Is Bankrupcty a better option?

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Sep 16, 2002
Bob,Im changing my mind on this whole screwjob
they are selling us,and Im not afraid of the
results.I will get a job somewhere there is
life after UAL.Brace for impact Bob we are
going to be slammed for our choice.Wont they
still have to bargain again even in BK court?
I also believe UAL would prefer to stay out of
court so the real books wont be examined.You
know the ones that show where the esop profits
went to.


According to the IAM leaders we must give massive wage and benefit concessions to “save†United Airlines. Our six-month contract, they say, must be torn up and extended another 2 1/2 years before “snapping back†to our current 2002 wages in 2008.

The new revised contract is a DISASTER for all members of District 141M and District 141. For mechanics, it will mean a loss of $58,323 over the term of the contract. It will not save one job or prevent a Chapter 11 bankruptcy filing. In truth, it will oil the wheels for CEO Tilton to choose the time and day to go into bankruptcy court.

The heart of the rotten pact is clearly outlined in “Exhibit E†of the Recovery Plan. It states that “in the event of a war in Iraq or a sudden unforeseen event that substantially disrupts air travel (e.g., an act of God, act or threat of terrorism, etc.)†the entire agreement is “null and void.†Then United’s Board of Directors can implement its own draconian recovery plan.

Does anyone truly doubt the intentions of President Bush when he says the US faces a permanent “threat of terrorism?†Or that a war with Iraq is not inevitable?

Tilton will use our lower wages and four lost vacation days as the starting point to get more concessions from us. There will be new work rules, outsourcing of jobs, loss of receipt and dispatch and possible closure of maintenance bases.

The promises of “profit sharing,†“stock options†and improved pensions are the sugar toppings on a poison pill to get our “yes†vote. The IAM officials know full well that the company will attempt to tear up even this concessionary pact if we easily roll over and surrender without a fight. Their hope is that the ATSB and an “act of God†will save them and us.

The IAM and other unions’ leaders are running scared. And Tilton knows it. There will be no divine intervention. It is up to us to stand together against concessions.

We are better off saying NO to concessions and taking our chances in the bankruptcy court. The playing field will be more level between us and the other creditors. The judge could even decide to have a trustee oversee UAL’s executives – as occurred at World Com against management’s will – and take other steps to investigate past accounting and other possible corrupt practices. Remember Enron.

Let’s be frank: our billions of givebacks under the ESOP have never been accounted for. The same management team that is responsible for the financial crisis—James Goodwin, Rono Dutta and Andy Studdert et al—continues to get large pensions and even office space while we lose pay and jobs.

Our future is at stake. The revised contract is a gift to those who put UAL in its current shape. We must Stand United and VOTE NO!

By Jennifer Biddle (SFOOV) and Malik Miah (SFOEC) for AMTs Against Concessions. AMTs Against Concessions is an ad hoc group of rank and file mechanics against concessions and layoffs.

