Testy Times at United

[Kip Powick]

United Airlines faces two critical court dates this week, including one where the bankrupt carrier will ask a bankruptcy judge for permission to scrap the airline's pension plans. If the judge approves the plan, it would mark the largest pension default in U.S. history, according to The Associated Press.

That's set up what could prove to be a huge mess for United. Workers from three of the airline's largest unions have said they'll strike if the pensions are thrown out.

United has responded by saying it would fire any flight attendant who takes part in a threatened strike, the Chicago Tribune reports. A union representative called United's threat "laughable."

Lost in all the maneuvering is what the Chicago Tribune calls a "novel legal strategy" by United. The airline, the paper writes, is hoping to use one law "to convince the court to throw out the contracts of more than 41,000 flight attendants, mechanics and machinists," while using another law to "compel workers to accept new pay and benefit terms the company would dictate." It should be an interesting week at United … stay tuned.

[ccairspace]

United Airlines faces two critical court dates this week, including one where the bankrupt carrier will ask a bankruptcy judge for permission to scrap the airline's pension plans. If the judge approves the plan, it would mark the largest pension default in U.S. history, according to The Associated Press.

I'm sitting here trying to imagine what it would feel like to work for a company for 20+ years, watch my take home pay decline for the last 5-10 years and at the end of it be told I had no pension...

[deicer]

When it gets to that point, I believe the employees have the right idea. Walk out, and if the company shuts down, it didn't deserve to be in business in the first place.

United has no right to do what they are doing in my opinion.

Surely there has to be a better way to negotiate than holding a gun to one's head.

Iceman

[Mitch Cronin]

I have no link, and I can't even recall where I read it, but I did read that if United goes ahead with their plans, not only will they be faced with a strike, but all of the other ailines maintenance employees represented by AMFA will strike with them.

...now I'll have to find that link won't I?... ok... I'm off hunting...

[Mitch Cronin]

Here we go: http://news.airwise.com/story/view/1115333348.html

"Thursday's AMFA announcement beefs up that threat, saying mechanics at Alaska Airlines, ATA, Horizon, Independence Air, Mesaba, Northwest and Southwest would strike in sympathy with United's mechanics if a bankruptcy judge approves the pension shift."

[Mitch Cronin]

You know... At least a part of me is feeling that I wish we were all so together that we'd all support them.

It's hard to see that as anything other than theft made legal somehow... and it truly rots!

[mrlupin]

YIKES!!!!

I didn't think we in maintenance had that kind of solidarity!!! Good for the troops for sticking together like that. If United's pension gets tossed all the other carriers will be trying to follow suit to lower their costs in the same manner.

Some unity might make a difference here....

Eric

[deicer]

This is almost shaping up to be like the general strikes earlier this century. It is Labor against the system.

With the political wind blowing the way it is in the U.S. at this conjecture, it will be very interesting to see what comes of it.

This will be a test case for what happens to the rest of the airline industry, and for what is about to happen in the automotive industry. The implications are huge.

'Tho one knows what side the courts will be on after Dubya's speech on TV last week informing people that their retirement plans are pooched.

Will the judicial system be up to the challenge of ruining that many lives?

Iceman

[deicer]

You know... At least a part of me is feeling that I wish we were all so together that we'd all support them.

It's hard to see that as anything other than theft made legal somehow... and it truly rots!

Mitch...

You must remember......

Uncle Milty tried to do the same thing here, only in Canada we still have SOME laws that protect the worker

Nice to be Canadian, isn't it?

Iceman

[AME]

Airline workers struggle to adapt after sky falls in

By Greg Burns

Tribune senior correspondent

Published May 10, 2005

Veteran airline pilot Craig Eldridge could have kept flying, but in his heart he believed it was getting him nowhere.

Amid all the cutbacks and turmoil at United Airlines, which filed for bankruptcy protection in 2002, Eldridge had enough seniority to keep his job as a Boeing 777 captain. Instead, he taxied his last wide-body to the gate two years ago, then launched a new career as a salesman for a commercial printing company in suburban Batavia.

"It's not as cool to tell people I sell printing, but I think I'm happier," the 45-year-old Eldridge said. "For me, the romance of it was gone. If I was going to secure a future for my family, this was my chance."

For a time, United Airlines workers had it made, their compensation protected by some of the strongest unions around.

On Tuesday, United is to seek court approval to turn its pensions over to the government, and on Wednesday it has a trial scheduled to void certain labor contracts. United's headcount has fallen almost 40,000 from its peak, and the nation's airline industry overall has eliminated more than 120,000 jobs since just before the Sept. 11 attacks.

