Airline workers see more bad times as oil rises

WASHINGTON (Reuters) - Just when workers at big U.S. airlines thought they were set to share in a recovery from a traumatic downturn, unions there are again backed into a corner as the industry's fortunes turn bleak.

The heavily unionized six network airlines have collectively lost 75 percent of their market value in the past year as fuel costs have risen steeply and travel has slowed because of the economy. Some Wall Street experts believe the situation could be worse than the multiple bankruptcies that followed the September 11, 2001, hijack attacks.

"Most airline employees see the good days as over, like the auto industry," said Gary Chaison, a labor expert at Clark University who follows the transportation sector.

Unions, led by the powerful pilots, are upset with prospects of mergers, rising executive pay, fractious contract talks, and management priorities they say have hurt the industry's ability to respond to the fuel price spike.

Labor officials, airline industry consultants, analysts and other experts acknowledge that labor-management relations are deteriorating. The out-of-court restructurings and bankruptcies from 2002 through 2007 cut the work force at the six big U.S. airlines by a third to about 276,000.

Bankrupt and near-bankrupt airlines largely met billions in cost-cutting targets through furloughs and labor concessions. Wages and benefits were slashed, and thousands of workers lost their pensions.

"There was talk when restructuring was going on about a new collaborative relationship," said Stuart Klaskin of KKC Aviation Consulting. "In many cases, that lasted about as long as it took to get union (concessions), and then it was 'us and them' again."

Unions hoped to recoup concessions in new contracts, but now they face potential job losses as carriers are desperate to shrink their operations and bankruptcy fears are resurfacing.

DISCONTENT SURGES

Unions complain little progress was made in repairing relations before the latest downturn.

The 12,000 pilots at American Airlines, a unit of AMR Corp, have been in protracted contract talks and joined other unions outside the company's annual shareholders meeting last month to complain about the carrier's performance.

Pilots at US Airways Group Inc have tangled among themselves and with management over contract terms.

At United Airlines parent UAL Corp (, pilots have criticized what they and other unions characterize as a drive by Chief Executive Glenn Tilton to merge the company.

Teamsters, who represent mechanics at United, last month urged shareholders to withhold their votes for Tilton as board chairman over the merger issue.

Executive compensation, especially at American and United, has also stoked union resentment.

Maintenance workers lost the most jobs during restructuring, and Robert Roach, general vice president of the International Association of Machinists, recently told Congress: "Too much is at stake to take these airlines at their word."

UNCERTAINTY AHEAD

With a widely anticipated wave of airline mergers fizzling save for a proposal by Delta Air Lines Inc to buy Northwest Airlines Corp, labor is staring down the barrel of capacity cuts. American, Delta and United all have plans to pull more seats out of their schedules this fall.

Job losses are expected as carriers shrink to try and stay viable, and analysts have raised bankruptcy scenarios if business does not improve dramatically.

"The industry is obviously in turmoil, and no airline is immune," said Joe Tiberi, a spokesman for the machinists union. "We're worried about the impact it will have on our members at every airline."

The IAM, which mainly represents baggage handlers, reservation agents and other ground workers, has 17,000 members at United, 12,500 at Northwest, and 10,000 at US Airways -- including mechanics. It is particularly worried about Northwest's merger with Delta.

Only Delta, which is mostly non-union, has announced large job cuts to reduce capacity. The company has said more than 3,000 employees have agreed to voluntary buyouts. The only unionized group, pilots, are not included in the figure.

For Patricia Friend, president of the union that represents flight attendants at United, US Airways and Northwest, capacity cuts and prospects for restructuring keeps her up at night. She said concessions were not an option, but there was little the union can do. U.S. law permits strikes by airline workers only after contract negotiations have failed.

"If it's an industry business decision, I'm not going to stop it," Friend said. "But I need to be at the table to try and protect the interests of my members."

(Editing by Lisa Von Ahn)