United workers join for fight
Once at odds, unions riled by $38 million stock awards to CEO
By Julie Johnsson, Staff Reporter
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
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,
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
"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
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
"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 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
"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."