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.Make a comment