Four years in crisis has left thousands of lifelong airline employees bruised and disillusioned, their skills unappreciated, and their safety nets fraying. Money-losing carriers have targeted their jobs, benefits and perks, while their unions try to salvage what they can.

Many of the castoffs struggle to find a new place in the world.

"There's obviously a sense of bitterness and a real sense of betrayal," said Catherine Williams, vice president of financial literacy at credit counselor Money Management International, who has helped advise laid-off United workers. "It wasn't like you could go on to another airline."

Some got teaching certificates or real estate licenses, while some went into other transportation trades, she said. Some moved to rural areas, seeking a lower cost of living. Some went into career limbo.

When United shut down its Indianapolis maintenance center two years ago, machinist Paul Schnulle fell back on a lawn service he had run as a side job.

"You wouldn't believe how many people called me to ask if I had any work [for them]," he said.

In the aftermath of the shutdown, many of his friends left town or scratched together a living in heating, plumbing and other trades, he said. "I've heard a half-dozen stories of suicides. It breaks your heart."

The lawn business kept him going long enough for Schnulle to re-enter aviation, helping to launch a machine shop that mostly employs ex-United workers at the Indy site. With about 40 employees, Indianapolis Diversified Machining picks up the slack in an industry eagerly outsourcing maintenance work to low-cost providers.

While customer-service and mechanical skills transfer readily to jobs outside United, some airline work experience counts for less than anticipated in the open market, said aviation consultant Michael Boyd.

"It's not easy work, but loading an airplane is not a $50,000-a-year job. And cleaning an airplane is not that different from cleaning a building at night," Boyd said.

Furloughed pilots from mainline carriers have had trouble replacing incomes that typically ran well into six figures, Boyd said. At his small Colorado-based aviation consultancy, he said, "We get resumes all the time from pilots saying they want to work with us: `All I'm looking for is 100K a year.' A lot of people out there have nowhere to go."

Transitions can be particularly tough for folks who lived and breathed the business, Eldridge said. "A pilot is what I did, it wasn't who I was. But for the majority, it's in their blood," he said. "It's all they want to do."

Of course, plenty of refugees from mainline carriers say they feel grateful to be out of such a volatile industry.

For ex-United senior executive Andy Studdert, who gave the order to ground the fleet on Sept. 11, the offer to become chief executive of a troubled equipment-rental company looked sweet in comparison.

As he put it, "It's nice to be in a tough business rather than an impossible one."

Studdert's NES Rentals is in the midst of what he describes as a "fantastic" turnaround.

"It might not be as glamorous as a 777 banking into the sunset, but you know what? It's a good business," he said.

Still, his time in United's executive suite gave him a taste of aviation's seductive power.

"If anybody tells you they don't have a small part of them that misses it, they're lying to you," Studdert said.

The benefits alone were alluring.

"You like being able to walk on to an airplane and sit down in an empty seat for a very low cost," said Craig Busey, a one-time litigator at United who now serves as general counsel for Chicago's American Dietetic Association.

And though its labor relations were as volatile as its financial performance, United veterans recall an esprit de corps, too, especially during the heyday of the employee stock ownership plan in the mid-1990s.

Frank Kent, who went from North American sales at United to running Goodwill Industries of Silicon Valley, said he brought lessons from the plan to bear on the charity, which was struggling when he took over.

Besides borrowing tips from the airline's code of ethics and incentive bonus plan, Kent also adapted its "climate survey" to harness the ideas and concerns of his workforce.

"We have very similar problems," he said. "Employees are employees."

Some former United workers, including Eldridge, confess to missing the excitement.

At United, he had taken on management duties that involved reorganizing its slimmed-down flight operations, so when his family invited him to join its BFC integrated printing company, it wasn't as big a jump as it might seem.

Still, he said, "There are no life-threatening printing emergencies."

To capture that feeling again, he joined the volunteer fire company in Glen Ellyn.

Standing 100 feet up on a ladder is not quite the same as cruising at 30,000 feet, he allows. But it still gives him a sense of belonging, he said, to "a specialized group of people who do something most people don't."

----------

gburns@tribune.com

[handyman]

I'm not saying the same happened in Canada but… in the USA, workers and unions must both take some of the responsibility of what has happened to the prosperity of the airlines.

Bankruptcy and the loss of pensions were both partly the result of greedy workers wanting ridiculously more money during the good years which left no money in the coffers during the rough years.

[AME]

United faces loss of leased planes

Court defeat spurs airline to seek deal

By Mark Skertic, Tribune staff reporter. The Associated Press contributed to this report

Published May 10, 2005

United Airlines said Monday that it is negotiating a deal that would allow it to keep eight planes that a federal appeals court has ruled could be taken back by the aircraft's leaseholders.

