Posted on Mon, Sep. 01, 2003
Unions hurt by airlines' budget woes
By Trebor Banstetter
Star-Telegram Staff Writer
It's a familiar situation in today's airline industry: Facing a substantial shortfall in cash, leaders are making tough decisions to cut budgets, services and even employees.
But in this case, it's not airline CEOs reeling from a financial hit. It's union leaders, who usually fight management efforts to cut budgets.
Heading into Labor Day, airline union leaders have hardly had time to contemplate the holiday's meaning. In recent months, they've cut back on services, reduced operating hours and even laid off staff. The union budgets have been squeezed because the airlines have cut jobs and reduced the salaries of dues-paying members.
The problem is particularly bad for the unions representing American Airlines pilots and flight attendants. Unlike other airline labor groups, which represent workers at many carriers, the Allied Pilots Association and the Association of Professional Flight Attendants represent only American Airlines employees.
"Given the circumstances, our members are expecting us to tighten our belt," said John Ward, president of the flight attendants union. "And that's what we're doing."
Traditionally, airline unions have been among the strongest groups in organized labor. They are well-funded, disciplined and known for tough negotiating tactics that have provided members with good pay and benefits.
But layoffs and pay cuts have slashed unions' revenue from member dues. At the same time, unions have spent heavily on lawyers, financial consultants and analysts as they negotiate concessions with management.
Consider:
. The Allied Pilots Association will collect about $11 million in dues for its fiscal 2004 budget, which began July 1. Last year, it collected $24 million.
. The Association of Professional Flight Attendants will take in $5 million less in dues this year than last after furloughs, leave and attrition, according to a report by its treasurer, Juan Johnson. The report didn't specify a percentage decline.
. Chapters of the Transport Workers Union, which represents American's mechanics and ground workers, have cut budgets as the union lost nearly 6,000 dues-paying members in furloughs. Also, some members are trying to oust the labor group and install another union, the Aircraft Mechanics Fraternal Association.
And even as revenue falls, demand for union services increases. Unions help furloughed employees, and they have had to work hard to implement the contracts approved in May.
Union leaders are also spending more time on employee grievances as airlines make work rules stricter and try to boost productivity.
"The companies are in penny-pinching mode," said James Magee of the Air Line Pilots Association, which represents pilots at American Eagle, the regional affiliate of American Airlines. "We're seeing a big jump in grievances related to days off, sick days and things along those lines."
The troubles aren't confined to the unions at American Airlines; labor groups at airlines nationwide report cash shortages because of industry cutbacks.
"We've seen a substantial drop" in revenue this year, said Don Skiados, a spokesman for the national office of the Air Line Pilots Association, which represents 66,000 pilots at 42 airlines, including bankrupt carriers United Airlines and US Airways. The union's $100 million budget is down about 15 percent from last year, he said.
Some airline labor experts say the financial squeeze, coupled with union members' approval of steep concessions, could weaken airline unions for years to come.
"This is a tough time for the airline unions, which traditionally are very strong," said Richard Gritta, who studies airline economics as a professor at the University of Portland in Oregon. "I think they're resigned to the fact that they're never going to get back to where they were a few years ago."
Services slashed
The Allied Pilots Association's troubles began before the economic downturn. In 1999, a judge ordered the union to pay $45.5 million in damages to American after an 11-day sickout. The union paid $20 million before American forgave the rest as part of the May concessions.
The payout depleted the union's reserve fund. Today, the union has $9.8 million in reserves; the union's bylaws require at least $13.5 million. The group's board waived the requirement three years ago.
After the concessions were approved, the union also cut dues from 1.5 percent of member wages to 1 percent. Dues are traditionally reduced after new contracts are approved, even when unions win pay raises.
Since then, the union office has laid off 10 employees and reduced travel and administrative expenses for board and committee meetings by nearly $8 million. The union has been relying more heavily on volunteers to run services that had been contracted out or performed by paid staff members.
The union is also considering mortgaging its headquarters. Union leaders estimate that they could raise $4.2 million in cash, which they would add to the reserve fund.
"The past few years have put a tremendous strain on finances," John Darrah, the union's president, told members in a June e-mail.
The flight attendants union is also feeling the strain, officials said.
"We must make very serious budget adjustments so that we can continue to provide our membership with the services they have come to expect," Johnson said in a report to members.
The union hasn't been affected by pay cuts because monthly dues are a flat amount, $41 per member, instead of a percentage of salary.
But dues revenue has still dropped because thousands of flight attendants have been furloughed or have taken voluntary leave, Ward said.
With a $5 million cut in annual revenue, the Association of Professional Flight Attendants has reduced some salaries for its national officers, shortened office hours at its headquarters and removed some features from its Internet site.
Ward said that the union hasn't reduced member services but that if the budget is cut again or if the union's board reduces dues, some resources may have to be eliminated.
