Judge cancels US Airways’ machinists’ contract

[Judi Lynn]

Posted on Thu, Jan. 06, 2005


Judge cancels US Airways’ machinists’ contract

INQUIRER WIRE SERVICES


ALEXANDRIA, Va. - A bankruptcy judge on Thursday canceled a collective bargaining agreement between US Airways and its machinists' union, providing millions of dollars in annual savings that the airline says will relieve pressure for a quick liquidation.

The termination of the contract with the International Association of Machinists would result in pay cuts for union workers ranging from 6 percent to 35 percent and the loss of thousands of union jobs.

There still is a chance, however, that the union and the airline will agree on a new deal.

US Airways lawyer Brian Leitch said Thursday that the machinists' union had agreed to send the company's final offer to the union rank and file for a vote. If the union accepts US Airways' offer on Jan. 21, the judge's action canceling the contract would be nullified.
(snip)

Mitchell also allowed the termination of pension plans for the Machinists, the Association of Flight Attendants and certain other non-union employees. Minimum funding contributions for the plans from 2005 through 2009 was $987 million, which the judge called a "financial albatross" for US Airways.
(snip/...)

http://www.philly.com/mld/philly/business/10581256.htm?1c
(Free registration is required)

[gratuitous]

1. So, whether or not the union accepts management's offer

The judge has already voided their contract. See, this is why the court system has to be kept clear of those niggling little lawsuits from people maimed or killed by corporations. Judges need to have a clear calendar to protect poorly run businesses from their own excesses, and be sure to put some teeth in management's bargaining position.

[Moe Levine]

25. to protect poorly run businesses from their own excesses

what difference does it make, today, that the business was poorly run yesterday?

it has to meet payroll, today, pay creditors, today, etc.

you are talking about an historical fact that means nothing.

the decision is whether the airline will operate, today and tomorrow.

Are you suggesting that the court should order it shut down? That would really help its remaining workers.

[DemoTex]

26. Hi Moe.

Read down, my friend. I am an expert. I am a US Airways pilot.

Read down. Cool your jets.

Mac

[Moe Levine]

29. cool jets

didn't know my jets were even on.

airlines are in a hell of a fix. the giveup decision by bush to ground flights on 9/11 (we should have done everything necessary to keep planes in the air) doomed the industry. After all, it has a broken business model--an airline ticket is only a means to an end, not an end in itself.

a real fighter for the people like HST would have kept planes flying.

[DemoTex]

31. Hunter S. Thompson? Dr. Gonzo?

You are a funny dude, Moe. You have me and Saigon68 doubled over. Not really. Study the airline industry. You are no expert. I might or might not be. I have over 40 years in the industry, including 250 combat missions, 17,000+ hours as an airline pilot, and ALPA safety/accident investigation qualifications. That might just saddle your pony ... but I don't know. You still might eclipse me on qualifications. Post 'em if you've got 'em.

[Moe Levine]

32. business models

qualifications--lets just say that I have 25 years experience in securities, venture capital, business strategy, business models, etc., but don't take my word for it--do the reading for yourself.

A successful business model is one that competitors cannot easily duplicate. Frequent flier miles (like warranties) for example, are not a good business model because everyone else can and will follow the leader. Costs go up, or revenue down, not profits. Try Hamel, Leading the Revolution.

A good business model is Microsoft--a monopoly created by two different forces: (1) legal forces--its patents, trade secrets, copyrights, licenses; and (2) the costs savings or efficiences that come from being able to share files, move employee from computer to computer, etc., because its all the same.

Airlines have no good business model, especially because they are a means to an end--the end is what you do in your destination city, after you arrive. Very few people get on commerical airplanes just to fly around for the fun of it. Because the inflight experience is viewed, basically as a commodity by the public, customers are very price sensitive. Price sensitive customers also cut down on profits.

As for the events on 9/11, someday learn about the difference in how America reacted on 9/11 and how we reacted after Pearl Harbor.

Bush all but stopped commerce post 9/11 by shutting down the airports. I can recall goin to Washington DC 4 weeks later--the airports were empty as were the hotels and restaurants. Business still hasn't come back we are still 1.5 million jobs short of 2001 and about 6 million short of where we should be.

[saigon68]

30. So Moe do you think $5.15 an hour should be the salary?

Or do you think that a few 10 year old children should clean toilets and other Manual Labor Jobs at the airline for a bed and rations?

Oh and if you know --tell me what the CEO makes?

Demotex will tell us all of this stuff-- He has reported for years on the excesses here and how this ship was sinking for a while now.

[Moe Levine]

34. 5.15 salary

until airlines find a way to make profits, wages and salaries are going to continue to fall, regardless of what the CEO is paid.

my 2 cents is that airlines will never make money, because the business model of the industry does not permit one to make profits. there is no rule of economics that says that every industry can make a profit. Why, principally because it is a means to an end.

Consider Las Vegas, for example. Have you ever asked yourself, why don't the casinos in Vegas own and operate their own planes. Don't think they haven't considered such. The answer--there is no money to be made in operating the planes. They are a means to the end. The end, the experience, is where the profits are made.

This is a not a statement that the people who work for airlines are bad, or deserve hard times, or anything like such. It is simply reality, which cannot be changed. If I were in the industry I would either: (1) get out; or (2) go to work for a new company in the industry that has a different business model.

S/West is just as vulnerable as the older carriers. If United or US or both fail, one can buy their planes and gates cheaper than what S/West pays and do it all again.

The best evidence I have that it is a business where profits cannot be made. Read Buffett or Kessler (Running Money) or any other good investor. They won't go near the industry because they know it is not one in which one can make a profit. Read what they say is necessary for an industry to make a profit.

[Tom Yossarian Joad]

40. See WLDA.

[gratuitous]

33. Wow, don't hurt yourself jumping to so many conclusions

Sorry I was away from this thread for awhile. Yeah, a business that's been poorly run "historically" hardly gives one hope that it will suddenly (you should pardon the expression) straighten up and fly right with the same management in place that ran it into the ground.

Is the only alternative to shut the airline down? If that's your only suggestion, then I would say that you have a rather narrow vision on this matter, and I'm not sure I care to invest the time required to expand that vision or if it would do any good.

[Moe Levine]

35. some businesses can't make money

you make an assumption--that airlines could make money. There are flaws in the business model of the industry that makes such unlikely. Read Hamel, Leading the Revolution, to learn more about business models.

The biggest flaw is that the service is a means, not an end. Econmically speaking a seat on a plane is a commodity. As long as it is a commodity, there are scant profits to be made.

This is not some new understanding. We went to regulated airlines because we understand long ago that unregulated ones couldn't make money over time. We may go back.

[reprobate]

43. I hope you're right about going back to regulated airlines.

I can easily remember when airlines were regulated. Flying was a pleasant experience then, not the cattle car paradigm that exists today.

And my biggest bitch about the current situation is that with such a paucity of profits in the industry, inevitably there will be and is scrimping on maintenance, which endangers the safety of both passengers and crew. I point to Alaska Air for an example.

And at the same time we do everything we can to destroy the passenger rail system, instead of building a high speed rail system like the rest of the world.

What a grand idea!

[SKKY]

36. Hi there Moe...

Welcome to DU.

[liberal N proud]

2. It is going to take another Labor movement in the country

to bring things back on even ground.
Just one Union after another keeps getting stomped on by the government.
Damn

[lumpy]

9. Traditional Republican (ultra)agenda

Break unions
Break corporate regulation
Break Women's rights
Break Constitutional legal rights
Break ecological/conservation advances
Break the UN
Break democracy as we know it and let unfettered capitalism reign
Anything else?

[not fooled]

11. Break the media...

...so that they turn into RW shills and the population gets more propagandized and less informed.

Break the public schools...so that children get dumber and don't learn civics.

[mn9driver]

3. US Airways and United are leading the way.

Every airline in the country with union contracts and pension plans is salivating at the prospect of dumping them. If you investigate a bit, you'll find that compensation and pension security for the executive management teams of these companies is just fine, thank you.

Well, even though my pension is toast, at least I've got Social Security, right?

[Demit]

4. Your last line made me laugh, and cry.

My God, nothing means anything anymore. Contracts, promises...all allowed to be broken by them what's got the brute power.

[Blue_Tires]

5. bad precedent

look for the U.S. automakers to try to do something similar in the future if they keep losing market share (pension and healthcare costs have been mounting for their tens of thousands of retirees), and they've been looking to sidestep the UAW for a long time, especially since the Japanese/German automakers with plants in the U.S. don't use union labor

[DemoTex]

6. The big question now is: Will the IAM now strike US Airways?

Did Judge Mitchell enjoin the US Airways IAM from striking the company after he abrogated their labor contract? I cannot find any mention of any such injunction. There are labor lawyers who believe that absent such an injunction, a Railway Labor Act-governed union is free to strike following court abrogation of a contract.

A wildcat job action is a much more likely scenario. However, if an injunction ensues, the IAM had better be careful. The American Airlines pilots' union, the Allied Pilots Association, was fined $45-million by US District Court Judge Joe Kendall (a Bu$h-1 appointee) for contempt of court following a wildcat sickout a few years back. The APA had to assess every union member thousands of dollars to pay that compensatory fine.

[DemoTex]

21. I am told by my contacts that the IAM will not strike US Airways.

At least not before the 1/21/2005 deadline to ratify the latest offer the company had on the table. The BK judge has given them an out. Ratify the company offer, and get the devil you know. Turn it down (the abrogation stands) and the IAM gets the devil they don't know. A Hobbsonian choice if ever there were one. However, the IAM doesn't cotton to being fucked with, and that is how they may take this dilemma. Ask the old EALers.

[MostlyLurks]

7. A victory for the workers!

Oh, wait. I meant "A kick in the 'nards" for the workers.

We are so completely, utterly fuct and the only solace I take is that in 15 years, when some idiot Freep is out on the street whining about how he lost his job, his pension, his everything else, I'll be there waiting to give him the old Nelson Muntz "HA HA!" (of course, we'll be standing on the same bread line at the time, so it won't mean much, but hey, small victories).

Mostly

PS Is the following true (it's an idea that's been kicking around in my head since October, but I haven't actually researched it)?:

"You can trace the rise and decline of the middle class in this country since 1900 by tracing the rise and decline of union membership. The lines rise and fall at the same points, to the same degree."

[napi21]

8. I hate to say this, but if I were an employee of US Airways, I would

walk out right now. They must know they aren't going to have a job in the near future anyway, and the judge and the company are demonstrating that neither cares about anything but the survival of the management, their money, and certainly not any interests of the workers.

I have never been a union supporter, and am well aware of the damage unions have done to the steel industry in my old home town of Pgh. Pa., but this time, the unions should demonstrate some power and refuse to accept this BS! US Airways is a dead dog, and the employees whould euthanize it today!

[bleedingheart]

12. Unions didn't do the damage in Pittsburgh

it was the mismanagement of the mills that destroyed the steel industry. I still live in the area and I am tired of arguing with people about this issue... Scaife did a marvelous job convincing people that the very unions that created the middle class in America were the problem.

The steel executives were all happy to take home fat paychecks and pay out huge stock dividends..never worrying about the fact that they should invest in modern technology and possibly work to have the mills change with the times...nope they just kept having those 100 year old blast furnaces pump out steel until the Japanese kicked their ass.

As for the workers...men like my father worked their asses off under dangerous conditions and they deserved every dime they earned.

While unions aren't perfect they aren't the reason that the companies failed.

[Cornjob]

19. I happen to be an executive manager in a steel mill...

and I agree with you. I have been in the business for 35 years and can tell you of my frustration with the finance wizards who refused to reinvest in the business until it nearly collapsed.

25 years ago I can vividly remember working at a steel plant that consistently returned $12-20 million a month in net profits to our company. The brain trust never reinvested a dime in our plant, and in time, the profitability shrank due to outmoded production methods.

That plant was shut down and the land is now a struggling "redevelopment" park.

No, unions aren't perfect, but steelworkers still work hard and many work in technologically advanced jobs that require considerable skill.

It is amazing to see, however, that in the current profitable times in our industry, financial management still would rather fund acquisitions than reinvest in their bread and butter facilities.

The greedy never seem to learn.

[gizmo1979]

18. I'am really sorry

that I expect a living wage, in a safe environment, free from harrassment.Union made and dam proud of it!You have to stand up for something sooner or later,at least you'll be able to look into a mirror and know you stood for something!!!

[tedzbear]

10. If airlines can't make money, why is Delta cutting fares 50%?

..followed by American and all the rest?

Me thinks this fish stinks at the head.

[NashVegas]

38. they're cutting "last minute" fares, IIRC

Every try to book a flight less than three weeks before your trip? The cheap seats are GONE. I've seen flights from NYC to Albany for over 1k!

If those are seats that aren't selling because of the 1k price tag, and they do sell at the $500 price tag, that money they would't be getting otherwise.

[not fooled]

13. Does anyone know anything about the judge?

bet he was nominated by the 'pukes. or "middle of the road" which nowadays = far right 30 yrs ago.

gawd this country is effed up BIGTIME. yeah we'll be hearing those freepers whining when they end up in the poorhouse.

unfortunately, the 'puke dismantling of the New Deal is a slow-motion tragedy playing out; the slow-witted among us (apparently the majority of the voting public) are taking so long to comprehend what is going on that it will be a while before the revolution can begin.

[Bluebear]

14. "The company has also wanted to impose outsourcing provisions.......

"The company has also wanted to impose outsourcing provisions that could cost the mechanics roughly half their jobs."

The Bush era continues.

[DemoTex]

20. Engine overhaul to foreign facilities. The FAA has already approved them.

That makes it much harder to avoid counterfeit parts. That should give you the warm and fuzzies on the proverbial dark and stormy night, as you contemplate the bearings in the #2 engine.

[rsmith6621]

15. UAL Is Next.....Jan 7th

[w4rma]

16. In other words, contracts in this country aren't worth the paper they are

written on.

And corporate pension plans are worthless, because the corp will most likely dump your plan before you retire. So, don't take a job with ANY corporation based on some fantasy pension plan that they'll get some right-wing judge to annul after they've sucked you for 20+ years of hard work.

So, don't trust any contract that you can't get the return from immediately, especially pension plans.

[Bluebear]

17. Not anymore. Have to look out for bidness, you know.

Too many good airlines can't practice their, their LOVE for passengers and all that.

[NuttyFluffers]

42. that spells disaster...

especially since we live in a country completely and wholly sustained on trust. our currency is off of gold or anything solid, it's based on trust that we are the de facto currency for oil trade and hence trade in general. our profitability is wholly sustained on trust in the stock market and consumer spending, even though production is a dying business function in america and consumer take-home dollars have been only maintained through dangerous levels of debt. our stability is dependent on trust of our gov'ts solvency hence our bonds having it's happy lil' history, but now other gov'ts are reconsidering if not outright dumping, especially since we have more expenses and debts than we can handle, with more war responsibilities and greater deficits than ever before...

so now they want to play with the trust of contracts... another backbone of our country's stability. they want to shake down the last pillar holding up this whole charade, trust cannot take this much damage without collapse. and when it goes, most of america goes with it.

the end is near for america, start to wear your shiny hard hat :tinfoilhat:

[DemoTex]

22. BTW, there is a curse working here (against US Airways management).

In the early 90's USAir (as it was then called) bought some Boeing 757s from the recently defunct, at the hands of Bu$hie Frank Lorenzo (SPIT!), Eastern Air Lines. Even though USAir was hiring pilots at the time, the company refused to bring EAL pilots into the deal to staff the EAL 757s. While this was certainly not required of USAir, it would have been the right thing to do. But then again, USAir never did the right thing. When they bought my old airline (Piedmont) in 1988, CEO Ed Colodney said that USAir would replace southern charm and gentility with northern efficiency. They did and here we are today: a rust-belt failure.

[damntexdem]

23. Yeah, contracts are sacred in our society --

but some contracts are more sacred than others. Contracts with worker organizations don't get the Bushista blessing at all.

[DemoTex]

24. Well, DTD, bankruptcy makes strange bedfellows.

But it is nothing more than buying time. Within the next four years many (if not all) of the major airlines will be gone, or going. What Bu$h wants (and Bu$h gets what Bu$h wants) is cabotage. Cabotage is foreign airlines flying domestic routes in the US. That is the ultimate nail in the coffin of US airline labor (dust hands!). With cabotage, the sticky question of re-writing the Railway Labor Act will become moot. The ultimate irony is, many of Bu$h's TANG pilot buddies are like me. They are airline pilots and they are at or near mandatory retirement age (60).

Two things here: 1. The three Texas airlines are the strongest (Southwest, American, and Continental). 2. Bu$h, like his daddy (a fighter pilot in WW-2), likes to fuck airline pilots. I'm sending Bu$h. Jr., a big jar of K-Y for the next round. I can't believe nobody has squealed on this son-of-an-ugly-bitch!

[AlabamaYankee]

44. Southwest is profitable and pays a decent wage

I may be wrong, since I got my information from the Birmingham News, but wages comprise 41% of Southwest's expenses, and they turn a profit with bargain rates. Sure, they get their cost savings somewhere, but it seems that an airline can turn a profit and pay a living wage if it's appropriately run.

[DemoTex]

46. WTF is a living wage for responsibility for thousands of lives a day?

It is estimated that nearly 100,000 patients a year lose their lives to medical mistakes. Extrapolate that to the airline industry. We have the best and safest airline industry in the world. It is, however, very precarious. Take my word as an airline captain and a trained accident investigator (ALPA).

BTW: Cheapo Southwest is not an ALPA carrier, but their pilots certainly benefit from our safety inititives (especially the B-737 rudder actuator problems.) In fact, with their total Boeing-737 fleet, SWA should fund a John Cox scholarship fund to study B-737 safety problems (Google "john cox 737 rudder").

[LiberalFighter]

27. U.S. Bankruptcy Court Judge Stephen Mitchell

Is the name of the judge...

AND

http://www.fortwayne.com/mld/philly/business/10581256.htm

Gets you directly to story without registration

[DemoTex]

28. Good decision, given the state of US Airways.

The IAM is intractable. Period.

[SKKY]

37. Maybe this will keep my frequent flyer miles around long enough...

...for me to use them next month.

[Rainscents]

39. I believe...

This issue has nothing to do with not making money... It has everything to do with breaking up the Union. Corporate managers always hated Unions and they had done everything in power to break it up. This is good example... Taking the case to Neo-Con Judge knowing that, judge will favor the corporate, not this suit will follow to other company that has Union workers... Neo-Con Judge will bust all the Unions as the case come to the court. Look at what happen in Virginia this past summer... Judge said to Union, retired workers had no right to their health-care and they had no right to the pension... And also, Coal miners don't have right to their safety. This country is going backward and only way we can fix this problems is to take it street!

[reprobate]

45. From your lips to the ears of the populace. It WILL happen

[InvisibleBallots]

41. Activist judges interfering with the right of contracts

the conservatives should be up in arms.