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Tuesday, May 17, 2005
 
End Game for Unions

United’s mechanics have signed a new contract. It essentially gives management everything they asked for in the way of pay and benefit cuts; the same cuts that the mechanics said they would strike over, two weeks ago. They didn’t strike because they knew that it would be the end of the company. It turns out that Chapter 11 is a wonderful tool for gutting pay and benefits, and breaking unions.

United’s finances are a horror show. It’s not just the pension liabilities that they irresponsibly allowed to accumulate--those are gone now, along with the pensions. It’s their revenue model and business plan itself that sucks. Here is a summary of their first quarter results.

The article spends some time talking about pension-related and bankruptcy-related costs, but here is the bottom line: Their loss from operations was $250 million. That works out to about $16 for every passenger that walked through their doors.

Their total loss was $1.28 billion. For one quarter. Or $14.2 million per day. After two years of bankruptcy reorganization. With a CEO who was paid more than any other airline CEO in 2004, at $1.1 million. In a NYT article on Sunday, Delta’s CEO complained about the problems that United’s endless stay in bankruptcy is causing for the rest of the industry. He said that he had called the White House more than once to explain the need for some sort of intervention for the entire industry.

The Bush Administration’s response? “You can file Chapter 11 bankruptcy, too.” So apparently it is the official policy now, to put all unionized airlines into bankruptcy.

Too paranoid, you think? In 2000 and 2004, the Airline Pilots Association sent Bush, along with all of the other presidential candidates, a questionnaire regarding labor and airline issues. This is a respectful and fairly short document that every candidate has always responded to in some fashion. Sometimes we like the answers, and sometimes we don’t.

The Bush team has never responded to it in any way at all.
 
Shouting into the closet to inform and entertain the 10 people who actually read this thing. In our new format as an online magazine, we take pride in our reporting and opinions. Please leave reader feedback on our online magazine message board so that we can better serve you.

“There’s a lot of money to pay for this that doesn’t have to be U.S. taxpayer money, and it starts with the assets of the Iraqi people…and on a rough recollection, the oil revenues of that country could bring between $50 and $100 billion over the course of the next two or three years…We’re dealing with a country that can really finance its own reconstruction, and relatively soon.” -Paul Wolfowitz

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