The federal government, through its Air Transportation Stabilization Board, has insisted on these union concessions as a condition for granting United $1.8 billion in federal loan guarantees that the carrier says are needed to make debt payments and stave off bankruptcy proceedings.

In face of this pressure and after years of identifying their well-being with the fortunes of the company, most of the unions at the airline have accepted the demands. The pilots agreed to $2.2 billion in salary cuts. Some 24,000 flight attendants voted 87 percent in favor of pay cuts totaling $412 million.

The 24,500 ramp and customer service workers, who are members of the International Association of Machinists (IAM), approved $800 million in cuts--although 37 percent gave the proposal the thumbs-down.

On November 27, mechanics at United, who are also members of the Machinists, voted to reject the bosses’ demand for wage cuts and other givebacks totaling $700 million. The vote surprised the airline bosses, as well as the union officials. The employers immediately went to work on the Machinists, pressuring the officials to organize a revote on the same contract proposal on December 5.

The proposals the 13,000 mechanics rejected included a 7 percent wage cut, which would not be fully restored until 2008. Workers would forego four days of vacation pay each year and pay increases previously agreed to in the contract would be canceled.

The proposed cuts were the topic of intense discussion on the job in the week preceding the vote. Union officials strongly urged approval of the wage cuts. At San Francisco International Airport, improvised "Vote No" signs sprang up throughout the sprawling maintenance facility and on workers’ tool boxes. Homemade flyers urging a rejection were widely distributed and some workers wore "No Concessions" T-shirts. One Machinist distributed a flyer showing how the concessions amounted to a loss of $53,000 per worker.

Other workers voiced approval of the concessions as the only way to avoid the worse fate they perceived if the company filed for bankruptcy.

Raucous union meetings took place the day before the vote. Officials argued for the concessions as the only possible alternative. During the discussion, one IAM member stated, "We’ve heard a lot of stockbroker talk, a lot of lawyer talk, but no union talk."  
 
Company’s bankruptcy blackmail
Big-business commentators immediately decried the mechanics’ rejection vote as making bankruptcy "virtually inevitable."

Union officials warned that the mechanics’ vote jeopardized the overall pay-cut agreement, which was contingent on every union at United approving "its share" of the giveback package. Earlier this fall, the United Airlines Union Coalition, composed of officials from each of the airline’s five unions, agreed to work toward the $5.2 billion concession goal. In a letter to ramp workers and customer-service agents at United, IAM District 141 president Randy Canale said, "I sincerely and truly hope that our co-workers in maintenance find a way to join the rest of United’s employees in the effort to save our airline, our contracts, and our families’ future. There is no positive alternative to the equality of sacrifice that is required of us all." Referring to company chief Glenn Tilton, Canale said, "We have to give him the tools and support he needs to help protect our futures."

After the IAM scheduled the revote by the mechanics, the airline announced it would use a two-week grace period to defer a $375 million debt payment owed to bondholders that came due December 2. The company is renegotiating agreements with a dozen banks that hold $7 billion in leases on United’s fleet of aircraft. If United declares bankruptcy, it will not be the first major carrier to file for bankruptcy court protection. TWA, USAir, Continental, Eastern Airlines, Pan Am, Braniff, ValuJet, National, and others have done the same over the past decade or so. Some resulted in assets being liquidated and absorbed by other airlines, while other carriers reorganized. Bondholders have been the first in line for payment in every case.

UAL, the parent company of United, says it is losing about $7 million every day. It has reported $4 billion in operating losses since mid-2000. Since then the company has slashed its workforce from 100,000 to 83,000, cutting the number of flights by 20 percent. Over the past year the airline’s stock has lost 92 percent of its value, a factor fueling the mechanics’ anger at the company’s Employee Stock Ownership Plan. In 1994, workers and pilots at United received a 55 percent stake in UAL stock in exchange for granting the company several billion dollars in wage cuts. Active employees do not have access to their stock holdings.

When the stock was selling for nearly $100 a share in the late 1990s, workers envisioned retiring on the tens of thousands their stock was worth. But over the past year, unable to sell their stake in this "employee-owned airline," workers have watched the price of the stock plunge.This spring mechanics as well as ramp and customer service workers organized by the IAM received their first pay raise in eight years. The previous contract had expired in July 2000 and a new contract was not approved until March of this year.