A three-judge panel of the 7th U.S. Circuit Court of Appeals in Chicago called United's argument for keeping the planes "thin to the point of invisibility" and said the leaseholders could move immediately to take back the aircraft, on which United has stopped making payments.

http://www.chicagotribune.com/business/chi...ack=2&cset=true

[Say Altitude]

YIKES!!!!

I didn't think we in maintenance had that kind of solidarity!!! Good for the troops for sticking together like that. If United's pension gets tossed all the other carriers will be trying to follow suit to lower their costs in the same manner.

Some unity might make a difference here....

Eric   

Give me a break!! What about the organizations that have bargained in good faith and have treated their employees well? The decent company should pay for the mistakes of another because of some altruistic vision of "solidarity"?

Reality please people! If that happens, what motivation does the management then have come the next round of negots? Do this and you are your own worst enemy.

"What's the point of making a fair offer? They walked out with United anyway...."

[Airband]

Getting crowded in the lifeboat..

Delta Warns of Substantial Losses for Rest of Year, May Need to File for Bankruptcy

Tuesday May 10, 10:39 am ET

By Harry R. Weber, AP Business Writer

ATLANTA (AP) -- Delta Air Lines Inc. warned Tuesday that it will record a substantial loss for the remainder of the year, and said it will need to file for bankruptcy if its cash reserves fall too low or some of its lenders demand immediate payment of its debts.

Shares of the nation's third-largest airline sank more than 11 percent in early trading to their lowest level in nearly seven months.

Delta said in a Securities and Exchange Commission filing that it continues to face significant challenges due to historically high fuel prices and low ticket fares.

"Accordingly, we believe that we will record a substantial net loss for the nine months ending Dec. 31 and that our cash flows from operations will not be sufficient to meet all of our liquidity needs for that period," the filing said.

Delta said that it is considering several moves to keep itself afloat, including more cost cuts and potential asset sales.

But even that may not be enough.

"There can be no assurance that we will be able to implement any of these strategies or that these strategies, if implemented, will be sufficient to enable us to maintain adequate liquidity," the filing said.

Delta, which reported a nearly $1.1 billion loss in the first quarter, had $1.8 billion in unrestricted cash at the end of March.

But in the filing, the airline said it expects that its cash level will be substantially lower by the end of the year if it can't increase revenue, cut more costs, sell assets or restructure debt.

Delta said the financing agreements that it signed with American Express Co. and General Electric Co. last fall to help avoid a bankruptcy filing at that time require that it maintain certain cash levels.

While the airline did not specify those levels in the filing, it said failure to comply with the agreement terms could result in the lenders demanding immediate payment of the money they are owed.

"If this were to occur, or if our level of cash and cash equivalents and short-term investments otherwise decline to an unacceptably low level, we would need to seek to restructure under Chapter 11," Delta said.

Some analysts have speculated that Delta will sell its feeder carriers Comair Inc. and Atlantic Southeast Airlines. The Atlanta-based company did not specify its plans in the filing.

Delta shares fell 38 cents, or 11.5 percent, to $2.92 in morning trading on the New York Stock Exchange. The stock closed at $2.93 on Oct. 20, 2004, around the time the airline almost fell into bankruptcy before winning deep concessions from pilots and fresh financing from creditors.

[Mitch Cronin]

Give me a break!! What about the organizations that have bargained in good faith and have treated their employees well? The decent company should pay for the mistakes of another because of some altruistic vision of "solidarity"?

Reality please people! If that happens, what motivation does the management then have come the next round of negots? Do this and you are your own worst enemy.

"What's the point of making a fair offer? They walked out with United anyway...."

Hang on a second... What part of losing a pension is "fair"? We're not talking about the usual brand of contract negots here... And I'd be inclined to agree with you if we were. Why should other airlines employees stand in their way... but in this case, United is saying "we think we can survive if we're allowed to rape our employees futures, can we please?"

Understandably, the employees - or it would seem that many of them - feel that's a step across the line... other airlines employees have much to fear from how that goes... I can tell you if I was in that position, I'd sooner see the company fold than be allowed to screw me that badly.

While their government is shelling out massive hordes of tax dollars for all manner of "homeland defense" things, and all things military, ...and Bush's favoured contractors are getting filthy rich, ...it doesn't seem that much to ask for some federal intervention to protect those pensions.

On the one hand, you could sit back and watch while a judge calls pension theft legal, and take what comes when your airline feels the pinch... or, on the other hand, shut down the country's air travel for a bit and see how fast a rethink comes!

