As summer begins, trouble in the US airways
Labor dissatisfaction could be a key factor in how the summer travel season goes.
Buckle those seat belts. The nation's airways are in position to create some not-so-friendly skies.Skip to next paragraph
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With airplanes packed with more passengers than ever before, forecasters predicting severe hurricane and thunderstorm seasons, and airline employee morale at what experts say is a record low, this summer could become one of the most chaotic. Some analysts are predicting it could even rival the summer of 2000, which was laden with work slowdowns, record flight delays, and passenger frustration.
"All of the pieces are in place," says Kevin Mitchell, chairman of the Business Travel Coalition in Radnor, Pa. "There's so much dissatisfaction, and so many employees are burned out. They're working longer hours for less pay in a system that is jammed to the hilt."
Indeed, labor dissatisfaction could be a key factor in how the summer travel season goes. Pilots, flight attendants, and ground workers are already taking to picket lines – at a Washington rally last Thursday and at recent shareholder meetings. Their mantra: "We're takin' it back!" – referring to their pay and benefits.
They're angry at what they see as management enriching itself at their expense. A case in point: After United Airlines was in bankruptcy for three years, during which workers lost their pensions, took pay cuts as high as 50 to 60 percent, and agreed to work longer hours, CEO Glenn Tilton walked away with a $40 million bonus in 2006.
Since 9/11 and the economic downturn of 2001, almost two dozen airlines have gone into bankruptcy. In almost every case, labor took pay cuts and agreed to work longer hours to help the nation's large traditional airlines bring their costs down. At American Airlines, which avoided bankruptcy, workers also took pay cuts that they saw as a collaborative effort with management to save the airline.
"They made those sacrifices for the life of the company and with the understanding that when the company was back on the road to profitability, those sacrifices would be rewarded," says Capt. Paul Rice, first vice president of Air Line Pilots Association. "But as profits have finally come in, almost the first action of senior management in most companies has been to reward themselves – not to reinvest in the company, not to thank shareholders or their workers."
The Air Transport Association (ATA), which represents the largest airline companies, declined to comment on labor's concerns or executive compensation. United Airlines declined to comment in an interview and did not respond to a list of e-mailed questions. But some analysts note that large bonuses are necessary to retain top-level corporate leadership.
During a conference call about first-quarter earnings with reporters in April, Mr. Tilton said that under his leadership, the company was in a "significantly improved financial condition," generating increased cash flows that they've been using to "improve our balance sheet and preserve our strategic options." But he declined to address labor's concerns about executive compensation, instead noting that the current labor contracts, which were negotiated during bankruptcy, will remain in place until they expire.