We're All Screwed!

The US District Court of New York just handed down a decision that, if it withstands appeal, has far-reaching and disasterous consequences for every worker in the airline industry. The decision, which can be read here, essentially means that airlines in bankruptcy may unilaterally change unionized workers' contracts and the affected unions are powerless to do a thing about it.

Under normal circumstances, union-management relations at airlines are governed by the Railway Labor Act. The provisions of the RLA are designed to provide a level playing feild for collective bargaining while minimizing air transportation system disruptions due to strikes. Under the RLA, both management and unions go through a long negotiating and mediation process before they are allowed to engage in self-help, which would include imposition of a contract on management's side and any combination of strike, sickout, CHAOS, etc on the union side. Jumping the gun and engaging in self-help before you're allowed to gets you slapped down quickly, as American Airlines pilots found out when they staged an illegal sickout several years back. The system encourages the sides to resolve their differences before self-help is permitted, since each side is released into self-help at the same time and each can inflict damage on the other party.

US Bankruptcy code, of course, has provisions which allow insolvent companies to abrogate or unilaterally change certain contracts, including labor contracts, with the permission of the court. In the case of airlines, this is a contradiction of the RLA, since it is engaging in self-help outside of the established process. The courts have held, however, that the bankruptcy code takes precedence. What's been untested, until now, is whether the unions are still prevented from engaging in their own self-help when the company imposes paycuts and work rule changes on them without their permission.

Northwest Airlines has been seeking draconian concessions from it's Flight Attendants that, in addition to 40% paycuts and work rule changes, would allow them to replace a significant portion of the unionized flight attendents with non-unionized foreign nationals working for lower pay. After Northwest flight attendants overwhelmingly rejected these terms, the airline imposed many of the conditions unilaterally. The bankruptcy court approved the new contract, but they also allowed the AFA to use the threat of rolling strikes to bring management back to the negotiating table. Northwest appealed to the District Court, which issued a temporary injunction against the AFA on 25 August and a permanent one this morning. With this ruling, the District Court essentially puts unions at any bankrupt airline at the same disadvantage NATCA has: "negotiate" with management all you want, but at the end of the day they'll do whatever they want to and you have no recourse.

Airline bankruptcy just got a whole lot more lucrative. Unions not rolling over for your demands? File bankruptcy, they can't strike! We're all seriously screwed.