United Airlines May Avert Union Action

    May 31, 2005
    WebProNews Staff

Last minute negotiations with the Aircraft Mechanics Fraternal Association yielded a ratified agreement.

The airline, which did not benefit from the massive post-2001 bailout orchestrated by the lobbyist wife of former Senate majority leader Tom Daschle, faces a hearing in US Bankruptcy court today.

The court will decide whether or not to impose a contract on the International Association of Machinists. That union has vowed to strike in the event the court rules in favor of United. Also, the AMFA has pledged to honor picket lines staged by other unions should a strike begin.

United believes that a strike action by the union would be illegal. A hearing on that opinion will be held on June 7. United claims it needs to realize $700 million USD in savings annually in order to exit bankruptcy protection, and has been trying to get $176 million in savings from a new contract with IAM.

The President signed the Air Transportation Safety and System Stabilization Act (“ATSSA”) into law on September 23, 2001. This $15 billion aid package offered $5 billion in direct relief and $10 billion in loan guarantees. Though United and American were limited in their legal liability resulting from the attacks, United was not eligible for loans under the plan.

Despite this aid, most airlines have been unable to achieve profitability. United had planned a merger with US Airways but that fell through. US Airways will now merge with America West.

One school of thought contends the airlines should have been provided with expedited bankruptcy and reorganization processes instead of a bailout that placed the airline’s burdens on the taxpayers and not the shareholders of the airlines.

Recently, the Bankruptcy Court permitted United to dump nearly $10 billion USD in pensions on the Pension Benefit Guaranty Corporation, the federal pension insurer.

David Utter is a staff writer for WebProNews covering technology and business. Email him here.