In late 2001, when the mechanics threatened to slow down operations in response to company foot-dragging on negotiations, a court issued an injunction barring any work slowdown. A White House–appointed federal panel made a contract recommendation that workers initially voted down by 68 percent in February. The contract they finally approved contained small wage increases and stipulated retroactive pay of $478 million, stretched out over two years starting in December 2002. The proposed contract amendment, however, cancels this back pay. Taking advantage of discontent among mechanics at the IAM officialdom, as well as promoting a narrow craft mentality, the Aircraft Mechanics Fraternal Association (AMFA) is waging a raiding operation against the IAM at United. On March 30 AMFA, which claims it never accepts concessions, submitted more than 8,000 cards of mechanics at United seeking to replace the IAM.

In a letter to mechanics at United titled "Why AMFA represents future for mechanics at United Airlines," AMFA organizing committee members Malik Miah and Rich Lesnik state, "Most mechanics view the IAM as simply another arm of management." They add, "In our view, a democratic craft union would be stronger, even with its small size, than a bureaucratic so-called industrial-type union." AMFA has successfully challenged the IAM at Northwest Airlines and Alaska Airlines by claiming that skilled mechanics need to organize separately from other airline workers in order to fight concessions.

Mechanics at United have kept a close eye on their counterparts at bankrupt US Airways, who agreed to significant concessions earlier this year. On November 17, US Airways announced it wanted another round of pay and job cuts. The bosses are demanding draconian work rule changes. They claim they need $200 million more in annual cuts--in addition to the $1.3 billion originally projected--to meet the bankruptcy requirements.

Last summer, unionized workers at US Airways agreed to $900 million in annual wage and benefit cuts over six and a half years. Faced with the bosses’ threat of bankruptcy, workers reluctantly approved the givebacks, with the mechanics initially voting them down. Proposed amendments to the contract include hiring outside contractors to perform work done by unionized mechanics and doubling employee contributions for medical benefits.

There is also a provision that in case of a U.S.-led war against Iraq, the airline bosses would be authorized to cut wages 5 percent for up to 18 months. US Airways also announced it would lay off 2,500 workers in the next three months and immediately shut down its maintenance facility in Tampa, Florida, putting 500 mechanics out of work. The airline owes creditors $10.7 billion.

In addition to the thousands of other airline workers who have lost their jobs in the last year, airline manufacturer Boeing has laid off 30,000 workers this year alone.

In September, 62 percent of the 25,000 IAM members at Boeing voted against a concession contract with big hikes in health coverage premiums and proposals to contract out work. But the pact was put into effect because the "no" vote was short the two-thirds majority required by the union’s constitution.  
 
Congress bails out airlines
Last year, right after September 11, the major airlines made a beeline to Congress and asked for federal aid. Congress approved $15 billion in airline bailout legislation and established the federal Air Transportation Stabilization Board (ATSB) to review loan proposals. The loans are withheld until the airlines impose wage concessions and other cost reductions to the satisfaction of the ATSB. United’s competitors have challenged its application for a government loan.

Continental Airlines chief executive Gordon Bethune said on CNBC that taxpayers should not subsidize United Airlines. American Airlines and Northwest Airlines have submitted their own "analyses" of United’s financial condition before the ATSB. In an expression of the depth of the economic crisis, Carol Hallett, outgoing head of the Air Transport Association, the airlines’ top trade association, declared in a November 26 speech to airline executives that "failure to fix the root causes of the airline industry’s meltdown may necessitate nationalization of the industry." She quickly added that "the cost of that step is intolerable."

A state takeover of the airlines, Hallett said, would mean that "we will have failed to sustain a system that constitutes 40 percent of the world’s commercial aviation system. We will have failed to sustain a system that underpins 25 percent of the world’s economy."

She noted that the industry’s pretax losses for this year alone are $9 billion, and that the nine largest passenger airlines now carry more than $100 billion in on-balance sheet debt.

Larry Lane, member of the Machinists union at the United Airlines maintenance base in San Francisco, contributed to this article.
 
 
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Must begin with workers’ needs  
 
 
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