Airlines industry facing major labor contract restructuring

| Apr 24, 2012 | Contract Disputes

The strength of unions representing employee rights continues to dwindle. One of the remaining union contract strongholds was in the airline industry. However, with mergers and falling profits, the airline industry is going through a major labor relations restructuring, according to an industrial relations professor at Massachusetts’ Clark University.

American Airlines is in federal bankruptcy court trying to figure out a way to best save the company. While American wants to make cuts in their labor costs, union representatives are suggesting a merger with US Airways instead. American says it is burdened by high labor costs because of employment contracts requiring pension plans, health benefits and cumbersome union work rules. The airline says it can only survive if the courts let them throw out the union contracts.

An alternative buyout and merger plan presented by the union includes pay raises and few job losses. American has until this fall to present an alternative restructuring plan. The fight extends more than just saving an airline. Similar bankruptcy court proceedings have acted as precedent-setting employment law and succeeded in eliminating the power of unions. Companies have used bankruptcy filings as a way to cut wages and pension obligations.

The court will recess for two weeks while the company and unions try to renegotiate their employment contracts and agreements. Other airlines have been able to turn a profit by imposing fees on customers and cutting labor costs. Experts agree that if the union agrees to certain concessions now, they will have to continue giving up additional clout while the airlines continue to cut costs to stay afloat.

Source: Chicago Sun-Times, “American makes its case against union contracts,” April 23, 2012