Professor: Why should unions cooperate?
By Steve Halvonik
TRIBUNE-REVIEW
Friday, July 30, 2004
There is a simple reason why US Airways' unions aren't cooperating with the company's attempt to negotiate $800 million in wage and benefits reductions, some observers say.
There is no incentive, said Marick Masters, a University of Pittsburgh business professor who is writing an academic paper about the airline's labor relations.
"I think they regard the situation as a fait accompli," Masters said. "The airline holds all of the cards one way or another and they're going to do what they have to do to reduce employee costs. So why should employees cooperate?"
Indeed, a look at the Communications Workers of America's Internet site seems to confirm Masters' theory. Featured about halfway down the page is a color picture of David S. Bronner, US Airways' chairman, accompanied by the quotation, "We will restructure the airline with or without the employees."
Although that quotation is several months' old, its lingering presence on the CWA's Web site illustrates "the legacy of distrust" that still exists between management and labor, in spite of Chief Executive Bruce Lakefield's attempts to improve relations, Marick said.
"That now-famous remark by Dr. Bronner has been interpreted to mean that management has a plan to declare bankruptcy for a second time," the CWA's Web site said. "That means they could change the employment contracts without a vote of the employees."
It was Lakefield who recently accused the unions of seeking bankruptcy reorganization. A bankruptcy filing would permit US Airways to void all of its union contracts and cancel or alter employee pension and medical plans -- something Lakefield's predecessor David Siegel avoided during the airline's bankruptcy reorganization from August 2002 to March 2003.
"Please stop dragging your feet of hoping that Chapter 11 will help you," Lakefield warned union leaders in a recorded message made available to employees. "It most certainly will not."
US Airways, the nation's seventh-largest airline, is seeking $800 million in wage and benefits givebacks from employees as part of a $1.5 billion cost-cutting plan aimed at restoring the company to profitability. Lakefield has warned employees that if new labor agreements are not in place before Sept. 30, the company would likely file bankruptcy and be liquidated -- putting 31,000 jobs in jeopardy, including more than 7,000 in Western Pennsylvania.
A bankruptcy filing could be advantageous to employees if other airlines stepped in to acquire US Airways or its pieces. The company reiterated on Tuesday that it would not sell assets to stay afloat, setting the stage for bankruptcy if new labor agreements are not reached.
In spite of Lakefield's increasingly dire threats, there have been no negotiating breakthroughs. The pilots' union is still actively talking with the company, but CWA negotiations ended after one day on Tuesday.
"Our people just don't have the confidence that the new business plan is going to work," said Chris Fox, president of CWA Local 13302 in Pittsburgh.
Talks with the flight attendants' union also began on Tuesday. But a fourth union -- the International Association of Machinist and Aerospace Workers -- has refused to reopen its contract.
Masters said he believed that IAM negotiators were being pressured by the international board to stand firm and refuse to grant any concessions to US Airways that could be used against the union by another airline.
Masters said that US Airways' "our way or the highway'' stance left union negotiators with little room to maneuver.
"There's nothing for union leadership to benefit from negotiations unless it believes it can reduce the magnitude of wage and benefits cuts," Masters said.
Steve Halvonik can be reached at [email protected] or (412) 320-7993.
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Why Should Unions Cooperate?
- Thread starter unit4clt
- Start date
Today in a column titled “Professor: Why should unions cooperate?â€, Marick Masters, a University of Pittsburgh business professor, told the Pittsburgh Tribune-Review, "I think they regard the situation as a fait accompli. The airline holds all of the cards one way or another and they're going to do what they have to do to reduce employee costs. So why should employees cooperate?"
From this observer’s perch this is true. With reports from inside the company that the airline is preparing a pre-packaged bankruptcy, led by consultants from the investment banking boutique Seabury Group, FTI Consulting, and a new legal team from Arnold and Porter, there is much time or room for any union to obtain a new labor accord.
