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Unions Threaten to Strike over United Pension Plan
By Alexei Barrionuevo, The New York Times
May 13, 2005
The unions representing flight attendants, bag handlers and machinists, all issued statements Wednesday saying members had given wide approval to strike. A spokeswoman for the Association of Flight Attendants, which has 21,000 members at United, said the union would most likely respond through unannounced and intermittent strikes, called chaos strikes. Such actions could take the form of a one-day national strike or a strike on a single flight at a remote location.
The flight attendants' union said it was reviewing the possibility of appealing the default of its pension plan, but a spokeswoman, Sara Nelson Dela Cruz, called avoiding the termination "all but impossible," given the court's action.
United contends that any strikes would be illegal because the rest of the workers' labor agreements remain in effect. Airline workers fall under the Railway Labor Act, which forbids them to strike as long as contracts are in place.
On Tuesday, Judge Eugene Wedoff, of the U.S. Bankruptcy Court in Chicago, agreed with United that it could not emerge from bankruptcy with its pension plans in place. That move led to the largest pension default in the three decades that the government has guaranteed pensions. The ruling releases United, a unit of UAL, from $3.2 billion in obligations over the next five years.
The federal agency that guarantees pensions, the Pension Benefit Guaranty Corporation, will assume responsibility for the plans, which cover about 134,000 people. The government measures United's pension shortfall at close to $9.8 billion.
Analysts said that the pension default might put pressure on United's rivals, like Northwest and American, to reduce the costs of their retirement plans.
Northwest, the fourth-largest American carrier, is seeking to lower labor costs by $1.1 billion a year and is talking with unions regarding pay, pension and benefit reductions. Its pension plans are underfunded by $3.8 billion.
UAL, based in Elk Grove Village, Illinois, also announced on Wednesday that its first-quarter loss surged to $1.07 billion from $459 million a year before as expenses for jet fuel and its reorganization rose. Sales inched up to $3.92 billion from $3.91 billion. UAL has posted $5.8 billion in losses since filing for bankruptcy protection from creditors in December 2002.
The airline was back in court Wednesday, asking Wedoff to impose permanent pay and benefit reductions on unions representing its machinists and mechanics. The airline continues to negotiate with some unions on revisions in their labor agreements, trying to get long-term pacts.
About 40 United workers and retirees arrived at the courthouse in a yellow school bus Wednesday. Their gloom was palpable.
"United Airlines just robbed me of any future with the company," said Carol Krause, 47, a 20-year employee who works as a customer service agent at O'Hare Airport in Chicago. "I feel blindsided, and United management has to answer for this."
Dela Cruz, of the flight attendants' union, said that United management was forcing the unions' hand. "What seems to be more insidious is that there seems to be a move under way by management to do away with benefits altogether" at United, she said.
Analysts said unions were not likely to back down and would be compelled to take some action, even it if is symbolic.
But Gary Chaison, a professor of industrial relations at Clark University in Worcester, Massachusetts, said that by raising their strike threats, United's unions were walking a dangerous line.
"They may find themselves going down a path they can't get off now," Chaison said. "If they don't talk about a strike, no one will pay attention to them. And if they do talk about strikes, their bluff will be called and that's the last thing they want right now."
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