United and American have led the way, beginning in 2002. Last year, American Airlines, the largest in the country, used the threat of bankruptcy to force $1.8 billion cuts in annual wages and benefits.

On September 12, US Airways filed for Chapter 11 bankruptcy reorganization, for the second time in two years, after workers refused to accept a new round of wage and benefit cuts.

Attorneys for United Airlines told federal bankruptcy judge Eugene Wedoff at an August 20 hearing that the company would be within its rights to terminate pension plan agreements with the unions. A day earlier the court released papers in which United warned that it will “likely” have to end those pension funds in order to secure the loans it needs to get out of bankruptcy, CBS news reported.

CBS also said that United had failed to make a required $72 million quarterly payment to its pension fund in July. The company said doing so would have been a “huge financial burden.” United said it planned no further payments into the fund while it remained in bankruptcy.

In response, the Association of Flight Attendants and the International Association of Machinists asked the judge to replace United chief executive officer Glenn Tilton with a court-appointed trustee to oversee the bankruptcy.

The Financial Times of London reported in August that United also plans to cut 6,000 jobs. In the last three years the company has reduced its workforce by nearly 40,000.

In December 2002, United threatened bankruptcy unless the unions approved $5.2 billion in wage and benefit concessions over five and a half years. The federal government, through its Air Transportation Stabilization Board (ATSB), demanded the concessions from the unions as a condition for granting United $1.8 billion in federal loan guarantees the company said it needed to avoid insolvency. Union officials agreed to grant most of the concessions. But the company went into bankruptcy anyway.  
 
US Airways presses for wage cuts
US Airways had threatened to go into bankruptcy unless the airline’s unions agree to $800 million in wage and benefit cuts. The airline filed for bankruptcy protection in August 2002 and emerged the following April with a $900 million gift in the form of a loan guarantee by the ATSB. During the bankruptcy proceedings, union officials accepted two rounds of wages and benefits cuts worth $1.9 billion in the name of “common sacrifice” to save “our company.”

US Airways chairman David Bonner said a second bankruptcy could turn into a Chapter 7 liquidation because the company would not be able to attract new investors. Bonner is also chief executive of Retirement Systems of Alabama, a pension fund that has invested $240 million in US Airways and holds a 36.5 percent stake in the airline.

US Airways was facing a mid-September deadline to pay nearly $1 billion to cover pension obligations and the next installment on its loan guarantee. At least one major credit rating agency, Standard and Poor’s, has downgraded the company’s debt bonds to “Junk.”

The airline is demanding a 16 percent pay cut from pilots, amounting to an estimated $300 million. Negotiations between US Airways and the pilots’ union collapsed at the end of August, according to Reuters. “Since the beginning of these talks, we have witnessed a disturbing trend by the company to seemingly dismiss several significant proposals from our pilot negotiators,” said Jack Stephan a union representative. “Instead,” Stephan continued, “management has responded by piling on additional demands.”

After the pilots association and other unions refused to accept new wage cuts, US Airways filed for bankruptcy on September 12, seeking reorganization under Chapter 11. Under existing law, the company can ask the courts to throw out its current union contracts and impose the cuts the bosses say they need to continue operating.

So far, no major airline has survived a second bankruptcy reorganization.  
 
Mass layoffs at Delta
Gerald Grinstein, the chief executive officer of Delta Air Lines, announced September 8 plans to cut up to 7,000 jobs in the next 18 months if the company does not get concessions from pilots and other airline workers, the New York Post reported. The company said it will cut administrative and management costs by 15 percent. It is also expected to announce wage reductions and increased payments by workers for health insurance at the end of September. Despite all these measures, however, Grinstein said, “bankruptcy is a real possibility.”

Delta has been held up by airline bosses as an example of a company that has kept costs under control by keeping the unions out.

The airline’s management is demanding that the pilots give up at least $1 billion in concessions, including a 35 percent pay cut and work, scheduling, and pension changes. The union, which represents 7,500 active pilots at Delta, had proposed a 23 percent pay cut and other concessions that would add up to $705 million a year, reported the Cincinnati Post.

Delta is also demanding renegotiation of its agreement with the pilots that makes them eligible to retire at 50 years of age. William Greene, an analyst with the investment bank Morgan Stanley, told the Cincinnati Post that retirements by most senior pilots flying Delta’s largest planes on lucrative overseas routes could force the airline to ground its fleet of Boeing 777s, resulting in severe financial losses.

Delta has said that over the past months pilots “in greater than historic levels” have opted for early retirement and are taking half of their benefits in a lump sum payment. The company said 2,000 of its 6,900 pilots are currently 50 or older and eligible to retire.

The airline bosses are using bankruptcy proceedings to protect social capital, which is normal under capitalism. It is likely that not all major airlines will survive the current crisis.

To justify their antilabor moves, the airline owners are citing tougher competition from lower-fare carriers—like JetBlue and Southwest Airlines—most of which are nonunion, and higher costs of fuel. They are getting most of the concessions they are asking without any serious fight, however, because of the degree of misleadership of the labor movement by the union officialdom.  
 
 
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