The Fat Lady Has Sung (IAM Update)

Taipan

Advanced
Aug 20, 2002
132
0
December 6, 2002
To All IAM Represented employees at United Airlines:
Dear Sisters and Brothers,
Ever since the Air Transportation Stabilization Board (ATSB) denied United Airlines’ loan guarantee application on December 4, 2002, the United Airlines Union Coalition has been in near constant communication with the company to explore ways to avoid a bankruptcy.
After numerous discussions with company officials, it has become clear that the ATSB believes that United Airlines would need to make additional changes to its business plan to qualify for a loan guarantee. Unfortunately, there is insufficient time to correct the flawed business plan. Without the necessary corrections to the plan, additional employee involvement in United’s recovery at this time would not be sufficient to obtain ATSB approval. It is therefore with great disappointment that we are now certain a bankruptcy filing appears unavoidable and imminent.
A bankruptcy Q&A is available on both IAM web sites, www.iam141.org and www.iam141m.org, and additional information about how bankruptcy affects employees is being prepared. We will keep the membership updated on events throughout the entire bankruptcy process.
All United Airlines employees need to stand shoulder to shoulder at this most critical time in our company’s history. We must all work to ensure United Airlines avoids liquidation and successfully emerges from bankruptcy a healthier and stronger company.
Sincerely and fraternally,
S.R. (Randy) Canale
President
IAM District 141
Scotty Ford
President
IAM District 141-M
 
I remember the company said approx. 9 billion in labor concessions were needed to get approval, and the wisdom of the union coalition said a little more than 5 billion would do it.
This was with Creighton.
Obviously, Tilton went ahead with a flawed plan to work with the unions.
Truly, the unions knew squat about how deep the cuts had to be or knew the membership would reject them.
Now the 25% cuts will go through in BK to allow Ual to operate in the black and all the unions will reject these figures and contracts will go out the window.

I question more the need for unions in a business where increasing membership and outdated work rules are counter productive to operating a business efficiently.
I would rather see the skill one pocesses be the measure of what one is paid.
Unions have created a virtual cocoon which employees have wraped themselves in and have no idea of what is in the real world. They fool themselves into believing they are worth more than what the market will bare.

The other problem is companies take advantage of workers for their own gains, so we do need some sort of protection.

This will be a never ending story of greed, stupidity, ignorance, and delussion.

There is plenty of blame to go around here folks. So from past experience, use what works for you to wash your hands of the responsibility of what has happened.
 
"The other problem is companies take advantage of workers for their own gains, so we do need some sort of protection."

You have it, its called a contract. You get it from collective bargaining through your Union.
 
The decision of the Air Transportation Stabilization Board (ATSB) to reject United Airlines’ request for $1.8 billion in loan guarantees is the signal from the Bush administration for an unprecedented attack on the jobs, wages and working conditions of United Airlines employees and workers throughout the industry.

The three-member ATSB—with representatives appointed by the White House from the Federal Reserve, the Treasury Department and the Department of Transportation—rejected as inadequate United’s plan to impose $5.2 billion in concessions on its workforce. The board reportedly demanded that $9 billion be wrenched from United employees for the loan guarantees even to be considered.

The rejection of the loan package is expected to force United to file for protection from its creditors under Chapter 11 bankruptcy by the end of the weekend. This would be the eleventh airline bankruptcy since the industry was deregulated in 1978. It follows last August’s Chapter 11 filing by US Airways. That carrier had previously carried out massive cuts in wages, benefits and jobs and had obtained ATSB approval for $900 million in loan guarantees.

A United bankruptcy would be the largest in airline history. United is the second largest air carrier both in the US and globally, with 85,000 employees worldwide and service in more than 120 cities. The company lost close to $4 billion in the past two years and is now losing more than $7 million a day. It faces nearly $1 billion in deferred debt obligations in the next two weeks.

A Chapter 11 filing will allow United to petition bankruptcy judges to rip up existing labor agreements and impose sweeping concessions on its workforce, including changes in wages, scheduling and benefits for current employees, and cuts in health coverage and other benefits for retirees.

