United Airlines Pretends to “Perish” in Order to Obtain Concessions

Oct 22, 2001

On October 16 a letter written by James Goodwin, the head of United Airlines, to United employees was leaked to the press. It said, “today, we are literally hemorrhaging money. Clearly this bleeding has to be stopped–and soon–or United will perish sometime next year.”

For a company hemorrhaging money, United has been acting very strangely. From1996 through 2000 United reaped 3.2 billion dollars in profits after taxes and all sorts of other charges, many of them simply bookkeeping entries to hold down taxes. Just last year it paid 44% of its profits out in dividends to its stockholders, instead of using the money to buy more equipment or to have cash on hand in case of an emergency. Even so, United had almost a billion dollars cash on hand on June 30.

United had enough money that it tried to buy US Airways for 4.3 billion dollars and to take over 7.3 billion dollars in debt that US Air owed its banks and bondholders. The merger didn’t go through, but not because United couldn’t come up with the money. The government ruled the merger would limit competition. The same company that had plenty of money for this purchase, now cries poor.

United is simply using the tragedy of September 11 to demand sacrifices form its work force. It laid off 20% of its workers–more than the% of the flights it cancelled. Before September 11 United was insisting in contract negotiations that it would not return the concessions United mechanics and baggage handlers gave up in 1994. After September 11, it was doing exactly the same thing. The only difference is that United now has a bigger club to use against the workers–patriotism. The bosses say, “You must sacrifice for the good of the country.”

No. The workers’ concern should be to strengthen their situation, to prevent these rapacious corporations from running roughshod over everyone.