CHICAGO (Reuters) - Airline unions, still nursing wounds after a bruising six-year clash with cash-strapped carriers, are getting ready to reclaim lost wages and benefits for workers, as well as some lost clout for themselves.
And ironically, in some ways the beating they took during the downturn gives them strength because there’s nothing left to lose, labor experts say.
Airline staff have been cut to the bone and the public’s perception about lack of manpower has added to complaints about rising flight delays and cancellations.
But these problems aside, the airline industry is on the mend, with some carriers taking on staff for expansion after years of contraction and retrenchment dating back to the attacks of September 11, 2001.
And the unions plan to use this rebound as leverage in contract negotiations.
“The fact that the unions are still around is a victory, given the poundings some of them took in bankruptcy court,” said Lowell Peterson, a labor attorney at Meyer, Suozzi, English & Klein.
“(But) there’s no more to be cut. So the airlines are not going to be in a position to demand cuts either in wages or in staffing.”
The airline industry has been battered since 2001 by a perfect storm of terrorism fears, low-fare competition and soaring fuel prices. And most carriers have restructured to some extent to survive in the changed industry.
Top airlines such as UAL Corp.’s UAUA.O United Airlines, Delta Air Lines Inc. (DAL.N) and Northwest Airlines Corp. NWA.N even went through bankruptcy reorganizations where they squeezed major concessions from their employees.
Airlines faced strike threats as contract negotiates trudged along and, while no such work action is looming now, experts say employee frustration is high as is union resolve to win better contracts.
“Now we see the pendulum has swung back the other direction and we see labor unions trying to recoup some of that,” airline consultant Robert Mann said.
By almost any estimation, the last few years have been painful for airline unions as they battled — often unsuccessfully — to preserve jobs, wages and pensions.
Delta used bankruptcy protection to cut 6,000 jobs and restructure contracts. United cut wages, shrank its work force 25 percent and dumped underfunded pensions.
Northwest slashed labor costs by $1.4 billion and took the unusual step of using court permission to void a contract with its flight attendants and impose new terms. The workers eventually ratified a new contract, but only by a slim margin.
Before entering Chapter 11, Northwest trounced its mechanics union, replacing the workers when they went on strike.
Airline managers then rubbed salt in the workers’ wounds by granting lucrative stock awards to top executives.
UAL Chief Executive Glenn Tilton earned nearly $40 million in 2006, including stock bonuses. Northwest CEO Doug Steenland has a stock and options package potentially worth more than $20 million.
Some experts believe the labor cost cuts were too steep and cannot be permanent.
“All the reductions they’re making (in operating costs) are on the backs of labor. I don’t see it as sustainable,” said Jody Hoffer Gittell, a professor of management at Brandeis University, who researches the airline industry.
“I think there’s going to be a snapback because of the way it’s been done,” Gittell said. “It’s been done in a pretty unfair way.”
Airline labor leaders have emerged from the latest cost cutting with battle scars, but also with honed negotiating skills.
“Having been able to survive this most recent crisis suggests that the people who are left know how to fight,” labor attorney Peterson said.
Robert Roach Jr., general vice president at the International Association of Machinists, echoed the sentiment. But he added airline managers must learn an even more valuable lesson — give labor a louder voice in airline operations.
That is the only way to avoid operational snafus that can cost an airline business and erode financial stability. Such problems may have occurred recently at United Airlines, where a computer failure on June 20 delayed nearly 270 flights.
At Northwest, pilots blame extraordinarily high cancellations recently on insufficient staffing. The airline blames severe weather.
In any event, operations will run more smoothly if managers and union leaders cultivate a better working relationship, Roach said.
“They need to make this work. You need somebody from the top level of the union,” he added.
Additional reporting by Chris Reiter in New York