Competing airlines such as American, Continental and Delta lobbied the ATSB to deny the loan guarantees. They hope to capitalize on United’s bankruptcy by snatching up market share and taking over some of the airline’s choice routes, particularly its lucrative trans-Pacific flights. “At the end of the day, it’s good for our industry, and it’s good for the American people,†commented Gordon Bethune, chief executive of Continental Airlines.

The rival airlines will utilize the draconian concessions imposed on United workers via the bankruptcy court to push through similar attacks on their own workforces. Commentators are openly declaring that the new round of wage and benefits cuts and speedup measures at United will set the benchmark for the rest of the industry, and for the labor movement as a whole. The stage has been set for an assault on the working class similar to that inaugurated by the destruction in 1981 of the air traffic controllers’ union, PATCO, by the Reagan administration.

The airline industry is also expected to seize on the crisis at United to push for changes in federal law that would strengthen their hand in bargaining with their unionized workers.

It is a sign of the political reaction that permeates the political system and the media that such a brutal assault on tens of thousands of workers is treated as an entirely reasonable business measure. This latest attack by the Bush administration on the working class has evoked virtually no protest from the Democratic Party or the trade union officialdom.

The new assault on United workers follows years of concessions by the unions at the airline. In July 1993, at the bidding of the union leadership, pilots, flight attendants and machinists agreed to wage and benefits concessions—followed by a wage freeze for seven more years—in exchange for an employee stock ownership plan (ESOP) that gave them 53 percent ownership of the company’s common stock.

The United ESOP was hailed by the AFL-CIO bureaucracy as a model of “workers ownership.†This was a cynical fraud. The only ones who gained from the deal, besides the airline’s bankers and top executives, were the union leaders, who gained three seats on the company’s board of directors along with other perks.

For the workers, the net result of supposedly owning their company is the loss of hundreds of thousands of dollars in wages and benefits, the destruction of all shop floor rights, and the constant threat of being laid off. That is the fate of the “lucky†workers who escape the job-cutting axe. As for their stock holdings—these have already plummeted in value and will likely be reduced to zero in bankruptcy court.

The assault on workers at United is the latest in a series of attacks by the Bush administration on airline workers. In February 2001, Bush banned a strike by Northwest Airlines mechanics. Last December he intervened to block a strike by United’s 15,000 mechanics.

The move to force United into bankruptcy exposes the hypocrisy of the Bush administration in pushing for billions of dollars to bail out the airlines in the wake of the September 11 terror attacks. In the fall of 2001 Bush justified the allocation of $15 billion in federal funds as an emergency measure to keep the airlines afloat and save jobs.

Now it is clear that the purpose of the bailout was to position the airlines for an all-out attack on their workers, even if that meant driving an industry giant like United into bankruptcy. The net result of this class war policy will be enormous suffering for airline workers and their families, higher fares, fewer flights and even worse service for the flying public, and a further deterioration of air safety.

Throughout this process, the trade union leadership has worked to extract the cuts and concessions demanded by the airlines. When International Association of Machinists (IAM) members at United voted November 27 to reject $1.5 billion in wage concessions, the IAM leaders immediately called a second vote to ram the wage cut through.

The United debacle is further proof that the existing trade union structures are incapable of defending even the most elemental interests of the working class. They must be bypassed by the rank and file if any effective struggle is to be waged.

At the heart of the betrayal of the union leadership is its alliance with the Democratic Party, the big business party responsible for pushing through deregulation under the Carter administration in 1978.

A defense of airline workers’ jobs and conditions requires first and foremost a political struggle against the industry as a whole and the political establishment that represents corporate management, the banks and the big shareholders. This means working people establishing their own political party based on a program that begins from the needs of the vast majority of the population, not the profit requirements of the airline industry and other multibillion-dollar corporations and financial institutions.

After two decades of deregulation, it is time to draw a balance sheet. The subordination of the air transport system to the untrammeled workings of the capitalist market has produced a disaster. Hundreds of thousands of workers have lost their jobs. Major carriers such as Pan Am, Trans World, Braniff and Eastern have gone out of business. Service has deteriorated. The scramble among competing airlines to cut costs and gain market share has produced a state of anarchy approaching system failure.

