Airline workers see more bad times as oil rises

By John Crawley - Analysis

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.