As Continental wins its bankruptcy filing, unions seek more contract protection

Unions, rebuffed by a federal bankruptcy court decision supporting a Continental Airlines filing, plan to press Congress to prohibit - or sharply limit - the use of bankruptcy law to abrogate labor contracts.

Three unions involved in a contract dispute with Continental also will continue a court fight against the Jan. 17 ruling that could have what labor says could be ''far-reaching consequences in collective bargaining.''

The unions said, through a spokesman in Washington, that the ruling, unless it is overturned in court or by Congress, can be used to sanction employer bankruptcy actions to reduce wages, eliminate long-existing work rules, and lay off employees.

The Continental bankruptcy case is being watched closely by unions, employers , and the government as a legal test of how much protection - or how little - union members have when management invokes the law's Chapter 11 during labor disputes. A number of companies have filed petitions in recent months, but that of Continental filed last Sept. 24 is the largest and has aroused widespread controversy.

Continental sought sweeping reductions of labor costs - including wage cuts of up to 50 percent - during union contract negotiations.

Three days after it filed a Chapter 11 petition, Continental - which had been shut down by a machinists strike - resumed about half of its prestrike flights, using about one-third of its 12,000 employees and reducing their wages to half the level set by union contracts.

Unions of machinists, pilots, and flight attendants went into bankruptcy court Oct. 11, with the strong support of AFL-CIO and other unions, to challenge Continental's Chapter 11 action as a misuse of the bankruptcy law. The unions charged that the case was filed in bad faith by Continental ''for the sole and exclusive purpose of abrogating its contractual obligations.''

This week Judge R. F. Wheeler Jr., in Houston, dismissed the unions' challenge. He ruled that the unions ''have not satisfactorily demonstrated that there was any reasonable alternative under which the airline could keep operating.''

He agreed that Continental's primary purpose in filing Chapter 11 proceedings was to keep the airline operating ''so as to best utilize its going-concern value,'' an obligation that he said the airline ''owed . . . to its shareholders and its creditors.''

Continental hailed the decision as affirmation that it ''acted in good faith in order to preserve jobs and provide a viable future for the airline and its employees.''

Its operations are now being expanded to 64 percent of the level before the labor dispute began and by summer, according to executive vice-president Phil Bakes, operations should be close to 90 percent.

Judge Wheeler, commenting on the operating situation now, said in his ruling that without Chapter 11 aid, Continental ''would not have been flying for much longer, its 6,000 remaining employees would now be out of a job or working elsewhere, and its ability to reorganize would have been further seriously impaired.''

The next confrontation between the unions and Continental is expected Jan. 30 when hearings are scheduled in bankruptcy court on a request by the airline to have present labor agreements set aside formally.

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