US Air:
In case you aren't sure what corporate bankruptcies are all about

Sep 27, 2004

US Airways, the seventh largest airline in the country, has asked a bankruptcy court judge to order four unions at the airline to accept 800 million dollars worth of cuts in wages and benefits. A fifth union has already agreed to such cuts.

In addition to pay cuts of 23 percent, US Air wants court permission to stop contributing to workers' pension and 401(k) retirement plans, as well as permission to contract out some mechanics' work, to require longer hours from flight attendants and pilots and to lay off more workers.

This is the second time in just two years that US Air has declared bankruptcy. The last time around, officials at two unions had already convinced the workers to go along with big pay cuts in the summer of 2002. But US Air, then the sixth largest airline in the country, wanted more pay cuts, increased contracting out, and bigger co-pays and deductibles for workers' health care.

Faced with workers' anger over the new demands, the airline went into bankruptcy court, threatening to get the court to impose what it wanted.

The maneuver worked: Union officials argued that if the workers didn't agree to big cuts "voluntarily," the courts would impose even bigger ones. Under this pressure, the workers agreed to a total of almost two billion dollars in wage and benefit cuts on top of the cuts they had accepted just a few months earlier.

Having worked so well the last time around, US Air is now trying the bankruptcy route again. The trick is even more blatant this time, since US Air doesn't even pretend to be losing money. It just says it needs the new cuts in workers' pay and benefits in order to accumulate a bigger reserve.

That hasn't prevented union officials from immediately jumping forward, volunteering to negotiate the cutbacks, to "prevent the judge from imposing them."

Hopefully, this time enough workers will see through the game and tell the airline bosses, union officials and the bankruptcy judge where to park themselves!