A recent E- Mail set to me from a United Employee stated that the Recovery agreement included the following clause;“in the event of a war in Iraq or a sudden unforeseen event that substantially disrupts air travel (e.g., an act of God, act or threat of terrorism, etc.)â€￾ the entire agreement is “null and void.â€￾
So if you agree to this you are agreeing to allow management to do as it pleases should we go to war with Iraq. Basically you are setting your self up for the worst case scenario that they are telling you will happen if you dont vote yes. Chances are pretty good that we will go into Iraq. However if you VOTE NO and take the chance and do go to bankruptcy court (which is not a guarantee) your contract will still be in place. The status quo will remain in place unless the company can prove that they have made a reasonable attempt at negotiations and reasonable demands to make the company solvent, you will no longer have to meet the 7% ROI goal of the ATSB nor would you neccisarily be locked into 6 years of concessions. Just like most business deals you will have a better chance at a better deal the longer you hold out. It not as if United can go and make this offer to 10,000 other mechanics out there. Your it. They have to deal with you, so far they have set all the terms. All you have to do is say No, with the IAM you may have to say No twice but eventually they will have to modify the deal. UAL will not be liquidated. The economic effect would be too big as DB Cooper brought up in his post. The same arguements that AMFA used at NWA can be used in Bankruptcy court. The 6 year term can easily be exposed as onerous given the history of this industry.
Should you vote Yes your chance of ever recovering your earnings and maintaining a decent stardard of living are very slim. Once your concessions are in place then S-1327 will likely be in place by 2004 and the next round of contract talks will be concessionary even if the industry has made a full recovery. Read the bill, we will never see a snapback like we did during the last round of negotiations, in fact we will likely never see another negotiated agreement to vote on. Our wages will be dictated by the government under terms which favor the consumer and the stockholder over the Employee. In order for s-1327 to have its desired effect UAL, one of the largest carriers must have its concessions in place. Once UAL has concessions in place and S-1327 is put in then all the other carriers will be brought down to your rate.In the unlikely event that a raise ; would not put the carrier at a competative disadvantage to other carriers, or detract from the stockholders ROI, or the company demonstrates that they can give all other employees the same raise the most you will likely see is a slight adjustment to compensate for the underrported CPI.
If you really look at the options a NO vote is the best route to go. A Yes vote has the clause where if anything happens, which is very likely the company gets to void the whole deal and put inu under even worse terms. A yes Vote ties you into what will likely be permanent concessions and opens the door to put S1327 in place. A YES vote gives no positive guarantees, only the suggestion that a No vote could be worse but nothing in the agreement guarantees that the same worst case scenario wont happen if you vote yes. Once you vote yes there is no chance that this First time offer ( which is what it is) will get any better. Let them claim what they want about this being the last offer, the question is; have you ever been mislead before?
A No vote is the only way to keep the posibility open that you can get a better deal. Otherwise you will be stuck with these concessions or worse for at least the next six years. Think about it. The more you do, and take everything into consideration, you will see that a NO Vote is the only way to save your career.
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American is next.Its spreading like the aids virus.

By John Schmeltzer
Tribune staff writer
Published November 26, 2002

In what may be a harbinger of bad news for employees of American Airlines, the carrier's chairman and chief executive told Chicago-area workers Monday that wage concessions may be needed.

Donald Carty said it is becoming increasingly difficult to find places to cut expenses at the carrier and that contractual changes may be required to help American recover from the economic downturn and terrorist attacks that have crippled the nation's airline industry.

Since the Sept. 11 attacks, American has announced 7,000 layoffs, cut flights and grounded dozens of planes. But Carty, who has yet to seek wage concessions at American, said the cuts may not be deep enough to help the Ft. Worth-based airline.

We are hopeful that we will get some help from the economy, but we are not planning on it. Our plan for 2003 [assumes] that it stays a very, very tough year, Carty said before some of the airline's 12,000 local workers at O'Hare International Airport.

As a result of the continuing drive to cut costs and the failure of a recovery to materialize, Carty said he could not predict when American's operations will return to the black. Elk Grove Township-based United Airlines, however, has told a federal agency that it will return to profitability in 2004.

United predicted its return to profitability as part of an application for a $2 billion loan from the Air Transportation Stabilization Board. Of that amount, $1.8 billion would be federally guaranteed. Without the loan, United, which has a $375 million loan payment due Monday, has said it will file for bankruptcy.

If United's application is based upon a revenue rebound, then that's something that isn't going to happen, Carty said.

His comments came as documents attacking United's federal loan application circulated on Capitol Hill in Washington.

Rather than returning to profitability in 2004 as United predicts, the analysis shows that United will still be unprofitable in 2009. The documents were purportedly prepared by Northwest Airlines, but the carrier declined to comment.

Unlike many competitors, American so far has sought to focus on restructuring its business in the belief that it could cut costs sufficiently to allow the airline to recover from the downturn.

Thus far, American has identified $2 billion in annual savings, but Carty said it still needs to reach $3 billion to $4 billion in savings.

Carty said any recovery plan has to take into account the impact of low-cost carriers such as Southwest Airlines. Unlike when the airline industry was trying to recover from the Persian Gulf war, he said discount carriers now can be found on almost every route.

