it is clearly designed to provide for the long-term success of the company. In my book, that is “labor friendly.â€[/STRONG][BR][BR][STRONG]Being labor friendly also means trying to insure employees’ retirement income[/STRONG]. [BR][BR][STRONG]Think about this. If we had not found a solution to reduce our labor costs prior to filing for Chapter 11 protection, there was a real possibility that the Pension Benefit Guaranty Corporation might have seized and terminated our pension plans. [BR][/STRONG]For a pilot age 50, for example, with spouse and dependents, he or she could have seen their benefit drop from about $160,000 per year to $23,000 per year. Furthermore, post restructuring, our employees will own approximately 30 percent of the new company, and more than half of US Airways’ cash flow over the next 7 years will go toward funding employee pensions. [BR][BR][STRONG]Solving that problem with our unions is what I call labor friendly.[/STRONG][BR]