Every 10 years or so the Airline Industry has a major, unprecedented, crisis. Some carriers make it out and some don’t. One thing that is constant is that the industry continues to grow. Back in 1982 the industry posted its largest losses up to that point; in 1992 it did the same. 2002 finds us in the same situation, an industry that appears crippled. In 1982, and 1992 all we heard about was how desperate the airlines were. During both those cycles they went on to record profits immediately following those losses. During both those periods employees consented to concessionary contracts that remained in place long after the crises had abated.
In 1998 the Industry employed 621,000 people. By 2010 employment is expected to reach 860,000. These figures are from the ATA website. (ATA- The industry’s Lobbying Group)
This months Aviation Maintenance magazine (The Monthly Management Tool) has an editorial about future AMT shortages. The article highlights how despite the current setback the future presents severe challenges for the aviation industry to find and retain mechanics. It said There simply will not be enough new people in the pipeline to make hiring new technicians an easy job.
When EAL shut their doors I saw AA hire old men, some with severe medical conditions. Why? Because that’s all there was. A few years later I saw the same thing when Pan Am went out. For the Pan Am guys their biggest regret was all the years wasted working under concessionary contracts. As a result they have less seniority than their peers from EAL and will get less pension. The Pan Am guys helped the company to limp along for a few extra years, which in the end cost them more. A few did benefit however; the last CEO of Pan Am was awarded a few extra million dollars out of the liquidated assets for his 6 months of service. That money could have gone into Pan Ams under funded pension.
Do I think that USAIR might go out of business? Yes. There is always the possibility that the communities served by U will pressure the government to keep it going. However I don’t think that mechanics concessions will make the difference either way. According to AW&ST the reason why U went chapter 11 was not because of it labor contracts; it was because of its vendor contracts. The company/industry sees an opportunity to go after labor costs and they are using it. If the company was sincere then they would offer a relief provision that would reopen the contract should they return to profitability instead of just holding out for 6 years? 6 years is completely unreasonable. In the both of the past crisis’s (82 & 92) the industry went from record losses to record profits in three years or less. We keep hearing about how the ATSB and TPG will not change their numbers, well maybe they wont but probably they will. During the 1997 APA strike the APA was informed by the government that the President was NOT, I repeat NOT going to step in with a PEB. “You guys are going to have to walk away from your six figure jobsâ€. It seems the government believed that the APA would back off. As midnight approached the APA was informed that they would still be walking. Then at the last minute they were told that the President had issued a PEB. The APA pilots refused to believe it until they saw it. It took some time since the President was not in the White House. The message was received and the strike was called off minutes after it started. Just as the pilots were told that the governments position WOULD NOT CHANGE so are you guys. In the end the position that was written in stone was changed.
Why did the government change its position with the APA? Because having an airline like AA or UA go on strike can have a devastating effect on the economy.Even with a booming economy like in 97. The airline industry accounts for 3% of the GDP, around $273 Billion. I believe that between the two carriers they have 50% of the market. USAIR is not as big as AA so the effect may not be as bad but Bush wants PA, USAIR has a major hub there. He may step in. Should that happen he would likely maintain the status quo, but only if you vote NO. There are no precidents that I know of where a President interfered in a labor dispute and forced cuts. Any time a President stepped in the worst he did was maintain the status quo.
Those who are pushing for a YES vote are hiding behind aliases because they are promoting fear and when everything settles down they do not want to be called to task for their actions. They maintain that YES is the only option. However they cannot guarantee that a YES vote will save the company. Nor can they guarantee that that a NO vote will force the liquidation of the company. The company may liquidate with either vote, or it may survive with either vote. All the threats about this being non-negotiable and that being non-negotiable is bull, everything is negotiable. There is a lot more going on here than meets the eye. Does the Bush administration want another 40,000 people added to the unemployment rolls just weeks before the elections? Will that appear as a positive economic indicator? For every one airline employee the economy sees another $439000 added to the GDP. That’s a possible loss to the economy of $17.56 Billion should the company fold. With an average unemployment of $300/week the communities where the USAIR employees live would have to lay out $51,600,000 a month in benefits. The more you dig in the more complicated it gets. As time goes on more and more things come into play, especially in the political arena. The ATSB, TPG, USAIR, and the Unions all wish that you take what is for them the easy route and vote YES. But none of them have to live with the negative consequences for the next 6, or more, years. The IAM is staying strangely silent, giving you only the worst case scenarios and basically repeating the company’s propaganda. If you vote yes and two years from now the company is profitable they will say to you “Don’t blame the IAM, YOU voted for the contractâ€. The union has a responsibility to give you all the information not just the company’s side. That’s the only way that you can make an informed decision. One that recognizes all the risks, both long term and short. From what I’ve seen they have utterly failed to do this. Scotty Fords Letter was the worst example of Union leadership I’ve ever seen. Is that a “Fighting Machinistâ€? A NO vote will more than likely mean another vote, but with better terms. At the very least you should be able to get the years cut back. The fact is that once you vote YES you lose any chance to come out of this recession in decent shape. Yes it could end up worse for a period of time but as the Pan Am guys found out, concessions do not save companies and when the company did fold, they survived.