Those employees were promised that money. It's been a part of their agreed upon compensation package since they started working at United. Taking it away is theft.

[Guest long keel]

Give me a break!! What about the organizations that have bargained in good faith and have treated their employees well? The decent company should pay for the mistakes of another because of some altruistic vision of "solidarity"?

Reality please people! If that happens, what motivation does the management then have come the next round of negots? Do this and you are your own worst enemy.

"What's the point of making a fair offer? They walked out with United anyway...."

Divide and conquor!

Kudo's to the AME's. The judge should stop and think hard before sending thousands into post retirement poverty while the decision makers who lead their ships are still able to maintain their lifestyles. All while they continue to sell their product for less than its production cost to maintain yield.

Sounds like a modern day Boston Tea party to me.

[handyman]

Hang on a second... What part of losing a pension is "fair"? We're not talking about the usual brand of contract negots here... And I'd be inclined to agree with you if we were. Why should other airlines employees stand in their way... but in this case, United is saying "we think we can survive if we're allowed to rape our employees futures, can we please?"

Those employees were promised that money. It's been a part of their agreed upon compensation package since they started working at United. Taking it away is theft.

But what if that is the only way to survive? You would rather lose your job and pension then just your pension? If it were true that they need this to survive, then why not negotiate a clause which returns say 80% of all future profit back to the employees in the form of profit sharing until at some point in the future the airline can afford to reinstate the pension plan. To give up and close shop I think is just too easy and lacks good old smarts!

[YYC I/C]

Could this be the reason why Air Canada is in advanced negotiations with America West and US Air? It doesn't look good for United and AC might want to have another option in terms of feed.

[dagger]

Mitch...

You must remember......

Uncle Milty tried to do the same thing here, only in Canada we still have SOME laws that protect the worker

Nice to be Canadian, isn't it?

Iceman

How exactly did AC try to do something like that. It never went outside the bargaining realm in search of pension changes, and the last offer on the table would have left the current pension plans intact for those who wanted defined benefit plans, while requiring future hires to have a defined contribution plan. It's still a pension plan. Anyway, the pensions were not changed, but I don't see how the company tried to do what United is doing. AC could have pushed this to the max by telling the fedl pension board that it would default... Same thing as UA is doing... but it chose not to go that route. So don't say AC tried to do the same thing. It did NOT - not even close.

Frankly, there is something to be said for the way AC went through CCAA, and the way Judge Farley kicked everybody's butt to get an acceptable compromise. Specifically, get down to it and get it done, don't let this thing go on and on and on. AC was in CCAA for 18 months, but that will be a year less than UA if/when UA does emerge from Chapter 11. UA has been in Chapter 11 for too long, and management appears to be to be looking for an optimum deal instead of a liveable one.

[Mitch Cronin]

If that's the only way they can survive then they're toast anyway. Give the employees all what they'd get in their pension if they retired today, hand over the keys and close the doors.

No way should any working stiff get robbed of something for which they have already paid in full.

[handyman]

If that's the only way they can survive then they're toast anyway. Give the employees all what they'd get in their pension if they retired today, hand over the keys and close the doors.

No way should any working stiff get robbed of something for which they have already paid in full.

You might be right....sad.

[ccairspace]

I don't have a very good feel for what direction the US courts might take with this issue. And there really isn't any precedent in law that is comparable. Not that I know a whole lot about American law anyway... But, my sense is that if the courts agree to the request by UA to scrap the pension plans for its workers, and the workers "drop tools", then I can't help but think that there will be a domino effect within the industry. Already there are creditors asking to take leased planes back (from Delta) and I can imagine just a wee bit of panic setting into the industry if strikes start.

Does anyone think that there is any chance that the current Commander and Chief will designate the industry as an essential service" and make it illegal to strike? A past one did when it came to air traffic controllers...

ccairspace

[FA@AC]

AC was in CCAA for 18 months, but that will be a year less than UA if/when UA does emerge from Chapter 11. UA has been in Chapter 11 for too long, and management appears to be to be looking for an optimum deal instead of a liveable one.

I'm not sure how closely you follow the US industry, Dagger, but I'm curious as to how you rate UA's chances of survival. Do you think they'll make it if they're able to avoid labour strife? Some analysts cite the strength and the profitability of the UA international network as reason to be optimistic. Others say that high fuel costs, the battering that UA gets from low cost carriers and its inability to raise yields in domestic markets aren't going to be offset by the profitability of the international routes, and that things thus look bleak. What's your view?

[Dropzone]

I'm sitting here trying to imagine what it would feel like to work for a company for 20+ years, watch my take home pay decline for the last 5-10 years and at the end of it be told I had no pension... 