"We're like any business," he said. "You can only spend what comes in."
The union is struggling to remain prepared for further turmoil in the industry, Johnson said. "In most cases, these are things the [union] has little or no control over but must be ready to cope with."
Battle to represent
The Transport Workers Union hasn't been affected quite as much as American's two other main labor groups. That's because the union has members at other airlines, including profitable low-fare carriers like Southwest Airlines.
Still, budgets are being reduced, particularly at local chapters serving carriers that have enacted concessions, said Jim Little, international vice president.
"We're certainly being impacted in terms of dues," he said.
Little said that he could not provide specific information on the budget but that the union has lost 6,000 dues-paying members because of cutbacks at American.
TWU officials also have a battle on another front, an attempt by some members to throw out the union and bring in a new labor group.
Organizers say 7,000 TWU members have signed cards supporting the effort to replace the union with the Aircraft Mechanics Fraternal Association, which represents mechanics at United Airlines, Southwest Airlines and Northwest Airlines, among others.
Organizers say that when they have gotten 10,000 cards, representing about 60 percent of eligible members, they will ask the National Mediation Board for an election.
Union members critical of the TWU say that the leadership gave up too much in salaries and benefits during concession talks and that members should have been allowed to vote on the issue a second time after it was revealed that American's top executives were eligible for lucrative bonuses and pension perks.
"Your livelihood and future are too important to allow a small un-elected, decision- making group of national TWU officers to negotiate your contract without any accountability or democracy," O.V. Delle- Femine, AMFA's national director, said in a recent letter to American employees.
Little said many ground workers still don't understand that union officials had no choice but to accept concessions.
"The only option was bankruptcy," he said. "And there's no question that we would have done a lot worse in bankruptcy than we have under the new contracts."
The battle, however, means that "I'm spending a lot of my time now rehashing everything that went on in the spring," Little said.
Gritta, the economics professor, said the unions will deal with the fallout from recent events for years.
"The industry has changed forever, and the unions are being forced to change along with them," he said. "It's very frustrating for them, but that's the way things are going to be a for a long time."
Pilots cut back
The Allied Pilots Association, which represents American Airlines pilots, has cut its budget to cope with a $13 million drop in revenue this year. Some of the cuts:
Department Cut Pct. cut
Staffing $2.8 million 34 percent
Board meetings $700,000 39 percent
Base costs $200,000 22 percent
Committee costs $6.9 million 73 percent
SOURCE: Allied Pilots Association
Unions hurt by airlines' budget woes
By Trebor Banstetter
Star-Telegram Staff Writer
It's a familiar situation in today's airline industry: Facing a substantial shortfall in cash, leaders are making tough decisions to cut budgets, services and even employees.
But in this case, it's not airline CEOs reeling from a financial hit. It's union leaders, who usually fight management efforts to cut budgets.
Heading into Labor Day, airline union leaders have hardly had time to contemplate the holiday's meaning. In recent months, they've cut back on services, reduced operating hours and even laid off staff. The union budgets have been squeezed because the airlines have cut jobs and reduced the salaries of dues-paying members.
The problem is particularly bad for the unions representing American Airlines pilots and flight attendants. Unlike other airline labor groups, which represent workers at many carriers, the Allied Pilots Association and the Association of Professional Flight Attendants represent only American Airlines employees.
"Given the circumstances, our members are expecting us to tighten our belt," said John Ward, president of the flight attendants union. "And that's what we're doing."
Traditionally, airline unions have been among the strongest groups in organized labor. They are well-funded, disciplined and known for tough negotiating tactics that have provided members with good pay and benefits.
But layoffs and pay cuts have slashed unions' revenue from member dues. At the same time, unions have spent heavily on lawyers, financial consultants and analysts as they negotiate concessions with management.
Consider:
. The Allied Pilots Association will collect about $11 million in dues for its fiscal 2004 budget, which began July 1. Last year, it collected $24 million.
. The Association of Professional Flight Attendants will take in $5 million less in dues this year than last after furloughs, leave and attrition, according to a report by its treasurer, Juan Johnson. The report didn't specify a percentage decline.
. Chapters of the Transport Workers Union, which represents American's mechanics and ground workers, have cut budgets as the union lost nearly 6,000 dues-paying members in furloughs. Also, some members are trying to oust the labor group and install another union, the Aircraft Mechanics Fraternal Association.
And even as revenue falls, demand for union services increases. Unions help furloughed employees, and they have had to work hard to implement the contracts approved in May.
Union leaders are also spending more time on employee grievances as airlines make work rules stricter and try to boost productivity.
"The companies are in penny-pinching mode," said James Magee of the Air Line Pilots Association, which represents pilots at American Eagle, the regional affiliate of American Airlines. "We're seeing a big jump in grievances related to days off, sick days and things along those lines."