While the right-wing ideologues of the Bush administration and the corporate-controlled media endlessly sing the praises of the market, depicting it as an impartial mechanism that rewards the most efficient and customer-friendly enterprises, the state of affairs at United and across the industry proves the opposite. In reality, the market is a mechanism through which the most powerful corporate interests work their will, more often than not punishing with extinction any firm inclined to more enlightened management policies or showing a higher regard for the flying public and the society at large.

The very notion that such a complex global industry can be operated in a rational manner on the basis of the private accumulation of wealth by a handful of rich and super-rich investors is absurd. The only progressive and socially responsible solution is for the airline industry as a whole to be taken out of private hands and organized as a public utility under the democratic control of the working people, so that the industry can be run in a planned manner to meet the need for comfortable, efficient, inexpensive and safe air transport
 
Competitors Poised to Pick United's Bones

Dec 06, 2002 (The Orlando Sentinel - Knight Ridder/Tribune Business News via COMTEX) -- The government's refusal to give United Airlines $1.8 billion in loan guarantees was like a gut punch threatening to send the staggering company to the ground.
Waiting for it to fall are a host of hungry competitors eager to scramble over one another in the dismantling of the once-mighty carrier, which is now expected to seek shelter in bankruptcy court.

"United will be food. It is a turkey waiting to be carved," said Dan Headley, an associate professor at Wichita State University and a longtime industry observer.

Competitors, many of whom actively lobbied the government to reject a United aid package, look upon the No. 2 carrier and see routes and airport gates ready to be swallowed. They sense an opportunity for the industry to slash capacity at a time when there are simply too many seats in the air for the number of passengers willing to fly.

And just as important, they see an opportunity to cut their own labor costs if United is successful at staving off financial ruin -- something likely to happen only if the carrier gains deep concessions from its unions.

"All other major carriers will be able to use that as leverage with their own unions, particularly American and Delta," said Kevin Mitchell, chairman of the Business Travel Coalition.

United is struggling as the industry is in the midst of its worst financial crisis ever, coming off a year with a record $7 billion in losses and looking at the same this year. Many observers say the industry and its largest companies have no choice but to radically alter the way they do business if they want to survive.

United, a relatively minor player in Orlando with less than 6 percent of the market, may offer just that opportunity.

For now, the bigger questions revolve around the company's pathway through bankruptcy, where it would join No. 7 carrier US Airways.

Initially, the carrier could seek Chapter 11 bankruptcy and an opportunity to put itself back in financial order, free of pressure from creditors. The move would involve restructuring its debt, slashing more routes and making itself more efficient.

During this time, competitors would be sniffing around for pieces of the airline that might be sold off under order by the bankruptcy court.

Mo Garfinkle, an airline consultant based in Arlington,Va., sees both Northwest and American gaining market share in the Pacific and in Chicago, respectively, with United expected to trim service in those markets.

But also, the smaller discount sector -- populated by carriers such as Orlando-based AirTran Airways and JetBlue -- stands to gain market share during the next year or so as United cuts back.

"The extent to which they benefit depends on what happens to United in bankruptcy," Garfinkle said. "There's no guarantee they'll come out."

Indeed, it is the doomsday scenario -- with United being liquidated in Chapter 7 bankruptcy -- that presents the biggest opportunity for competitors.

If United were to disappear, that would slash nearly 20 percent of the industry's capacity, eliminating most, if not all, of the industrywide imbalance between supply and demand. For other struggling carriers, that would offer more control over pricing, enabling fares to be pushed higher.

And there would be what amounts to an airline garage sale at United's Chicago home.

"You'll have assets, unbelievable assets, selling for pennies on the dollar," said Mitchell, of the travel coalition.

There is, however, one potential danger for all of those carriers cheering United's downfall.

Once the carrier moves into bankruptcy, it will be relieved of debt pressures, giving it considerable freedom when determining fare pricing. Some industry observers fear a domino effect in which United launches a major fare sale that eventually forces other struggling airlines over the edge and into bankruptcy.

"That would unleash a wave of economic havoc on the industry," said Stuart Klaskin, an aviation consultant for Miami-based Klaskin, Kushner & Co.

