United seeks to slash cost of upkeep
By Marilyn Adams
USA Today
As United Airlines struggles to slash more than $2 billion a year in labor costs, it's planning major changes in an expense invisible to passengers but dear to their hearts: the maintenance of its planes.
United, the biggest airline ever to file for Chapter 11 bankruptcy protection, employs 12,000 mechanics at airports and maintenance stations nationwide and operates aircraft-overhaul hangars in Chicago; Denver; Indianapolis; Oakland, Calif.; and San Francisco. The carrier is on track to spend $2 billion this year on maintenance — for pay, facilities, parts and services.
Although United spends about 80 percent of its maintenance budget in-house, that could soon change. The airline wants to eliminate restrictions in its labor contract, freeing it to outsource more than the 20 percent of maintenance now contracted out.
The proposed changes also would allow United to send regular maintenance work to overseas facilities and would allow the carrier to sell or lease repair facilities it no longer needs. The changes are contained in an airline contract proposal made public by the mechanics' union, the International Association of Machinists. United seeks union approval for changes as part of the reorganization plan it will file with the U.S. Bankruptcy Court.
"That rips out the heart and soul of our contract," says Tom Buffenbarger, IAM's national president .
Michael Peat, IAM's flight safety director, says the mechanics expect United to double the amount of outsourced work. "We anticipate perhaps thousands of mechanics getting laid off," he says.
Peat says some or all of the engine-overhaul work might be outsourced to engine manufacturers.
United officials declined comment, citing the sensitivity of ongoing concession talks with the IAM. The airline is expected to seek $1 billion to $2 billion over six years in contract concessions from the mechanics union as part of its plan to emerge from Chapter 11 a healthier carrier. Any agreement reached with union leaders has to go to mechanics for a vote. If that fails, United could ask the court to let it impose changes.
Before United filed for Chapter 11 on Dec. 9, mechanics rejected a 7 percent pay cut. The airline's new proposal calls for a 13 percent cut.
All major airlines use repair stations to supplement their staffs. Low-fare carrier Southwest Airlines, which has never had a fatal crash, contracts out all its overhaul work. By law, the Federal Aviation Administration holds outside contractors to the same safety standards as in-house mechanics. And work by repair stations is subject to FAA inspection.
Airlines are required by law to perform two types of aircraft maintenance: "line" work on planes sitting at airport gates between flights, and "heavy" or overhaul maintenance on planes as they age. Large passenger jets can fly safely for decades with proper maintenance. Federal law requires airlines to inspect and overhaul jets every so many flights or years. As safety problems occur with parts on certain types of jets, the FAA issues directives requiring airlines to make certain repairs within a deadline.
Two weeks ago, the FAA proposed fining United $805,000 for questionable repairs on three Boeing 757s. The FAA says United mechanics mistakenly used metal tape to fix holes in spoiler panels, which are wing extensions that help slow the plane on landing. The government says United shouldn't have flown the planes with that repair; United says passengers were never at risk, and it plans to contest the fine.
United's proposal to outsource more heavy maintenance troubles United mechanics, their union and some safety experts. If United dramatically increases the work it outsources, that could pressure other major carriers to do the same.
Independent repair stations save airlines money in part because many are nonunion and tend to employ a lower percentage of federally licensed mechanics than airlines. Repair stations are not required by law to have licensed mechanics working on planes, although licensed people must check and sign off work before a jet returns to passenger service.
"When you get into repair stations, pay scales are different and the appeal is low cost," says John King, a safety advocate and former Eastern Air Lines mechanic. "If you are counting on a group of licensed people to oversee people who aren't, it's not as good. The problem is control."
People inside the contract-maintenance industry say repair stations save airlines 40 percent to 50 percent with comparable quality. TIMCO Aviation Services, a Greensboro, N.C.-based company used by United and several other airlines, is one of the larger such companies. It employs about 3,000 nonunion mechanics, pays lower wages than the airlines and operates facilities in small Southern cities with low costs of living.
"TIMCO has an excellent quality record on par with the best airlines' maintenance practices," says President Gil West.
In recent years, however, the quality of work by some repair stations has come under fire, and airlines using them have been criticized for lax oversight. In 1998, Phoenix-based America West Airlines was fined a record $5 million by the FAA for violations related to its use of contractors.
The FAA faulted sloppy procedures at contract maintenance bases doing work on America West jets. The low-fare carrier had trimmed its staff of mechanics and contracted out much of its maintenance. Ultimately, $2.5 million of the fine was waived when America West changed contractors and agreed to improvements. America West is now a TIMCO customer.
United mechanics have complained about the quality and cost-effectiveness of maintenance done by repair shops. Several months ago, IAM officials say, work done on a number of Boeing 737s under an FAA directive was done incorrectly by TIMCO and had to be redone by United mechanics in Indianapolis. TIMCO mechanics used supports made of the wrong material on the front bulkhead that helps keep the plane pressurized during flight, says Bill Austin, a mechanic and IAM safety chairman at United's Indianapolis facility.
"We ended up with three or four planes flying around for months with the wrong material," Austin says. TIMCO's West says use of the wrong material posed no risk. "It wasn't a safety-of-flight issue," he says.
