Elk Grove Village, Ill. – United Airlines employees threatening to strike should instead get their frustrations about shrinking pay and pensions resolved at the negotiating table, chief executive Glenn Tilton urges.
The beleaguered airline, the largest in Denver, goes to court in Chicago this week to void the contracts of three of its unions.
If that’s not significant enough, the bankrupt carrier also is asking a judge to back a government takeover of four critically underfunded pensions, which will make workers’ secure retirements far less secure.
United employs 60,000 people worldwide and 6,000 in Denver.
“I really understand the frustrations that the employees feel,” Tilton, a longtime executive with oil giant Texaco, said in a recent interview with The Denver Post. “But I think that those frustrations would really be more productively satisfied at the negotiating table. … Throughout the restructuring we have continued to deliver good quality service, and I really think we should continue to do so.”
However, United’s flight attendants, mechanics and machinists unions are threatening to strike.
United’s flight attendants union, composed of some of the airline’s most aggrieved employees, recently reiterated its intent to stage intermittent walkouts if the company breaches its labor contracts and terminates the pensions.
In the early 1990s, flight attendants for Alaska Airlines successfully used such “CHAOS” strikes – an acronym for “Create Havoc Around Our System – to win pay raises.
“Current management is on a path that will lead to a labor relations meltdown that could destroy our airline,” Greg Davidowitch, the leader for United flight attendants, said recently. Reiterating a persistent theme, Davidowitch called for the ouster of Tilton and other top execs: “We must replace this management team if this airline is to survive.”
But Tilton, United’s chief since 2002, hasn’t said he plans to leave. Moreover, this isn’t Alaska Airlines. And these aren’t the 1990s.
The nation’s airlines, including United, continue to reel from the aftershocks of the terrorist attacks of Sept. 11, 2001. That day, Chicago-based United lost two jets and scores of customers and employees.
United, struggling with both a recession and reduced air traffic nationally, filed for Chapter 11 protection in 2002 – from which it has yet to exit.
The delayed departure from bankruptcy is due in large part to the airline’s failure to win a key government loan, steadily rising jet-fuel prices and United’s historically high cost structure, which has been difficult to slash.
“Oil prices push the prospect of profitability into 2006, when many carriers thought they were going to be profitable in 2005,” Tilton said last week.
Meanwhile, the airline and its flight attendants, machinists and mechanics unions continue negotiations on termination of the pension plans, although United has said that it must end the plans.
Each union has language in its labor contract where the company agrees not to reduce pension benefits without agreement of the union.
The company also is attempting to reach deals with the mechanics and machinists on permanent cost-cutting labor contracts, including pay cuts and the right to outsource some work.
If the company and the unions can’t reach deals, a trial could start Wednesday.
United will ask for court approval to reject its labor contracts and replace them with new concessionary terms to cut costs.
The deal with the pension agency includes about $500 million in convertible notes that could eventually lead to the pension agency owning a share of the airline.
Tilton said the U.S. Pension Benefit Guaranty Corp.’s obligation is to employees whose pension plans are terminated, “so their success in many ways is the employees’ success.”
The PBGC is the federal government’s pension insurer.
Amid recent talks between US Airways and America West about a merger, Tilton also emphasized his interest in the possibility for United to play a role in airline industry consolidation.
“The activity that’s begun already in the marketplace, between US (Airways) and America West, suggests that the marketplace is going to be different by the time we arrive at that point. And I think that’s true. Certainly the marketplace doesn’t wait for anybody,” Tilton said.
“So deals are going to be done between now and then. But I simply want to not be restricted from participating in what is already beginning to play out with the America West-US (Airways) deal.”
Staff writer Kelly Yamanouchi can be reached at 303-820-1488 or kyamanouchi@denverpost.com.