The pre-packaged bankruptcy plan is being coordinated with key members of the financial community, the ATSB, and may not require debtor-in-possession financing, as long as the Chapter 11 filing occurs before the company begins to burn cash in the not-so-distant future.
As we all know all too well David Bronner seems intent on maintaining control of the airline, not canceling the current security, and possibly issuing a new security to maintain his investment in US Airways to ultimately realize a capital gain, which is likely why he said, "We will restructure the airline with or without the employees.â€
According to the Tribune-Review, "That now-famous remark by Dr. Bronner has been interpreted to mean that management has a plan to declare bankruptcy for a second time," the CWA's Web site said. "That means they could change the employment contracts without a vote of the employees."
The challenge for labor is how can the employees obtain the best possible deal whether it’s to continue working at the airline or moving on?
If US Airways files for bankruptcy, it is widely accepted that any union who enters the “judicial restructuring†without a S.1113/S.1114 letter will likely see the company seek to set aside the collective bargaining agreement and maybe reject key facility leases, such as the Winston-Salem reservation center and the Charlotte maintenance facility.
Earlier this week chief executive officer and president Bruce Lakefield told employees in a recorded message, "Please stop dragging your feet of hoping that Chapter 11 will help you. It most certainly will not."
That’s true because once in bankruptcy everything can change. For example, the company could ask the court to eliminate severance pay, it remove pass privileges that maybe necessary to help obtain a new job, the airline would then be free to reject facility leases, and the opportunity for recall or J4J positions could be eliminated.
Do I like this? No, of course not and what's happening is awful, but it appears things are going to change for US Airways employees regardless of what we do because as Masters said, “The airline holds all of the cards one way or another and they're going to do what they have to do to reduce employee costs.â€
The company believes the new US Airways will offer significant rewards, which include:
Ability to grow again.
Resources to invest in the company.
Plan offensively, not only defensively.
Add international destinations.
Be the first legacy carrier to truly adapt to the new market reality.
Share in the upside with both equity and profit sharing.
Re-establish the leadership, confidence, and pace-setter position on the east.
For those who are angry and would rather see the company “burn to the ground†instead of accepting an America West type of pilot contract, I believe Siegel made a valid point during his webcast. He went so far as to encourage employees to leave the company if new work contracts aren't agreeable, rather than to fight the change. "If it doesn't work, I'd encourage you to support the change, and then go on and find something else," he said. "It's better to have a job when you're trying to find another job."
From this observer’s perch, Siegel’s comments in the paragraph above are valid because after all the emotion and anger -- it’s better to have a job while you are seeking another job than to have just unemployment.
Respectfully,
USA320Pilot
From this observer’s perch this is true. With reports from inside the company that the airline is preparing a pre-packaged bankruptcy, led by consultants from the investment banking boutique Seabury Group, FTI Consulting, and a new legal team from Arnold and Porter, there is much time or room for any union to obtain a new labor accord.
The pre-packaged bankruptcy plan is being coordinated with key members of the financial community, the ATSB, and may not require debtor-in-possession financing, as long as the Chapter 11 filing occurs before the company begins to burn cash in the not-so-distant future.
As we all know all too well David Bronner seems intent on maintaining control of the airline, not canceling the current security, and possibly issuing a new security to maintain his investment in US Airways to ultimately realize a capital gain, which is likely why he said, "We will restructure the airline with or without the employees.â€
According to the Tribune-Review, "That now-famous remark by Dr. Bronner has been interpreted to mean that management has a plan to declare bankruptcy for a second time," the CWA's Web site said. "That means they could change the employment contracts without a vote of the employees."
The challenge for labor is how can the employees obtain the best possible deal whether it’s to continue working at the airline or moving on?
If US Airways files for bankruptcy, it is widely accepted that any union who enters the “judicial restructuring†without a S.1113/S.1114 letter will likely see the company seek to set aside the collective bargaining agreement and maybe reject key facility leases, such as the Winston-Salem reservation center and the Charlotte maintenance facility.
