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.