But Klaskin and others question whether such a disastrous fare war will occur and whether competitors would even join in. Instead, they could counter by pulling out of United-dominated markets, and waiting for the carrier to fail before returning.

For now, the industry must simply wait for United's next move.

"There are a lot of chess pieces on the board right now," Klaskin said. "It's very difficult to predict this one."


By Tim Barker
 
[blockquote]
----------------
On 12/7/2002 8:12:47 AM wts54 wrote:

...

The assault on workers at United is the latest in a series of attacks by the Bush administration on airline workers. In February 2001, Bush banned a strike by Northwest Airlines mechanics. Last December he intervened to block a strike by United's 15,000 mechanics.

The move to force United into bankruptcy exposes the hypocrisy of the Bush administration in pushing for billions of dollars to bail out the airlines in the wake of the September 11 terror attacks. In the fall of 2001 Bush justified the allocation of $15 billion in federal funds as an emergency measure to keep the airlines afloat and save jobs.

Now it is clear that the purpose of the bailout was to position the airlines for an all-out attack on their workers, even if that meant driving an industry giant like United into bankruptcy. The net result of this class war policy will be enormous suffering for airline workers and their families, higher fares, fewer flights and even worse service for the flying public, and a further deterioration of air safety.

Throughout this process, the trade union leadership has worked to extract the cuts and concessions demanded by the airlines. When International Association of Machinists (IAM) members at United voted November 27 to reject $1.5 billion in wage concessions, the IAM leaders immediately called a second vote to ram the wage cut through.

The United debacle is further proof that the existing trade union structures are incapable of defending even the most elemental interests of the working class. They must be bypassed by the rank and file if any effective struggle is to be waged.

At the heart of the betrayal of the union leadership is its alliance with the Democratic Party, the big business party responsible for pushing through deregulation under the Carter administration in 1978.

A defense of airline workers' jobs and conditions requires first and foremost a political struggle against the industry as a whole and the political establishment that represents corporate management, the banks and the big shareholders. This means working people establishing their own political party based on a program that begins from the needs of the vast majority of the population, not the profit requirements of the airline industry and other multibillion-dollar corporations and financial institutions.

After two decades of deregulation, it is time to draw a balance sheet. The subordination of the air transport system to the untrammeled workings of the capitalist market has produced a disaster. Hundreds of thousands of workers have lost their jobs. Major carriers such as Pan Am, Trans World, Braniff and Eastern have gone out of business. Service has deteriorated. The scramble among competing airlines to cut costs and gain market share has produced a state of anarchy approaching system failure.

While the right-wing ideologues of the Bush administration and the corporate-controlled media endlessly sing the praises of the market, depicting it as an impartial mechanism that rewards the most efficient and customer-friendly enterprises, the state of affairs at United and across the industry proves the opposite. In reality, the market is a mechanism through which the most powerful corporate interests work their will, more often than not punishing with extinction any firm inclined to more enlightened management policies or showing a higher regard for the flying public and the society at large.

The very notion that such a complex global industry can be operated in a rational manner on the basis of the private accumulation of wealth by a handful of rich and super-rich investors is absurd. The only progressive and socially responsible solution is for the airline industry as a whole to be taken out of private hands and organized as a public utility under the democratic control of the working people, so that the industry can be run in a planned manner to meet the need for comfortable, efficient, inexpensive and safe air transport

----------------
[/blockquote]

Where did you get this from, the Communist Party? This is a manifesto, politically driven trash, not a plan. This is the most myopic piece of rabble-rousing drivel I've come across in some time.

Since when is a business being allowed to fail under its own merits (or lack thereof) an attack on the working class? If the business doesn't work, don't blame Bush. He's not going around cutting your fares and yields, making mechanics push airplanes, paying pilots 60 hrs a month to sit at home, or pissing off your best customers. Your costs are too high and your revenues are too low. You have your own customer hate site. What part of that is the government's fault?

More to the point, what's the use of another $1.8 billion in loan money if the above problems would not be fixed by it? Every dime of it would service current obligations without addressing the problems of the business itself. IOW, it would buy time, solve nothing, and leave the taxpayer on the hook for it. Sorry, guys, but I as a taxpayer don't want to pay you to stay out of bankruptcy if you can't stand on your own. United is not entitled to stay in business.