Earlier this week chief executive officer and president Bruce Lakefield told employees in a recorded message, "Please stop dragging your feet of hoping that Chapter 11 will help you. It most certainly will not."
That’s true because once in bankruptcy everything can change. For example, the company could ask the court to eliminate severance pay, it remove pass privileges that maybe necessary to help obtain a new job, the airline would then be free to reject facility leases, and the opportunity for recall or J4J positions could be eliminated.
Do I like this? No, of course not and what's happening is awful, but it appears things are going to change for US Airways employees regardless of what we do because as Masters said, “The airline holds all of the cards one way or another and they're going to do what they have to do to reduce employee costs.â€
The company believes the new US Airways will offer significant rewards, which include:
Ability to grow again.
Resources to invest in the company.
Plan offensively, not only defensively.
Add international destinations.
Be the first legacy carrier to truly adapt to the new market reality.
Share in the upside with both equity and profit sharing.
Re-establish the leadership, confidence, and pace-setter position on the east.
For those who are angry and would rather see the company “burn to the ground†instead of accepting an America West type of pilot contract, I believe Siegel made a valid point during his webcast. He went so far as to encourage employees to leave the company if new work contracts aren't agreeable, rather than to fight the change. "If it doesn't work, I'd encourage you to support the change, and then go on and find something else," he said. "It's better to have a job when you're trying to find another job."
From this observer’s perch, Siegel’s comments in the paragraph above are valid because after all the emotion and anger -- it’s better to have a job while you are seeking another job than to have just unemployment.
Respectfully,
USA320Pilot
:down: Nothing more than a broken record!!!! I remember the many of the previous comments prior to givebacks 1 & 2......now 3 and I am sure more after that. Like it was posted before stop "wasting bandwidth"!!!!!!!!!!! :down:
wings396
Veteran
- Aug 20, 2002
- 3,672
- 1,122
The company believes the new US Airways will offer significant rewards, which include:
Ability to grow again.
Resources to invest in the company.
Plan offensively, not only defensively.
Add international destinations.
Be the first legacy carrier to truly adapt to the new market reality.
Share in the upside with both equity and profit sharing.
Re-establish the leadership, confidence, and pace-setter position on the east.
They had the chance to do most of the above with the last 2 rounds of cuts, and have done next to nothing. All this company knows how to do is cut the employess paychecks and benefits. Why don't they focus on some of the listed items, instead of our wages. Oh yes, and they are the Masters of Threats. Do this, give this much, or we will liquidate just in time for the Holidays. Give for a 3RD time, or we will file CH-11 AGAIN!!! Go ahead already, as most here have lost some much that we could care less what they do already. The CWA & IAM should not even bother meeting with these guys anymore, as it is a complete waste of time. Nobody is going to give a YES vote to their proposals....NEVER!!
Maybe this time the BK Judge will see thru their sham.
Ability to grow again.
Resources to invest in the company.
Plan offensively, not only defensively.
Add international destinations.
Be the first legacy carrier to truly adapt to the new market reality.
Share in the upside with both equity and profit sharing.
Re-establish the leadership, confidence, and pace-setter position on the east.
They had the chance to do most of the above with the last 2 rounds of cuts, and have done next to nothing. All this company knows how to do is cut the employess paychecks and benefits. Why don't they focus on some of the listed items, instead of our wages. Oh yes, and they are the Masters of Threats. Do this, give this much, or we will liquidate just in time for the Holidays. Give for a 3RD time, or we will file CH-11 AGAIN!!! Go ahead already, as most here have lost some much that we could care less what they do already. The CWA & IAM should not even bother meeting with these guys anymore, as it is a complete waste of time. Nobody is going to give a YES vote to their proposals....NEVER!!
Maybe this time the BK Judge will see thru their sham.
Nobody likes what is happening, but the reality is people will be hurt much worse in bankruptcy.
