State of the Airlines

Thursday, January 06, 2005

NEWS: Judge terminates US Airways labor contract

Machinists at US Airways, the nation's seventh-largest carrier, were facing pay cuts of up to 35 percent and the loss of thousands of union jobs after a bankruptcy judge on Thursday -- for the first time in U.S. airline industry history -- unilaterally terminated a union collective bargaining agreement. Source: Associated Press

My Commentary: I gotta admit I never thought that US Airways would get away with this. But now that this is done you'd better stand to the side because the other bankrupt airlines will be moving at top speed for a similar verdict (can you say United?). This is a bitter pill for the folks in the union...but its been coming for a while. Labor unions have been in a game of one-ups with each other for years continually pushing salary and benefits to new heights. I can't argue with trying to improve your position but its outta hand and now its abruptly snapping back. Salaries, benefits, work rules are all going to be overhauled and rightfully so. The industry simply cannot support the overhead (in fact it couldn't handle it before 9/11).

Now the funny part. This judgement, in the end, is going to be irrelevant to US Airways. My opinion is that they are still headed for liquidation. This ruling is, however, quite relevant to the airlines that will survive and the unions who represent their workers.