Language Will Prohibit Airlines From Breaking Contracts,
Dumping Pensions On PBGC And Taxpayers
In what the Teamsters describe as "a major victory for
organized labor, airline employees and American taxpayers," the
House Subcommittee on Commercial and Administrative Law adopted
language last week of an amendment into H.R. 4766 that the union
says would preclude U.S. airlines that are in bankruptcy from
abrogating labor agreements, and dumping pensions onto the Pension
Benefit and Guarantee Corporation (PBGC) and ultimately the U.S.
taxpayers.
The amendment, offered by Congressman Dan Maffei (D-NY) was
passed in committee on an 8-4 roll call vote, contains language
offered by the Airline Division of the International Brotherhood of
Teamsters. Committee Chairman John Conyers (D-MI) and seven
committee members, who are also members of the Judiciary Committee,
voted in favor of the bill.
Under current practice, when an airline files for bankruptcy
protection, management has the ability to unilaterally abrogate the
existing labor contracts and may terminate employee pensions at
will. This was allowed despite the millions of dollars that
employee groups may have in the plans or turn the plan over to the
PBGC, an arm of the federal government, leaving the U.S. taxpayers
to potentially foot the bill for underfunded plans, according to
the union. Unions have been unable to change this provision of the
bankruptcy code despite efforts that have been ongoing for
years.
The amendment language, written by the Teamsters Airline
Division and now contained in H.R. 4766, would no longer allow
airlines to use the bankruptcy code to unilaterally reject a union
contract. They would be required to follow the procedures outlined
in Section 6 of the Railway Labor Act (RLA), which governs the
airline industry. Under the law, if adopted, airline managements
would be prohibited from making unilateral changes without the
assent of the union involved. If there is no agreement, no change
may occur.
"Just like the railroads, the airline industry is unique," said
Captain David Bourne, Director of the Airline Division of the
Teamsters. "Railroads have never been able to use the bankruptcy
code to reject their collective bargaining agreements. That is
because Congress did not want to upset and destabilize the special
and delicate bargaining processes required by the RLA which governs
railroad bargaining. Airlines are also subject to those same
bargaining processes under the RLA. In adopting this amendment,
Congress has now recognized that the inconsistent treatment of
airline contracts under the bankruptcy code has been unfair and has
helped to destabilize the airline bargaining process.
"Since the first use of bankruptcy law to gut airline employee
contracts and pensions by Frank Lorenzo in the early 1980's, this
change has been needed to protect the rights of hard working
airline employees. We have seen it happen at so many airlines since
then and unknown hundreds of thousands of men and women have seen
decades of sacrifice they put into their retirement pensions
vaporized at the stroke of management's pen. When this bill is
passed, those days will be over.