UAL Gets Final Nod From Unions
Labor cost reform in the U.S. airline industry advanced another step today when United Airlines announced its labor unions ratified new labor contracts. The carrier today submitted for final approval those new agreements to the court overseeing bankruptcy proceedings. The Association of Flight Attendants announced its ratification yesterday, followed early this morning by announcements from two districts of the International Association of Machinists and Aerospace Workers.
The agreements, combined with concessions agreed to by the carrier's other unions, notably the Air Line Pilots Association, positioned United to cut annual costs by more than $2.5 billion. "With this critical milestone behind us, we can now move quickly to implement the ratified changes in all of our labor agreements," said UAL Corp. chairman and CEO Glenn Tilton in a statement.
US Airways previously reduced its labor costs during bankruptcy restructuring. American Airlines last week tentatively won huge concessions from labor unions, staving off an immediate Chapter 11 filing. Delta and Northwest each have said discussions have begun with labor groups.
Despite these early stages of labor cost reform, major U.S. carriers are not assured of success or even survival. Jim Parker, airline analyst for Raymond James, speaking this week at the Association of Corporate Travel Executives conference in Las Vegas, said, "The major airlines are not going to become low cost, regardless of labor programs."
Frontier Airlines CEO Jeff Potter agreed. "We are still a long way from the major airlines really addressing the challenges they face," he said. Specifically on United, Frontier's primary rival, Potter said, "United has worked to reduce costs, but they still are losing lots of money and still have several hurdles in front of them."
Meanwhile, America West chief Doug Parker, when asked about Delta's new low-fare subsidiary Song, said, "It will be a high-cost, low-fare airline. The biggest expense, labor, has not been addressed." He also noted that United "is moving further away" from the low-fare-carrier-within-a-carrier concept. "It is hard to be something you are not."