The troubles aren't confined to the unions at American Airlines; labor groups at airlines nationwide report cash shortages because of industry cutbacks.
"We've seen a substantial drop" in revenue this year, said Don Skiados, a spokesman for the national office of the Air Line Pilots Association, which represents 66,000 pilots at 42 airlines, including bankrupt carriers United Airlines and US Airways. The union's $100 million budget is down about 15 percent from last year, he said.
Some airline labor experts say the financial squeeze, coupled with union members' approval of steep concessions, could weaken airline unions for years to come.
"This is a tough time for the airline unions, which traditionally are very strong," said Richard Gritta, who studies airline economics as a professor at the University of Portland in Oregon. "I think they're resigned to the fact that they're never going to get back to where they were a few years ago."
Services slashed
The Allied Pilots Association's troubles began before the economic downturn. In 1999, a judge ordered the union to pay $45.5 million in damages to American after an 11-day sickout. The union paid $20 million before American forgave the rest as part of the May concessions.
The payout depleted the union's reserve fund. Today, the union has $9.8 million in reserves; the union's bylaws require at least $13.5 million. The group's board waived the requirement three years ago.
After the concessions were approved, the union also cut dues from 1.5 percent of member wages to 1 percent. Dues are traditionally reduced after new contracts are approved, even when unions win pay raises.
Since then, the union office has laid off 10 employees and reduced travel and administrative expenses for board and committee meetings by nearly $8 million. The union has been relying more heavily on volunteers to run services that had been contracted out or performed by paid staff members.
The union is also considering mortgaging its headquarters. Union leaders estimate that they could raise $4.2 million in cash, which they would add to the reserve fund.
"The past few years have put a tremendous strain on finances," John Darrah, the union's president, told members in a June e-mail.
The flight attendants union is also feeling the strain, officials said.
"We must make very serious budget adjustments so that we can continue to provide our membership with the services they have come to expect," Johnson said in a report to members.
The union hasn't been affected by pay cuts because monthly dues are a flat amount, $41 per member, instead of a percentage of salary.
But dues revenue has still dropped because thousands of flight attendants have been furloughed or have taken voluntary leave, Ward said.
With a $5 million cut in annual revenue, the Association of Professional Flight Attendants has reduced some salaries for its national officers, shortened office hours at its headquarters and removed some features from its Internet site.
Ward said that the union hasn't reduced member services but that if the budget is cut again or if the union's board reduces dues, some resources may have to be eliminated.
"We're like any business," he said. "You can only spend what comes in."
The union is struggling to remain prepared for further turmoil in the industry, Johnson said. "In most cases, these are things the [union] has little or no control over but must be ready to cope with."
Battle to represent
The Transport Workers Union hasn't been affected quite as much as American's two other main labor groups. That's because the union has members at other airlines, including profitable low-fare carriers like Southwest Airlines.
Still, budgets are being reduced, particularly at local chapters serving carriers that have enacted concessions, said Jim Little, international vice president.
"We're certainly being impacted in terms of dues," he said.
Little said that he could not provide specific information on the budget but that the union has lost 6,000 dues-paying members because of cutbacks at American.
TWU officials also have a battle on another front, an attempt by some members to throw out the union and bring in a new labor group.
Organizers say 7,000 TWU members have signed cards supporting the effort to replace the union with the Aircraft Mechanics Fraternal Association, which represents mechanics at United Airlines, Southwest Airlines and Northwest Airlines, among others.
Organizers say that when they have gotten 10,000 cards, representing about 60 percent of eligible members, they will ask the National Mediation Board for an election.
Union members critical of the TWU say that the leadership gave up too much in salaries and benefits during concession talks and that members should have been allowed to vote on the issue a second time after it was revealed that American's top executives were eligible for lucrative bonuses and pension perks.
"Your livelihood and future are too important to allow a small un-elected, decision- making group of national TWU officers to negotiate your contract without any accountability or democracy," O.V. Delle- Femine, AMFA's national director, said in a recent letter to American employees.
Little said many ground workers still don't understand that union officials had no choice but to accept concessions.
"The only option was bankruptcy," he said. "And there's no question that we would have done a lot worse in bankruptcy than we have under the new contracts."
The battle, however, means that "I'm spending a lot of my time now rehashing everything that went on in the spring," Little said.
Gritta, the economics professor, said the unions will deal with the fallout from recent events for years.
"The industry has changed forever, and the unions are being forced to change along with them," he said. "It's very frustrating for them, but that's the way things are going to be a for a long time."
Pilots cut back
The Allied Pilots Association, which represents American Airlines pilots, has cut its budget to cope with a $13 million drop in revenue this year. Some of the cuts:
Department Cut Pct. cut
Staffing $2.8 million 34 percent
Board meetings $700,000 39 percent
Base costs $200,000 22 percent
Committee costs $6.9 million 73 percent
SOURCE: Allied Pilots Association
