Dave Siegel Repeat Performance

[700UW]

Airline Caterer Proposes Recipe for Disaster - Workers Reject Offer
Thursday June 2, 9:00 am ET

NEW YORK, June 2 /PRNewswire/ -- Union members working for airline caterer Gate Gourmet voted overwhelmingly 3,860 to 240 to reject deep cuts in wages and benefits sought in a final proposal by the company. Gate Gourmet threatened stakeholders that the rejection sets the stage for bankruptcy. While sympathetic to a distressed catering market since September 11, 2001, workers viewed the company's demands as being too severe given the low wages they already earn. Union members will determine whether to strike the company's U.S. kitchens in the event that Gate Gourmet seeks to reject the union's contract in bankruptcy court.

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[luvn737s]

Can anyone explain to me the difference between threatening bankruptcy and extortion? Why is one legal and the other not?

 

[Flying Titan]

Excellent article. This paragraph summed it up well.

The workers rejected over $40 million in annual concessions in the form of double digit wage cuts, frozen pensions and radical cost increases for health care. David Benitez, eleven year cook at Washington Dulles, retorted "this is outrageous; we work hard everyday for very little already. These cuts would have given us no reason to continue working in this tough airport business environment." At San Francisco International, Blanca Tejada added, "I can't afford the proposed cuts. My landlord won't lower my rent because Gate Gourmet or TPG need to cut my wage. Everyone's worried about Gate Gourmet going bankrupt; I'm worried about myself, my coworkers and our families going bankrupt!"

This should be a simple eye-opener for those who supported the recent bankruptcy reform bill that W signed into law. When GG slashes pay for these already low-income employees forcing many of them into personal BK, I'll be real interested to see how many people slam them as irresponsible deadbeats who just want to shirk their obligations.

I know GG has to balance its books and the airlines aren't helping them one bit, but it's not like their employees have expensive wage/benefit packages to begin with.

 

[whatkindoffreshhell]

Couple items to note:

1. TPG's investments in other industries (i.e. Neiman Marcus) have got nothing to do with Gate Gourmet. Each investment should be considered a silo. Ya think the Neiman clerk cares about the GG clerk?

2.The quoted Labor Council spokesman is correct: the GG workers should not bear the burden just so TPG can 'fancy up' the GG balance sheet to command a higher resale price. TPG is not a long term investor.

3. Has GG sought other revenue streams off the airport? Why now, years after 911, did the light bulb go on for the GG mgmt?

 

[Flying Titan]

Fresh -

Agreed on all points, especially #3. Nearly every carrier in the industry has dramatically cut back or eliminated its food offerings. Mgmt at GG doesn't seem to have come up with a way to deal with this issue. Shouldn't they dominate buy-on-board programs? Shouldn't they reach further into landside ops at the airports they serve? I'm sure there are plenty of ideas for growth/expansion that would be a logical extension of the company.