Best of luck, though. I hope United makes it as a going concern, if for no other reason that most people there keep their jobs.
 
[P]
[BLOCKQUOTE][BR]----------------[BR]On 12/7/2002 8:12:47 AM wts54 wrote:
[P]The decision of the Air Transportation Stabilization Board (ATSB) to reject United Airlines’ request for $1.8 billion in loan guarantees is the signal from the Bush administration for an unprecedented attack on the jobs, wages and working conditions of United Airlines employees and workers throughout the industry.[BR][BR]SNIPPAGE[/P]----------------[/BLOCKQUOTE]
[P]This is the biggest piece of drivel that I have read in a LONG, LONG time.[BR][BR]All hail to the Soviet, eh wts54???[BR][BR][A name=Internationale.wav href="http://ftp.std.com/obi/Anthems/Internationale/Internationale.wav"]Internationale.wav[/A] [/P]
 
Associated Press
United's Crisis Began Long Before 9/11
Saturday December 7, 3:17 pm ET
By Dave Carpenter, AP Business Writer
United Airlines' Path to Bankruptcy Linked to Costs, Errors, Downturn


CHICAGO (AP) -- Bankruptcy first appeared on the radar screen as a possibility for United Airlines following the Sept. 11 terrorist attacks. But the carrier's descent toward financial emergency began much earlier.
Burdened by the industry's highest costs, management missteps and an employee-ownership plan gone awry, United buckled worse than any other carrier when aviation's biggest-ever slump hit.

Those problems -- capped by the rejection of a government loan guarantee last week -- pushed the nation's No. 2 airline toward an expected Chapter 11 filing in U.S. Bankrupcty Court as soon as Sunday. United has said it would keep flying during what would be the largest bankruptcy in the industry's history.

How could such a premier global airline -- until not long ago both highly profitable and the world's biggest -- go bankrupt? The answer involves bloated costs, bad moves and bad timing, compounded by the economic downturn.

"For about the last three years, the airline's been out of control," said Darryl Jenkins, head of George Washington University's Aviation Institute. "The spiraling down of United since then was internally caused."

United's first huge problems erupted in the summer of 2000, when thousands of flight cancellations and delays entrapped passengers in its emerging trouble.

The operational chaos followed a fateful decision that May, when management agreed to the costliest merger in airline history at a time its pilots were in stalled negotiations for their first raise in six years.

Then-chairman and CEO James Goodwin was willing to pay $4.3 billion cash and take on $7.3 billion in debt to acquire US Airways, now in bankruptcy court itself. The deal collapsed 14 months later amid antitrust concerns, but the ultimate cost may have been far steeper: United's stability and perhaps its survival.

A pilots' slowdown snarled daily schedules all that summer. By the time United gave in and granted pay hikes of 22 percent to 29 percent to end the turmoil, passengers had fled in droves.

While other airlines were adjusting their strategies to deal with a weakened economy and stiff competition from discount carriers and Internet sites, United's energies were diverted to its ill-advised merger bid until mid-2001.

In the meantime, United suffered more than other carriers from the slide in business travel it depends on so heavily.

Since the second quarter of 2000, when it last turned a profit, the airline has lost a staggering $4 billion.

"They just basically never recovered" from the summer of 2000, Jenkins said. "In order to get traffic back, they had to lower their fares. And while pursuing the merger, they forgot how to operate the airline."

Labor relations soured as workers watched the free fall in shares they acquired in 1994, under a reluctantly adopted employee stock ownership plan, in exchange for wage and benefit cuts. Employees became more alienated during protracted contract negotiations, and a legal battle with mechanics stopped just short of a strike.

Then came one more costly flop: Its plan to launch a charter jet service called Avolar.

"United guessed wrong in many critical areas," said Joseph Schwieterman, an aviation industry expert and economics professor at DePaul University in Chicago. "It bought large planes, it tried to go head to head against discount airlines. At the same time, its labor relations were only growing worse."