We have to be competitive with Southwest and carriers of that ilk long term or we won't survive, Carty said.

While he said he believes the U.S. economy will continue expanding, Carty said it is a mistake to assume airline revenue will recover dramatically at the same time, given competition from low-cost carriers and fewer-than-expected business travelers.

Whatever we are trying to accomplish in the long term, we also have to be cognizant that the company can't bleed cash in the short term forever, he said.

American will also reduce flight capacity by another 3.3 percent early next year, he said.

Most of those reductions will occur on Saturday afternoon and Sunday morning flights, which could result in even more layoffs. Currently, the airline has 122,000 employees.

By the end of March, Carty said American, the world's largest airline, will be operating 18 percent fewer flights than it was at the end of 2001. United has said it will have to cut about 25 percent of its flights.

This is very much tactical. It is very much addressing the short-term crisis, Carty said.
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Machinists may not accept United pay cut
By Greg Griffin
Denver Post Business Writer

Tuesday, November 26, 2002 - United Airlines' mechanics can send their employer into bankruptcy by voting against pay cuts on Wednesday, and that's exactly what many say they'll do.
I'm not voting for it, said Gerry Kelly, an 18-year United mechanic in Denver.

I can't see how accepting a pay cut will save the airline, added mechanic Lloyd Garden. It hasn't worked in the past.

Denver officials with the International Association of Machinists say such sentiment is running strong among United's 13,000 aircraft maintenance workers, including about 1,000 here. United employs 7,500 workers in Denver and flies more than 60 percent of passengers at Denver International Airport.

There's a real good potential it will be voted down, said Steve Adams, a local official with IAM District 141-M. I'm cautiously optimistic it will pass, but if I had to base it on what people are saying right now, it's too close to call.

The mechanics, as well as United's 24,000 baggage handlers and customer-service representatives, vote Wednesday on 6 percent to 7 percent pay cuts and other concessions that would save United $1.5 billion over 5 1/2 years.

The pay cuts are part of a $5.8 billion labor-cost cutting package United is seeking from its workers to help secure a $1.8 billion federal loan guarantee. United officials say without the guarantee, the cash-strapped airline will be forced to file for bankruptcy, perhaps within a week.

Should the mechanics vote no, the pacts with the other unions would be voided and United's chances to avoid bankruptcy, already slim, would disappear. Representatives of other unions say they're concerned and closely watching the IAM vote, as is the company.

The participation of all our employee groups is important to United's recovery plan, said United spokesman Jeff Green. We rely on the leadership of the unions to inform their membership of United's situation, and now they'll make their own judgment.

Unlike United's pilots, who overwhelmingly approved 18 percent pay cuts last week, and the other ground workers, who are expected to approve theirs on Wednesday, the mechanics are divided.

Many still harbor old hostilities that began with the company's employee stock-ownership plan in 1994. They and other workers took pay cuts in return for stock under the threat of job losses. Pay was restored to 1994 levels in 2000, and new raises didn't come until earlier this year.

In April, after more than two years of negotiations and intervention from the White House, the mechanics approved pay raises of 37 percent. The raise put them at the top of the industry, but 41 percent of mechanics voted against it.

Now some mechanics are angry that United's top executives haven't given up pay. Company officials say such cuts are coming.

If United is hurting that bad, why don't they lead by example and cut management jobs and pay? Why should we do it first? Garden said.

Kelly also blames management: United has sat on this for two years and done nothing. They've run it right down to the deadline. I don't think the taxpayers should bail us out.

Another reason to vote the pay cuts down is that most analysts believe United won't win the loan guarantee with or without approval from the IAM. United's top competitors are pushing in Washington for the Air Transportation Stabilization Board to reject United's guarantee, arguing that its cost-cuts are inadequate.

Still, IAM officials hope for a yes vote on Wednesday. A bad contract agreement is better than no contract at all, they say, which is what they'll get in bankruptcy. In Chapter 11 they could be forced to accept bigger pay cuts and layoffs.

