State of the Airlines

Friday, January 07, 2005

NEWS: Back to the drawing board for United

A judge today threw out United Airlines' deal with its pilot union. This deal had come under fire recently by both the federal pension bureau and United's creditors. In the end I think the judge sees that this deal was going to hamstring other union negotiations which in turn will destroy their exit from Chapter 11. Thus, the judge must try to preserve that exit path.

The decision has got to put a serious hole in the recovery plan that United is trying to float. Maybe there is some salvation in the recent decision allowing US Airways to void the contract of their mechanic's union. But United is desperately trying to avoid that tactic as it has a tendency to turn your merely sullen employees into an angry rabble. Time is short for United.