Airlines' financial woes weaken unions

With bankruptcy looming, strike threat less potent

August 26, 2005|By James F. Peltz | James F. Peltz,LOS ANGELES TIMES

Northwest Airlines Corp.'s ability to keep flying while its mechanics are on strike is a telling example of how the airline industry's severe financial troubles are sapping the strength of unions, analysts say.

Just ask 30-year mechanic Sander Shipper, who was walking the picket line yesterday at Los Angeles International Airport as Northwest flights came and went.

"No doubt" the unions have seen their power ebb at distressed airlines such as Northwest, said Shipper, who turned 57 the day the strike began, a week ago. "It's been very unsettling for the employees."

In the past, a strike by a major employee group meant the targeted carrier had little chance of staying airborne, especially if the airline's other unions refused to cross the picket lines. But when Northwest brought in replacement workers for Shipper and 4,400 other members of the striking Airline Mechanics Fraternal Association, other unionized employees - pilots, flight attendants and other ground workers - reported for work. That has allowed Northwest to operate more than 95 percent of its scheduled flights despite scattered cancellations and maintenance-related delays.

The lack of labor solidarity partly reflected the outsider status of Shipper's union within the ranks of organized labor. But it also showed that airline unions are thinking twice nowadays about using their most potent bargaining tactic against a company that is already on the brink of bankruptcy.

A strike now, analysts say, might ultimately mean no airline and no job. "In that sense, the unions are losing quite a bit of their power," said Richard Gritta, a business professor at the University of Portland in Oregon.

The employees already have seen UAL Corp.'s United Airlines and US Airways Group Inc. file for Chapter 11 bankruptcy protection, and they know that Northwest and Delta Air Lines Inc. are dangerously close.

The industry has lost more than $30 billion since 2000 and is expected to lose an additional $5 billion this year, in large part because of record-high fuel prices. Airlines have repeatedly gone to their employees for concessions to stay alive.

Earlier this year, three of United's major unions - AMFA, the Association of Flight Attendants and the International Association of Machinists - threatened to strike in protest of United's demand for more wage-and-benefit cuts.

The airline warned that, if the unions didn't come to terms, it would ask the bankruptcy judge for permission to impose the cuts. The workers stayed on the job.

Even if a trip to bankruptcy court doesn't sink an airline entirely, it now poses a serious threat to workers' retirement plans. United and US Airways both received bankruptcy court approval to dump their pension plans on the federal government to cut costs - a move likely to result in substantially lower retirement benefits for thousands of workers.

"The unions are seeing the reality of the situation," said Fred Allvine, a professor emeritus and airline expert at the Georgia Institute of Technology. "Their jobs and the future of their airlines are in very deep jeopardy."

The last major airline strike occurred in 1998 when Northwest's pilots, led by the Air Line Pilots Association, walked out and grounded the carrier for more than two weeks.

Even ALPA, possibly the most powerful union in the industry, agrees that a strike isn't the weapon it was five years ago when the airlines were flush - at least among the big carriers on the critical list.

"Nobody is kidding anybody in threatening to strike," said ALPA President Duane Woerth, who is a Northwest 747 captain. The pilots instead focus on "damage control to live another day, worry about job security and wait for better times."

Still, not every airline union leader sees it that way.

"Today, our members are prepared to strike more so than five years ago," because "people are at the brink now and willing to say `Enough is enough,'" said Robert Roach Jr., a general vice president of the IAM, which represents airline mechanics and other ground workers.

Even in bankruptcy, an airline has creditors and suppliers that have a financial interest in keeping the carrier afloat, Roach said. They tell airline executives "we better listen to these people" to avoid a strike that could lead to liquidation, Roach said. "That's the leverage we have."

Northwest, the nation's fourth-largest airline by passenger traffic, is seeking $1.1 billion in annual labor savings from its work force, including $176 million from its AMFA members. The AMFA savings would include laying off about half its current workers at Northwest.

Shipper, the striking mechanic at the Los Angeles airport, said he and other AMFA members believed a strike was the only alternative after Northwest kept pressing for layoffs. Even if the union had delayed a strike and let members vote on Northwest's offer, "how could the majority of workers vote to put themselves out of a job?" he asked.

No new negotiations between the sides have been scheduled.

Meanwhile, Northwest declined comment about specific flights, but said it continues to operate its normal schedule and is prepared to keep flying with the replacements "indefinitely."

The Los Angeles Times is a Tribune Publishing newspaper.

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