If it gets rejected, we will be negotiating the next agreement in bankruptcy, Adams said. Mechanics as a group can get very vocal, very negative. Hopefully they will talk to spouses, look in a mirror and ask themselves if they're really willing to lose everything due to the past heartaches with this company.

Flight attendants are voting through Saturday on a proposed 4 percent cut in pay and cancellation of upcoming pay raises.
Well, I hope the majority of mechanics are smarter than that. While everyone has their own reasons for voting something down and are certainly entitled to those beliefs, voting down this ERP will push UA closer to the brink, and thus the mechanics closer to unemployment, than the ERP will. Anyone who doubts that is crazy. Think about it. US Airways mechanics thought the same thing. Until their union leadership actually explained to them the ramifications of voting it down. Then it was voted on again and passed, albeit narrowly.

If these T/A's are actually voted down, the company will NOT get the ATSB loan guarantee and will be forced to file for bankruptcy. And that presents the possibility of Armaggedon for this company. Is that really what you want?
United won't be liquidated??

United employees no longer own most of the UAL stock. The ESOP shares have been sold on the open market by State Street Bank for several weeks. Mr. Soros has been accumulating UAL stock at record lows and has filed with the SEC accordingly.

United Airlines routes and aircraft are worth much much more than todays market cap.

In short, United Airlines is worth much more in pieces than it is as a whole. Many greedy people are working to their own benefit to make that happen. A no vote working toward bankrupcy would help make these folks happy as can be.

The job market for mechanics at the Oldsmobile dealers will dry up real fast.

God speed.

naiveity is bliss.

To answer your question, no, United would not have to negotiate with unions in bankruptcy. They probably would, but they don't necessarily have to. They could petition the bankruptcy judge to toss out labor contracts due to their inefficiency and high cost. The judge, if he/she agreed, would then terminate labor contracts, after which point the company could institute new pay, work rules and benefits. Of course, in this instance, labor could strike, but that has never happened in this industry under those circumstances. But I think UA Senior Mgmt would still look to negotiate with the unions for the needed changes even in bankruptcy. Petitioning to toss out labor contracts should be the last resort.
I think Steve Adams summed it up pretty well:

If it gets rejected, we will be negotiating the next agreement in bankruptcy, Adams said. Mechanics as a group can get very vocal, very negative. Hopefully they will talk to spouses, look in a mirror and ask themselves if they're really willing to lose everything due to the past heartaches with this company.

You got some balls suggesting you are taking a massive paycut. You think 6% is massive? Wait till the BK judge gets done with you. Typical IAM crap.
Mastermechanic, wts54 et al., if your attitudes and feelings are prevalent among your work group-then a wholesale outsourcing of your jobs (and your attitudes with them) after a BK filing may be one of the few silver linings in the scenario. Unfortunately, it will probably be the more junior, level-headed family guys who lose their jobs while the likes of you remain.
I think the light is coming on. wts54, thank you for taking some time a investigating this fiasco. You are right, you'll catch hell here on this board, and I should be mad at you for even giving me a glimmer of hope that this thing might get shot down. Of course all I have heard from SFO and OAK is a big NO but you know how that goes. Went to the informational meeting and discovered a few more things. Like the reason vacation was included and not all base pay...because the union won't have to reduce dues. It amounts to about 1.75 million in IAM pockets. And do you know what the the union told me...we didn't realize it when we negotiated it!!! It was the same meeting we had 8yrs ago on the EFLOP. Better do it...we'll make's the only way...bullsh*t. We're screwed either way and I will not me hearded into the pen for slaughter again. Do you know how many 15yr plus guys are just saying screw it...and these posters think it's only me and kcabpilot being disgruntled. YOU GUYS JUST DON'T GET IT, IT'S THOUSANDS OF US WHO ARE FED UP WITH THE LIES AND BULLSH*T. I know we'll go chapter 11...I know the judge will hammer us...I know my career at United is over...SO F***NG WHAT...the only satisfaction I will have is knowing that I helped bring ALPA, UAL management, and the IAM with me!!! OH, and I hope everyone had a nice thanksgiving too
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