Even if a person gets laid off, it's better to go with severance pay, COBRA, passes, J4J, and recall rights, if desired than nothing.
It's a cold, tough world out there and anger does not help the situation.
As Masters said, "The airline holds all of the cards one way or another and they're going to do what they have to do to reduce employee costs."
Without new deals the majority of the employees will be much worse off, but it's each unions choice to vote no and have it worse or vote yes and either work at US Airways or move on.
Respectfully,
USA320Pilot
Even if a person gets laid off, it's better to go with severance pay, COBRA, passes, J4J, and recall rights, if desired than nothing.
It's a cold, tough world out there and anger does not help the situation.
As Masters said, "The airline holds all of the cards one way or another and they're going to do what they have to do to reduce employee costs."
Without new deals the majority of the employees will be much worse off, but it's each unions choice to vote no and have it worse or vote yes and either work at US Airways or move on.
Respectfully,
USA320Pilot
EyeInTheSky
Veteran
USA320Pilot, I still believe even if all the unions cooperate that they are going to file anyway. U going Chapt. 11 is going to have a domino effect or vice-versa. If we file; Delta is going to file; then American. If Delta files; we're going to file.. the whole industry is a mess.
Eye, I doubt that it will domino. US is so far gone that it's not really going to matter what they do. I'm sure DL and AA recognize this.
EyeInTheSky
Veteran
I've got a family member at Delta. Let's put it this way - it looks and sounds a lot like US Airways two years ago. However, two years ago, JetBlue and Southwest were holding back their expansion plans, oil was cheaper, fares were higher, and there was this high-yield fairytale customer called the businessman. Today, JetBlue and Southwest are aggressively growing their route maps, the fairytale customer has disappeared because they have figured out to use the Internet like the rest of the masses, and oil prices are the highest in history. I dunno, US Airways has a two year head start on the rest of the industry, and it still sucks. Its obvious things like bankruptcy, paycuts, job losses are going to happen MUCH quicker these days.mweiss said:
Two factors are very different. First, DL's costs have long been much lower than US's. Secondly, the only wage that is truly out of whack is the pilots'; it will be much more straightforward to fix this (though I can understand why they'd file 11 if the pilots won't agree to concessions).
EyeInTheSky
Veteran
mweiss, Delta's two biggest competitors US Airways and JetBlue now have lower costs on all labor levels. They have to compete with that; it's a lot more complicated than that at Delta.mweiss said:
thepoohbear
Advanced
If all the unions give the company what they want, then it will be the beginning of something larger than the demise of Usairways. If we set a president of give backs of this magnatude it will not only ripple through the aviation industry , but every business. You would no longer work to get a pay raise, but would work with the fear of a pay and benifit reduction.
One thing this company does'nt understand is that we are a service industry. They want to automate as much as possible. Kiosks are a fine helper, but when the #### hits the fan on a bad wheather a kiosk won't do the trick.The product we used to provide the passengers was superior to the other carriers. We are now nothing more then a copy of as cheap as it can be made in a TWC(third world country)Is'nt it fun whenever you call any company and spend 10 mins going through a menu when it used to take 3mins for the total conversation with a human. Profit at the expense of the worker may be good for the shareholder, but it will someday return to bite them.
:rant:
One thing this company does'nt understand is that we are a service industry. They want to automate as much as possible. Kiosks are a fine helper, but when the #### hits the fan on a bad wheather a kiosk won't do the trick.The product we used to provide the passengers was superior to the other carriers. We are now nothing more then a copy of as cheap as it can be made in a TWC(third world country)Is'nt it fun whenever you call any company and spend 10 mins going through a menu when it used to take 3mins for the total conversation with a human. Profit at the expense of the worker may be good for the shareholder, but it will someday return to bite them.
:rant:
Attachments
US's lower wages do not translate to lower costs. True, they have to compete with B6, but DL seems willing to do more than just beat the lower wage drum.EyeInTheSky said:
