SAN FRANCISCO — The flying public is angry at United Airlines, the largest airline in the world. The company has cancelled almost 9000 flights between May and October.
Most cancellations have occurred while passengers were already at the airports or on their way. When flights do leave, they arrive late. United now has the worse on-time arrival record in the industry. In May, the last month of record, 57% of flights were late.
Management points to three reasons for United's crisis: bad weather, problems with air traffic control and a pilot shortage. Since the first two reasons affect all airlines, the finger-pointing is directed at the pilots. Airplane mechanics have also been criticised by management for writing up too many mechanical problems.
What is really behind the crisis is management's wish to play hard-ball in contract negotiations with it pilots, mechanics and other workers.
The 10,000 pilots are represented by the Air Lines Pilots Association (ALPA). The pilots' contract ran out in April. The 49,000 mechanics and other workers represented by the International Association of Machinists (IAM) contract ran out in July. Flight attendants are unionised but are not currently in negotiations. United has some 100,000 workers in all.
Airlines operate under the notorious 1926 Railway Labor Act. When contracts expire, workers covered by this law cannot immediately strike, unlike auto workers or steel workers. They have to go through a whole rigamarole of prolonged negotiations before they can strike. The process may include intervention by a government mediator and even direct government intervention to force a settlement.
United's CEO, James Goodwin, said in a recent company "newsline" that it is typical for contracts to "take years" to settle. It is in management's interests to prolong the negotiations, if possible for years. If the current economic boom ends, workers will be in a less favourable situation to demand concessions.
The pilots and machinists are so upset today because we were promised six years ago that when our contracts expired, there would be no such prolonged negotiations but a "seamless" transition to a new contract. This was part of a con the company put over on the workers called the Employee Stock Ownership Plan (ESOP).
Employee 'ownership'
The previous management team convinced the pilots and machinist unions to accept an ESOP in our contracts in 1994, as the only way to save jobs and the airline. Then CEO Stephen Wolf used this threat to get the best possible deal for the big shareholders.
While many of us, including a majority of the mechanics at the San Francisco maintenance centre, opposed this pact with the devil, the deal was narrowly adopted system-wide.
Under the ESOP, the pilots and machinists union leaderships agreed to "buy" stock in the company with big wage and work rule concessions. The pact gave members of ALPA and the IAM, along with non-union employees, a 55% stake in the company. (The fight attendants union refused to sign up because of the huge concessions).
At first, there was no guarantee of even getting back to where our wages were in 1994. The machinists won such a "snap back" during mid-term negotiations, which we got when the contract expired in July. But the workers also gave up on any wage increases over the life of the contract, a loss of 25-30% compared to other airline workers.
In April, non-union employees did receive wages increases above 25%. The ESOP stock we got in return, however, was not ordinary stock. It cannot be bought or sold! It can only be redeemed at market value when an employee retires or quits, so it is a type of retirement plan, if the company survives to when you retire. Also, it is not voting stock.
Having 55% of the stock doesn't mean the workers can make company policy. The board of directors, which sets policy, has 12 members. Five are chosen by the holders of regular stock. The ALPA and the IAM each have one representative. The non-union workers are represented by someone chosen by management. The remaining four are management as well. The truth is, United is run the way it always was, by the major institutional shareholders and top management.
The biggest blow that ESOP represented was to union consciousness. Many workers no longer saw the value of unionism. Union solidarity was out the window; we were now "owners".
The "new culture" of employee ownership became wishful thinking for the unions' leaderships. The illusion that it would be possible to avoid the long contract negotiations of the past and settle quickly was proven to be just that — smoke and mirrors.
The reality of management being willing to force long contract negotiations while we work under the old contract's terms — now not even with the carrot of the ESOP stock — is behind the anger of the pilots, mechanics and other machinists.
In this situation the union leaders who pushed for the ESOP are under tremendous fire, and even they are beginning to pressure top management to make a deal. The Chicago Tribune referred to this situation with the headline, "United's Honeymoon Over".
Primarily because of the booming economy, United has experienced a 16-fold increase in net income since the ESOP, with revenue rising 30%. Ironically the record profits has raised expectations of the new "owners".
Despite the union leaderships — especially of the IAM — being in bed with the company, the rank and file assumed that we would get a big share of "our" profits back in wage increases of 25-30% to catch up with other airline workers. The IAM and ALPA leaderships were aware of this sentiment among the ranks. Their jobs were on the line.
US Airways buy-out
Another slap in the face of its employees was administered by United when the Board of directors voted to buy US Airways. This was done against the vote of the pilot's union representative. But the IAM representative, former IAM general vice-president John Peterpaul, voted for it. Thus the IAM representative gave up the one piece of leverage the unions had under the ESOP rules — they had the right to veto any mergers. If both union reps had voted no, the merger would have been shot down.
United agreed to pay US Airways shareholders $11.6 billion for the acquisition, $4.3 billion in cash and $7.3 billion for US Air's debt. That amount would go a long way in meeting our demand for a wage increase.
At the same time, the board refused to grant in writing the same two year job security guarantee to United employees that it gave to US Airways employees. On that issue alone, the pilots wouldn't sign on.
Now the IAM leaders, after outrage on the shop floor, have taken the same position, which rings hollow in light of Peterpaul's vote.
The US Airways acquisition was for most machinists and pilots the straw that broke the camel's back. To discover that the US Airways deal could go through without the unions having a contract was like an extra kick in the gut. The pilots' chief spokesman made the point: "I was one of the people who believed it [ESOP] would make a difference and that life would be better than it has been", said Herb Hunter, himself a working pilot. "But it doesn't seem to have made a great deal of difference in the way the company was run."
On August 10, United announced it would hire 1300 new pilots by year's end. This is one of the pilot's demands.
Management recognises that the flying public doesn't support their campaign to make pilots fly mandatory overtime. Recent air disasters make people uneasy about having a tired pilot at the helm. They also don't like to think that management is forcing mechanics not to report problems with aircraft.
What happens next will depend on the actions of the rank and file members, who can make clear to top management that we won't be taken for granted. It's not yet clear if this will be a brief crisis or the beginning of a protracted contract struggle.
BY MALIK MIAH & BARRY SHEPPARD
[Malik Miah and Barry Sheppard work as mechanics at United's San Francisco Maintenance Operations Center. Miah works in the Electric shop and is a former shop steward and head of the Local Lodge 1781's Human Rights Committee. Sheppard works at the company's power plant as an operator and a shop steward.]