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March 17, 2009 6:14 PM

The United Airlines Bankruptcy, Causing Headaches Five Years Later

Posted by Zach Lowe

With too many bankruptcies to count being filed every day, it's important to remember that changes companies make during Chapter 11 proceedings have longer term consequences once those companies resume normal operations.

Case in point: United Airlines, which renegotiated its collective bargaining agreements with several unions (including the pilots' union) during its recent bankruptcy, filed in 2002. One key point in the newly revised contract allows United--in the airline's view--to outsource pilot jobs on a limited number of flights with partner airlines. 

Now United is trying to do just that in a new agreement with the Irish carrier Aer Lingus (which is apparently desperate for cash, considering this promotion). The deal, to kick in next March, would allow the airlines to team up for flights between Washington, D.C., and Madrid--and to use nonunion pilots, according to the Chicago Tribune. The Air Line Pilots Association isn't happy, and sources familiar with the matter say the union's usual counsel at Cohen, Weiss & Simon are already studying the matter. Several lawyers at the firm declined to comment or did not return calls.

Kirkland & Ellis served as United's lead bankruptcy counsel, led by partners Marc Kieselstein and James Sprayregen. Cynthia Surrisi of Marr Jones & Wang, a former lawyer for the Air Line Pilots Association, flipped sides and served as United's special counsel during negotiations with the union, according to several lawyers familiar with the deal. (Jack Gallagher of Paul, Hastings, Janofsky & Walker served as United's general labor and employment counsel during the bankruptcy case, but he says Surrisi led the talks with the pilots union.)

Surrisi, whose husband is a retired airline pilot, declined to comment on the deal. Kieselstein says that the over-arching goal of the talks with the unions was to "make sure the work rules were flexible enough to allow the company to prosper in an uncertain environment." 

Kieselstein says he cannot immediately recall the particulars of the agreement with the pilots; the Tribune says it allows for United to use limited outsourcing on flights that fall under "joint ventures formed by United and Star Alliance partners, such as Aer Lingus." 

United is a founding member of the Star Alliance; Aer Lingus is not a member, according to the alliance Web site.

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Just one thing to say. Let's remember that to call the agreements reached between United Airlines and its unions "re-negotiated" agreements is a bit of a stretch. The unions had 1 of 2 choices. Either agree, or have the judge impose the cotracts anyway. The idea that there was some actual sense of negotiation and voting going on, ignores the reality of the actual options left to the unions. UAL got away with murder in that Bankruptcy case. As a result, the vast majority of Americans are paying a big price for the ProCorporate America stance of the US courst.

When will America wake up? Every US job that can be outsourced will be. Where does it stop? Do you really want your plane flown by the absolute cheapest vendor? Regulated by country xxx?

United's pilots have no choice in the matter. Any intrusion by them will result in (say a strike threat) the company disappearing. Grow up UAL pilots. RTD is hiring and at least they realize they are just bus drivers.

Question 1: Will this result in an increase or decrease in safety? The union seniority system puts the most experienced senior pilots on international routes. They are also the highest paid and this is what the greedy are looking at; cheap entry level pilots with little experience willing to work for little.
2. Is this a good business or marketing decision? What rational can the company give passengers for this decsion that will motivate purchase decisions? They can't. They don't know how to run an airline or any business for that matter, just take the money and run. This is the true evil face of greed; nothing, nothing takes precedence over lining their pockets and the hell with tomorrow.
It's time for new laws of simple common sense on air travel. If you buy a ticket on airline A, you get; an airlplane actually owned by the airline, flown by the company's pilots, staffed with the companies inflight crew, serviced by the company's mechanics, fueled by company fuelers, loaded by company ramp personnel, cleaned by company personnel, handled at the gate and ticket counter by company personnel and dispatched by the company. Period. There used to be truth-in-advertising laws in this country. Seems like if safety considerations can force the posting of ingredients on the side of a box of cereal, safety considerations should require airlines to inform the flying public who the hell is actually hurtling them across the sea. Peace.

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