I would suggest that scenario is currently unfolding in Canada.

[flybye]

More news....

AP

Judge Approves End of United Pension Plans

Tuesday May 10, 7:08 pm ET

By Dave Carpenter, AP Business Writer

Judge OKs Termination of United Pension Plans, Clearing Way for Largest U.S. Pension Default

CHICAGO (AP) -- A federal bankruptcy judge approved United Airlines' plan to terminate its employees' pension plans on Tuesday, clearing the way for the largest corporate-pension default in American history.

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The ruling, which carries broad implications for U.S. airlines and their workers, shifts responsibility for United's four defined-benefit plans to the government's pension agency.

That will save cash-strapped United an estimated $645 million a year, part of the $2 billion in annual savings it says it needs to line up enough financing to emerge from Chapter 11 bankruptcy as soon as this fall.

But the cost will be painful to its employees, who stand to lose thousands of dollars annually off their pensions when they are assumed by the Pension Benefit Guaranty Corp.

The PBGC, the government's pension insurer, initially opposed United's plan. But it agreed to drop that resistance last month in exchange for up to $1.5 billion in notes and convertible stock in a reorganized UAL Corp., United's holding company.

United's pensions are underfunded by an estimated $9.8 billion, of which the PBGC would guarantee only about $5 billion. The previous largest U.S. pension default was Bethlehem Steel's $3.6 billion in underfunding in 2002.

Judge Eugene Wedoff said the settlement, while disputed, does not violate any law or United's collective bargaining agreement and he noted that employees at companies such as United could end up with fewer or even no benefits if no arrangement is made and the company goes broke.

"The least bad of the available choices here has got to be the one that keeps an airline functioning, that keeps employees being paid," Wedoff said.

United Chief Financial Officer Jake Brace said the ruling is crucial for United to come out of bankruptcy.

"It's not a good outcome. It's unfortunately a necessary outcome," he said. "This is not in any way a joyous day. It is an important step in our restructuring and in making our airline successful and viable for the long term."

United's effort to dump its pensions has been watched closely by the rest of the airline industry, where record fuel costs, the lowest fares since the early 1990s and stiff competition have caused network carriers to lose billions of dollars. Tuesday's ruling, following a step taken successfully by US Airways Group Inc. in February, clears the way for similar actions elsewhere.

United's biggest competitors would be under the most pressure to follow suit. American Airlines, the largest U.S. carrier and a unit of AMR Corp., has said it will keep its pension plans but is concerned about No. 2 United gaining a financial advantage with the elimination of its pensions.

On Wednesday, flight attendants for American will gather in Washington to lobby for federal pension reform that would allow carriers to extend the amount of time they have to replenish underfunded plans and provide relief to airlines that seek, through collective bargaining, to preserve rather than terminate their pension obligations.

No. 3 Delta Air Lines Inc., which has said it is in danger of being forced to file for Chapter 11 bankruptcy, faces $3.1 billion in pension payments over the next three years.

An overflow crowd of current and former United workers showed up at bankruptcy court Tuesday, with more than 100 packing the courtroom and dozens more listening to piped-in proceedings in a separate courtroom.

Unions representing United's flight attendants, mechanics and ramp workers have expressed their ire at both the airline and the government's pension insurer, PBGC, for agreeing to drop its opposition to United's plan last month. In exchange for that settlement, the PBGC would get as much as $1.5 billion in notes and convertible stock in a reorganized UAL Corp., United's holding company.

Attorney Jeffrey Cohen said the PBGC, which might have been unable to halt United's plan in any case, made the agreement as "a matter of last resort." Disputing the flight attendants' contention that the deal violated its mission, he said the agency concluded that cutting a deal was in the best interest of not only those with pensions at United and other companies but also for taxpayers who fund the pension insurer.

In addition, he said, "We think it helps clear a path to the exit door" for United to leave bankruptcy.

Lawyers for United's unions spoke ardently earlier Tuesday against the proposal.

Robert Clayman, an attorney for the Association of Flight Attendants, drew loud applause and cheers from employee spectators in both the courtroom and auxiliary court with an emotional appeal to preserve the pensions and workers' secure retirements.

"Without equity there is no justice," he said.

Jack Carriglio, an attorney for retired United pilots, said the airline should be ashamed of the agreement and warned of the consequences among angry employees.

"A strike is a real prospect if that agreement is approved," he said. "Also, this will have a grave impact on United employees' morale."

United's controversial move risks provoking action by employees who already have agreed to sharp cuts. Unions have raised the possibility of striking if United terminates the pensions and has its labor contracts overhauled.

www.united.com