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Crisis Essay

5323 words - 22 pages

THE AIRLINE INDUSTRY is in deep crisis.  Losing over 100,000 jobs since September 11, 2001, and suffering major wage and benefit cuts, workers are in shock and looking for new leadership.  The recent U.S. invasion and occupation of Iraq, the outbreak of the SARS epidemic and the economic downturn exacerbate the impact of the crisis on labor.  Airline workers are in the forefront of discussions about their own industry and more general questions as political and social consciousness changes under the impact of the restructuring crisis.  These experiences are valuable for all workers.
While 9/11 and subsequent events greatly worsened the crisis, the dire state of this industry pre-dated the ...view middle of the document...

56 billion.  The pacts include outsourcing of all heavy maintenance of aircraft to less costly nonunion facilities.
The new power plants (jet engines) allow smaller regional carriers to use fifty- to seventy-seat jets to fly longer distances.  Electronic check-ins (E-Tickets) and the internet are eliminating travel and reservation agents by the thousands.  The bottom line is fewer workers and a more flexible workforce, as well as a dummying down of workers' skills.
United expects to come out of Chapter 11 in 2004.  American Airlines, the world's largest carrier, also used the threat of bankruptcy protection to pressure its unions to accept yearly concessions of $1.8 billion for five years.  Yet on May 1, a few days after the concessions were approved, thousands of American Airlines workers received pink slips as management once again began talking about a possible Chapter 11 filing—repeating the tactic of management at US Airways.  First win concessions, then file for bankruptcy.
Northwest Airlines, the largest American carrier in the Pacific region, is still financially flush.  It has used a legal trick called "force majeure" three times to impose layoffs and other changes on its workforce.  At number three Delta, management is pressuring its only unionized workers, the pilots, who are the highest paid in the industry, to accept lower wages and changed work rules.
Meanwhile, executives at the major carriers are as arrogant as ever. They have established private pension funds for top executives that cannot be terminated under Chapter 11.Workers at American were so outraged by the news that the CEO had to resign, yet Northwest continues to reimburse top executives for out-of-pocket health expenses after imposing 20% co-pays for other employees.
Hawaiian Airlines filed for Chapter 11 in March, as did Air Canada in the spring.  Internationally, massive layoffs and restructuring are taking place as many protectionist laws are removed to allow more competition.
In 2001 and 2002 airlines posted losses of $17.7 billion.  According to the Air Transport Association total net debt rose by $33 billion or 61% since 1999.  The eleven largest carriers are more than 90% leveraged.  Too many seats are flying empty or being sold below cost. Overcapacity may be between 10-20%.
The few carriers making profits are mainly new and nonunion, including Jet Blue, ATA and regional feeder carriers.  Consumers, though concerned about bankruptcies and aircraft safety, generally see the lower ticket prices of JetBlue and Southwest as a benefit of deregulation.  Once considered a minor threat, Southwest is the tortoise steadily taking market share from the hares.
Southwest Airlines remains the exception to the rule of large airlines.  Its business model centers on domestic routes and uses a single aircraft type. Yet it is the most unionized airline in the industry and has never sought international routes or alliances.
Rewriting the Rules
Congress and the White House...

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