The setbacks took a huge toll. The company already was on a pace to lose $1 billion in 2001 when four airplanes, two of them United's, were hijacked by terrorists and crashed on Sept. 11.

An unprecedented falloff in air travel followed.

After cutting 20,000 jobs and hundreds of daily flights, Goodwin was ousted for telling employees the carrier would "perish" in 2002 unless it stopped hemorrhaging money -- a warning that devastated United's stock.

But it took 10 months to find a permanent replacement in oil executive Glenn Tilton. During that time, United underestimated how slow the recovery would be and moved sluggishly to craft a restructuring plan that the Air Transportation Stabilization Board said Wednesday was not financially sound.

"You can't expect a company that size to operate in its worst year ever without a permanent leader," said Denver-based airline consultant Michael Boyd. "They were rudderless for a year, and then they went out and hired a guy with no airline experience."

Goodwin's "perish" warning haunts United to this day.

With the airline facing a mountain of overdue debt, arguments about who's to blame have turned to talk about the drastic cuts likely in bankruptcy -- and whether other airlines will follow if the skies don't fill again.

"Without Sept. 11 and the recession, United wouldn't be where they are," said Samuel Peltzman, a University of Chicago economist who specializes in airlines and regulatory issues. "They might be part of the way there, but clearly the demand for air travel played a big role."

http://www.united.com
 
Comrade WTS, where to begin?

"The decision of the Air Transportation Stabilization Board (ATSB) to reject United Airlines's request for $1.8 billion in loan guarantees is the signal from the Bush administration for an unprecedented attack on the jobs, wages and working conditions of United Airlines employees and workers throughout the industry."

How about the decision being more about the fiscal ruin UAL owners (you) brought to your company?

"The stage has been set for an assault on the working class similar to that inaugurated by the destruction in 1981 of the air traffic controller's union, PATCO, by the Reagan administration."

Reagan made those jokers go on an illegal strike, somehow, I suppose.

"..such a brutal assault on tens of thousands of workers is treated as an entirely reasonable business measure. This latest attack by the Bush administration on the working class has evoked virtually no protest from the Democratic Party or the trade union officialdom."

No protest? Hastert has beeen squealing like that guy in Deliverance. Oh yeah, he's a Republican.

"The United ESOP was hailed by the AFL-CIO bureaucracy..."

I thought you'd love the AFL-CIO.

"The assault on workers at United is the latest in a series of attacks by the Bush administration on airline workers. In February 2001, Bush banned a strike by Northwest Airlines mechanics. Last December he intervened to block a strike by United's 15,000 mechanics."

Didn't Clinton intervene against APA?

"The move to force United into bankruptcy exposes the hypocrisy of the Bush administration..."

The "No" vote by the IAM exposes the hypocrisy of UAL mechs who profess to having the brains God gave gerbils.

"Now it is clear that the purpose of the bailout was to position the airlines for an all-out attack on their workers, even if that meant driving an industry giant like United into bankruptcy. The net result of this class war policy will be enormous suffering for airline workers and their families, higher fares, fewer flights and even worse service for the flying public, and a further deterioration of air safety."

Workers at well-run airlines aren't suffering.

"At the heart of the betrayal of the union leadership is its alliance with the Democratic Party, the big business party responsible for pushing through deregulation under the Carter administration in 1978."

Wait, now it's the Dems who are the big biz party! How hard were you laughing when you typed that one?

"The subordination of the air transport system to the untrammeled workings of the capitalist market has produced a disaster."

Who wrote this? Kim Jong Il?

"While the right-wing ideologues of the Bush administration and the corporate-controlled media..."

No, no. It's right-wing radio talk show hosts, but Jewish/liberal-controlled media. Or so I've heard.

"The only progressive and socially responsible solution is for the airline industry as a whole to be taken out of private hands and organized as a public utility under the democratic control of the working people"

Communal airlines will work. People's Express tried it. Mechanic one day, air hostie the next. I think the Communal Airways should seat-swap, too. You know, like FA's fly while pilots serve. That kind of thing.

WTS, your post was about the funniest satirical piece I've read in along time.
 
How are the mechs at Aeroflot doing? Still drinking hydraulic fluid as a cheap high?