CHICAGO – UAL Corp., parent of United Airlines, and its pilots union are scheduled to appear in U.S. District Court here Wednesday, as the airline seeks a preliminary injunction against pilots, alleging an illegal ” sickout” in July.
The nation’s second-largest airline, by passenger traffic, and the union representing 6,500 pilots, are at loggerheads, even as the U.S. airline industry is braced to lose billions of dollars this year due to sky-high fuel prices and a weak economy.
United last month filed a lawsuit against the Air Line Pilots Association, alleging that four union pilots organized a campaign designed to protest United’s plan to save money by cutting unprofitable flights, including laying off 950 pilots by next year. United also accused the union of discouraging pilots from volunteering for overtime, something they typically do to staff flights.
A planned work slowdown is illegal under the federal labor laws that govern airlines. The UAL suit alleges that an illegal job action took place, resulting in an unusually high number of United pilots calling in sick in July. That forced the airline to cancel 329 flights between July 19 and July 27, which cost $8.3 million in revenue and $3.9 million in operating profit, United said.
Pilot union lawyers haven’t commented on the suit.
Some pilots and other United employees have been angry with the airline’s management after the company went through a three-year reorganization in bankruptcy that led to significant pay cuts for employees, along with a loss of retirement pensions and other benefits. ALPA has been pushing to open its contract for new negotiations. Scheduled talks, which in the airline industry often take years to conduct, are on the calendar to begin early in 2010. Earlier this summer, United and the union did negotiate some changes in work rules.
ALPA has accused UAL’s chief executive, Glenn Tilton, and his staff, of mismanaging the airline, causing United’s operational performance to slip relative to other carriers.
The union’s most public gesture has been to open a web-site using Tilton’s name, that calls for his “resignation or removal.” ALPA has asked United passengers to “report bad travel experiences caused by bad management for use on this web-site.”
Such a call from powerful labor unions isn’t unheard of in the airline industry. In 2003, unions successfully sought the ouster of Donald Carty, chief of AMR Corp. (AMR), American Airlines’ parent, in exchange for union contract concessions that kept the world’s largest airline out of bankruptcy, even as United and other airlines went into Chapter 11.
In 2006 and 2007, airlines enjoyed new-found prosperity as passenger traffic continued to grow. That boosted managers’ paychecks, and led unions to ask for a financial share in the success.
But, in the past six months, surging fuel costs and a decline in air traffic growth have caused most U.S. airlines to reverse their growth plans. By the fourth quarter of this year, domestic seat capacity across the industry will be reduced by at least 8%, as airlines cut back on flights that don’t make money. So far, it’s not clear whether the cutbacks will be temporary, or will signal a permanent change in the industry. Many industry-watchers were looking for consolidation among major carriers to reduce the number of competitors.
Airlines across the board are looking for ways to add fees and services to generate more passenger revenue. They also plan to raise ticket prices, which likely won’t endear them to customers at a time when service is getting cut.
Shares of UAL traded lower Wednesday, along with most airlines, as the price of crude oil rose. The stock recently was down $1.27, or 11.3%, to $9.88.