Workers Take the Hit

US Airways got a gift from a judge yesterday when he “unilaterally terminated a union collective bargaining agreement” between the airline and its machinists who now face 35% pay cuts. The AP story then goes on to say:

Pressuring workers for concessions is about the only way (emphasis added) to save large chunks of money in an industry where many of the costs, like aircraft leases, fuel and landing fees are essentially fixed, with little room to haggle. In US Airways' case, it is in the midst of seeking a third round of concessions from its unions in less than three years.

…The judge also terminated three pension plans for US Airways workers and retirees that would have cost the airline nearly $1 billion through 2009 if they remained in effect. Mitchell called the pension obligations a "financial albatross" that would make it impossible for US Airways to attract the investment necessary for it to emerge from bankruptcy.

Why is it that a collective bargaining agreement is fungible but contracts for leases, fuel and landing fees aren’t? Why is it only the worker and not the airlines suppliers who must take the hit? Couldn't the judge have ruled that the contracts with airports are null and void?

It’s not only the workers who will take the hit. Taxpayers will, too.

The airline has said most retirees will receive the same level of benefits from the federal Pension Benefit Guaranty Corp., which will take over the funds. But that did little to mollify dozens of retirees who attended Thursday's hearing and shouted at CEO Bruce Lakefield as he left the courthouse.

The Pension Benefit Guaranty Corp. is federally funded and rapidly going broke as it takes up the slack of companies that say they can no longer fund promised retirement benefits. It’s taxpayer money that’s bailing them out, much like the savings and loan crisis of the Reagan era.