Posted on: Friday, May 6, 2005
United treads new ground in effort to void contracts
By Mark Skertic
Chicago Tribune
CHICAGO — United Airlines could be flying into uncharted legal territory next week when it asks a judge to throw out the contracts of more than 41,000 flight attendants, mechanics and machinists.
The airline will use bankruptcy laws when asking the court to void the contracts of three unions. If successful, the carrier has vowed to invoke another law, the Railway Labor Act, to force workers to stay on the job.
In short, United hopes to use the power of the courts to compel workers to accept new pay and benefit terms the company will dictate.
It's an unprecedented argument the airline is making, said Douglas Baird, a bankruptcy expert at the University of Chicago Law School.
"There's a deep-seated principle that's working here independent of the airlines," he said. "This is a country where we don't force people to work under terms and conditions they never agreed to."
But Robert Siegel, a Los Angeles attorney who has represented US Airways in its efforts to terminate its contract with machinists, said United's position might be unique, but it has a sound legal basis.
The Railway Labor Act, which, despite its name, also governs airline employees, prevents workers from striking until mediation and other efforts have been exhausted.
"When you don't have a contract, it doesn't mean you're free to strike," Siegel said.
United has called the need to further reduce labor costs essential to bringing the airline out of bankruptcy.
But it also fears a strike by any of its labor groups would cripple the airline, drive away customers and erode the confidence of financiers needed to provide the money to exit court protection. United entered bankruptcy in December 2002.
On Tuesday, the carrier will ask the bankruptcy court in Chicago to approve a deal made with the federal Pension Benefit Guaranty Corp. That agency has agreed to take over the carrier's pension plans, a move
that would save United about $645 million annually. It would also ultimately reduce the retirement benefits for many employees by thousands of dollars.
If the court accepts that agreement, it will set the stage for a trial scheduled to start the next day. United will be back before Judge Eugene R. Wedoff asking him to void the contracts of the Association of Flight Attendants, the International Association of Machinists and Aerospace Workers, and the Aircraft Mechanics Fraternal Association.
If successful, United would be free to impose new wage scales and decide what benefits to offer.
The airline already has come to terms with its other labor groups.
The bankruptcy code allows a court to reject labor contracts if the terms will prevent the company from returning to profitability. But the unions affected by next week's hearings have said they will walk off the job if their contracts are terminated. Particularly galling to many is the prospect of losing their pensions.
