United Leads The Way

Just days after United Airlines filed for Chapter 11 bankruptcy protection last December, CEO Glenn Tilton publicly endorsed the idea of doing away with what he called "costly, restrictive" union work rules. With other airlines watching intently, Tilton might just get his wish.

Using the leverage afforded by bankruptcy court, United is on the verge of finalizing contracts that could sweep many of those rules aside and set the stage for change throughout the industry.

Rewriting The Rule Book

Analysts say archaic and unproductive work rules that pile extra costs onto airlines' already high labor tabs can't last much longer at a time the industry is mired in its biggest financial crisis ever, made worse by the war in Iraq.

But United's Chapter 11 overhaul, on top of related actions taken in bankruptcy by smaller US Airways, is expected to hasten the process and provide the impetus for rivals American, Delta and Northwest to make similar changes long blocked by their unions.

By cracking down on such practices as featherbedding, padding of vacations and high pay for pilots' and flight attendants' down time, United hopes to achieve labor savings just as significant as employees' double-digit wage cuts.

Precedent: Other Airlines Are Watching

"It would set an incredible precedent for the industry," Joshua Marks, chief of staff at George Washington University's Aviation Institute, said of pending contract changes at the nation's second-largest airline.

The inevitable changes in work rules, he said, will allow an industry notoriously top-heavy in labor expenses to have leaner work forces, lower costs and higher productivity. Employees will pay a price in additional work and lower pay but get to see their airlines stay in business and, in most cases, keep their jobs.

United and spokesmen for all of its major unions declined to comment about work rules, citing the need to keep the contract process confidential.

But in detailed court filings, the airline has documented a long series of rules it intends to eliminate or rewrite using the bankruptcy process. If employees don't reach general agreement - as the pilots' union did tentatively on Thursday - the company can have a bankruptcy judge impose its terms May 1.

That ensures the end, one way or another, of many work rules that date to an era when the industry was federally regulated.

Getting Off The Gravy Train?

It means a senior pilot at United will no longer be able to make more than $200,000 a year while working six days a month, as is possible under the existing contract. A pilot won't be able to parlay a scheduled 10-day vacation into an entire month off by deliberately bidding for routes during that period, which was the case in December with a 747-400 captain simply exercising his contractual rights.

United would be able to use lower-paid employees to wave in and push away planes from gates at its hubs instead of employing 472 skilled mechanics for those duties, as it does now.

Among myriad other changes, the airline also intends to tighten expensive provisions concerning relief pilots on international flights and generous sick-leave and scheduling procedures, and have pilots and flight attendants spend fewer layovers at downtown hotels and more at less expensive ones near airports.

Darryl Jenkins, head of George Washington University's Aviation Institute, said many of the rules wouldn't be tolerated in any other industry. But the unmatched clout of unions to bring airlines to a halt has prevented their removal - until now.

"This is where you're going to make or break your reorganization, with work rules," he said.

Correcting Sins Of The Past

Tilton (right) and United acted on that realization as soon as United landed in bankruptcy after three years of economic turbulence, bad management decisions and labor turmoil.

"Anachronistic work rules that result in pay for time not worked and more employees on the payrolls than are necessary to perform the required work must give way to the realities of doing business in today's ultra-competitive environment," the airline said in a March 17 court motion to void its contracts.

"Restrictions on United's ability to maximize its revenues by deploying more and larger regional jets or pursuing strategic alliances with other carriers must fall by the wayside. And limitations on the company's rights to furlough employees for whom there is no work or to outsource functions that can be done by outside vendors at a fraction of United's current cost must end," it said.

Continental Airlines was the first to use Chapter 11 coupled with the authority of a bankruptcy judge to trim work rules. But it took a repeat trip to bankruptcy and a years-long slump to get the results it wanted - something United would like to avoid by getting negotiated contracts rather than forced ones.

United's more than 8,000 pilots, who last year made an average $205,978 and worked nine days a month, are being asked to make the deepest sacrifices. They will vote next month on whether to ratify an agreement slashing their pay by 30 percent and making further cuts via changed work rules.

"United has very skilled pilots but one of the lowest pilot utilization (productivity) rates of any carrier," said independent airline analyst Scott Hamilton. "United wants them to work harder for their money, instead of semi-work for their money."

The company hopes that when pilots start voting on the contract next weekend, they remember that the $1.1 billion in annual labor savings could make the difference between whether United prospers or liquidates.

"The upside for our employees is that survival of United will mean jobs, paychecks, health benefits and ultimately pension checks, which everyone wants," spokesman Joe Hopkins said.

FMI: www.united.com