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United workers join for fight
Once at odds, unions riled by $38 million stock awards to CEO
By Julie Johnsson, Staff Reporter
Chicago Tribune
Thursday, March 29, 2007

Tension over pay issues is building at United Airlines, where five unions representing 30,000 employees on Tuesday called for the carrier to let rank-and-file workers share in the largesse enjoyed by senior executives.

Workers are still simmering over the restricted shares and options worth $38 million granted Chief Executive Glenn Tilton in the weeks after the airline exited bankruptcy last year.  They were detailed in a Securities and Exchange Commission filing Monday.

The three worker groups who have traditionally been the most activist at the airline -- pilots, flight attendants and mechanics -- say they've formed a coalition with two smaller unions to push management to grant better pay, bonuses and work conditions.  They also want the airline to open contract talks that aren't slated to begin until 2009.

"If we are going to be successful going forward, this is where the rubber meets the road," said Greg Davidowitch, who heads United's flight attendants union.  "Management, if they want to attain status as a pre-eminent airline, they have to put money on the table."

So far, United isn't budging.  "We regularly work with our unions to address issues important to them," said United spokeswoman Jean Medina.  "We worked cooperatively with our unions to reach these consensual agreements, and we look forward to doing so again at their amendable dates."

Labor strife over pay issues is growing at other airlines, too, analysts said.

Workers locked into long-term pay cuts want to regain some of those lost wages as their carriers recover from a five-year slump.  Executives, who are often paid less than their peers in other industries, are anxious to close that gap.  But when pay soars for executives and not for workers, tensions understandably run high.

"It's a very contentious issue, and CEOs need to be very, very cautious about approving themselves bonuses when their workers have conceded so much," said industry analyst Darryl Jenkins.  "These [issues] have the potential to come back and really hurt your company, kill you at a later time."

At American Airlines, pilots are angry about an incentive plan that could pay 1,000 senior managers more than $173 million next month.  Meanwhile, flight attendants at Northwest Airlines are still fighting contract terms that were imposed on them last year by a federal bankruptcy court and have filed a claim seeking $1.1 billion in lost wages.

"We've shared the pain, but we're not sharing the gain," said Capt. Denis Breslin, spokesman for the Allied Pilots Association, which represents 12,000 American Airlines pilots.

The shared frustration has given United's often fractious unions a common cause to rally around for the first time in years.  The only major union not to participate in the coalition is the International Association of Machinists and Aerospace Workers, which represents 17,000 ramp workers, gate agents and customer service representatives.  Spokesmen for the union did not return phone calls Tuesday.

What brought the disparate unions together after battling each other for much of the airline's three-year bankruptcy sojourn?

"About $39 million," said Capt. Steven Derebey, a spokesman for the Air Line Pilots Association, referring to the pay and stock given Tilton in 2006.  "It's a tremendously unifying force."

Workers are also unhappy with the company incentive plan that paid Tilton a $839,028 bonus, equal to 122 percent of his salary, which also was disclosed in the SEC filing.  Lower-level workers are eligible for far smaller bonuses under the plan, known as "Success Sharing."  For example, the most pilots could receive, if United reaches on-time and other goals, is 2 percent of their annual pay.

But during bankruptcy negotiations, Medina said, the unions asked for lower bonuses in order to preserve more guaranteed pay.

"The management equity-incentive plan is not new," she added.  It "was approved last year by the court and the creditors committee, which benefited from the involvement and oversight of our unions."

Medina notes that 64,000 current and former employees benefited from a perk not made available to senior management:  They were awarded 34.7 million shares last year worth more than $1.5 billion.

"They didn't give us anything," Davidowitch responded.  "Those claims were a product of our bankruptcy changes to our collective bargaining agreement.  That's only pay for cents on the dollars."

The union coalition, meanwhile, said it's only fair that United reopen their contracts because it did so with Tilton last fall, giving him a controversial 40 percent pay boost.  "We expect to be treated no differently," Davidowitch said.  "We look forward to engaging the corporation as a coalition of employees."

So far, union officials won't say what tactics they plan to employ to pressure management to open talks.  But they could have a strong legal case if they decide to take the matter to court, said Neil Bernstein, emeritus professor of law at Washington University in St. Louis, who specializes in labor issues.

"Regardless of what the contract said, the Railway Labor Act allows for [contract] amendments at any time," said Bernstein.  "The union has a strong argument that it has a right to propose changes at any time, the parties have to negotiate it and go through that process.",0,6418807.story?coll=chi-bizfront-hed