by Barry Sheppard
December 9, 2002
The bankruptcy filing by United Airlines, the second largest airline in the world, is the next step in the war it is waging against its workers. Threatening to go bankrupt was used as a club to get the pilots, flight attendants and ramp and other support workers to vote for massive cuts in their own wages and benefits. However, United’s mechanics voted down the concessions the leadership of the International Association of Machinists (IAM) urged them to accept. The vote of the mechanics was one of the very few bright spots in the American labor movement in recent years.
The concessions were supposedly to help United stay out of bankruptcy by getting loan guarantees from the government. But United was on course for bankruptcy whether or not the loan guarantees were granted. The government board made it clear that even if the mechanics had accepted their concessions, more drastic rollbacks were needed.
United can utilize the bankruptcy proceedings to force bigger cuts in wages and benefits. The company can now ask the bankruptcy judge to arbitrarily abrogate the contracts it now has with the pilots, flight attendants and machinists. Any of his rulings can be appealed – to an equally pro-business review board. United executives are now also demanding major changes in work rules.
Another thing that will happen is that United will get loans for what is called debtor-in-possession financing to be able to keep running during the bankruptcy proceedings, from a consortium of Citizens Group, J.P. Morgan Chase, Bank One and the lending arm of General Electric. These lenders would get first claim on the airline’s assets, ahead of other creditors.
What this could mean is evident in the case of US Airways, which is in bankruptcy. That company, which has already forced concessions from its workers, is demanding more. The spokesman for the principle debtor-in-possession for US Airways, David Bronner, has stated that either the workers accept these further cuts or he will force the company to shut down and be liquidated. “What’s their alternative?” he asked. Without the concessions, “they’re gone.”
United workers, and not just the mechanics, are angry. Some background is in order. In 1994 United wanted concessions from its workers, pleading poverty. The pilots union and the IAM bought into an Employee Stock Ownership Plan (ESOP). The flight attendants didn’t.
Under the ESOP, the pilots and machinists got stock in the company in return for a wage cut. Wages were frozen at the new rate until 2000, when the contract would again be opened for change. But this stock was unusual. It couldn’t be sold until the employee left the company. So it was really a retirement plan, and was coupled with the company no longer paying anything into the 401(K) plan.
The stock did go up, to a high of about $100 in 1997. Those employees who retired then got something back from their sacrifice. Now the stock is worth about $1.
Supposedly, the ESOP meant that the company was now “employee-owned” with 55 percent of the stock. But it was not “employee-controlled” of course. On the Board of Directors the IAM had one person, the pilots one, and one was reserved for salaried employees. The rest were the creatures of the private investors, who continued to run the company. The IAM person was appointed by the top IAM officials. He never once voted in any other way than with management. The pilot’s elected their person, and management appointed the representative of the salaried people.
A negative thing developed. Union solidarity began to erode, as workers thought of themselves as “owners.” The IAM newspaper began to run articles by management, and the IAM pushed the line that labor and capital were one big happy family.
Management also promised that when the contract was up for changes in 2000, there would be a “seamless” transition. Guess what – management lied. When negotiations began prior to the end of the old contract, it turned out that the company was playing hardball. In the six years since 1994 United raked in billions. The workers wanted to at least catch up with what workers for other airlines were getting. But that’s not what management was proposing.
Once the pilots understood that they had been had, they voted out their old leadership and put in a new one. In the summer of 2000, they began to refuse overtime, their legal right. This job action disrupted United’s flight schedules, and the company capitulated and gave the pilots the increase to bring them up to pilots in other airlines.
In the hidebound and bureaucratic IAM, however, no such leadership change was possible. And any thought of a real job action is completely alien to these preachers of the “team” concept of “labor-management cooperation” wherein the workers always get screwed.
From the time the IAM contract was open for change in June 2000, the IAM conducted its negotiations in secret. We got fliers every once in awhile telling us things were going right along, but which contained nothing concrete. Negotiations dragged. We were still under the terms of the old contract, at 1994 wages.
Another union, the Aircraft Mechanics Fraternal Association (AMFA) had been seeking to replace the IAM as the bargaining unit for the mechanics and related employees. After the debacle of the IAM- recommended ESOP, and the foot-dragging by the company, keeping us on the terms of the ESOP contract, anger at the IAM grew. Support for AMFA grew too.
AMFA had a lot going for it in the eyes of most mechanics. It is democratic. Its officers and negotiators are elected and can easily be replaced. Its negotiations are not secret but open to the membership. AMFA had won at Northwest Airlines, and was in negotiations. Rank and file workers could sit in on the negotiations (if too many showed up, lots were drawn to see who would sit in on them). Reports were made weekly (sometimes daily) to the membership on what was going on. An informed and participating membership is a mobilized membership, and this power resulted in the Northwest mechanics getting the best deal in the industry.
In the summer of 2001, AMFA turned in cards from a majority of mechanics at United calling for a vote for representation. These cards were turned into a Presidential commission overseeing the negotiations (the airlines are under the Railway Labor Act, and so are not under the NLRB).
The IAM officials, in collusion with management, then “found” hundreds of IAM “members” not previously accounted for. Among these were secretaries who had never been members or paid dues to the union, people in management, people who had quit the company 25 years ago, and so forth. So the government commission ruled that AMFA missed having enough cards to call an election – by six cards, so the election wasn’t held that AMFA would have won hands down.
Finally, in the early months of 2002, with the hot breath of AMFA breathing down the necks of both the IAM and the company, a new contract was proposed that would bring us up to the level of American’s mechanics. But there was a poison pill in the contract. The IAM had agreed, in the contract, to reopen it if United said it might go bankrupt. The membership voted for it by a small majority. It’s this contract that the IAM just proposed be jettisoned in favor of the concessions United wanted. It was this betrayal that the mechanics rejected.
While the IAM officials were campaigning for a “yes” vote on the concessions, AMFA put out an email to the mechanics urging a “no” vote.
United workers face a tough fight. We have to face not only the company, but also now the bankruptcy court. And we have one hand tied behind our backs by the IAM. United has made drastic cuts in its workforce already, due to the economic downturn. (The fall-off in flying after September 11, 2001 was temporary.) It may threaten to close shop entirely. Layoffs and company failures are part of this capitalist system. We shouldn’t accept the argument that we workers are the cause of such catastrophes, because we aren’t. It is always better to fight than to agree to being hosed.
Barry Sheppard is a machinist at United's San Francisco Maintenance Operations Center.