Strike threats against UAL muddy carrier's outlook
By Kyle Peterson
CHICAGO, May 6 (Reuters) - Bankrupt United Airlines, close to shedding one of its heaviest financial burdens, remains dogged by threats of potentially devastating labor strikes that some lawyers say may, in fact, be illegal.
The union representing United's
flight attendants has vowed to call a strike if a bankruptcy judge on May 10
approves a deal allowing the No. 2 U.S. carrier, a unit of UAL Corp.
Critics of the settlement say it would unfairly erode the pension payouts of current and retired employees.
Most experts agree a prolonged strike by any UAL labor group would be a shot to the heart of the troubled airline, which is trying to emerge from Chapter 11 by this autumn.
"Given United's financial condition ... it's hard to imagine that United could survive a strike of any duration," said Willis Goldsmith, chairman of Jones Day's labor and employment law practice.
The flight attendants say any strike activity would be intermittent and target strategic routes. The mechanics say they are planning a strike, but have offered no timetable.
United, in bankruptcy since December 2002, has been battered by soaring fuel costs, weak revenue and competition from low-cost carriers.
The airline has said it must achieve $725 million in annual labor savings. Additionally, it said it must terminate and replace its four defined pension plans to save an average of $645 million a year over five years.
That's harsh medicine for some employee groups who have already endured stinging wage concessions.
UAL says it has no choice but to pursue the pension settlement unless someone can offer an alternative solution that brings the same financial savings. A strike is definitely not the answer, the carrier has said.
"We don't think it would be legal," said UAL spokeswoman Jean Medina. "But the more pertinent issue for us is that we think energies are better focused on reaching consensual agreements."
LEGALITY OF STRIKE IS IN QUESTION
"You're entering into a twilight zone of jurisprudence," said Thomas Salerno, chairman of the financial reorganization practice group at Squire, Sanders & Dempsey. "It's really interesting interplay between the bankruptcy law and federal labor law."
Salerno, who previously represented parties in United's bankruptcy, said that for the unions to strike legally, they must obey the federal Railway Labor Act, which permits a walkout only after mediation fails to resolve a dispute.
The act, written in the 1920s, safeguards interstate travel by restricting workers' right to disrupt it, he said.
It is unclear whether the restrictions apply if a collective bargaining agreement is altered or nullified against the will of the workers.
"A strike is the legally equivalent response to the rejections of our contract," the AFA said in a recent statement.
Experts also disagree over whether an employee group can strike against a company in Chapter 11.
Robert Siegel, an attorney with O'Melveny & Myers, said there is little precedent on the matter, but he thinks a judge could halt a strike called in response to a court ruling.
"I think the bankruptcy judge has the authority to do it," Siegel said. "My view is that would be an illegal strike that should be subject to a court injunction."
Partners in Siegel's law practice represent some UAL interests, although Siegel himself has no relationship with the carrier, he said.
Other lawyers believe that if the unions satisfy the RLA mediation requirements but fail to reach consensual deals, their right to strike is practically invincible.
"The federal law says workers have a right to strike," said Lowell Peterson, labor attorney with Meyer, Suozzi, English & Klein. "There has to be some reason why they can't strike."
The government intervened in
pilots' strikes in the late 1990s at American Airlines
REUTERS