Marathon Pundit: More on Big Labor's 'vampiring' of American Airlines

Friday, May 25, 2012

More on Big Labor's 'vampiring' of American Airlines

The left is quick to label corporations as 'vampires," bloodsuckers, that is. But Big Labor is scheming to suck the blood from American Airlines, as Timothy H. Lee of the Center for Individual Freedom informs us in today's Washington Times:

Today, as the industry begins to stabilize, a new threat is emerging. Union labor forces focused on securing short-term membership contracts are jeopardizing the long-term recovery of the travel sector. Specifically, three major labor unions have colluded to strong-arm American Airlines into merger negotiations at a time when the airline is attempting to reorganize as a once-again-profitable market leader. Last year, American Airlines filed for Chapter 11. Ironically, high labor costs, which represented 28 percent of its revenue, was one of the chief factors driving it into restructuring. Despite the filing, the company did, and still does, remain optimistic it can re-emerge as one of the country’s top domestic carriers. To do so, it will likely need to renegotiate its outdated labor contracts.

Recognizing the potential labor conflict, US Airways seized on the opportunity to pressure American Airlines into merger, disregarding that doing so while the company reconciled itself would leave the industry with an even larger ailment. Luring them with lucrative settlements, US Airways encouraged the unions to bypass American Airlines and pre-emptively engage in a collective bargaining agreement.

The move amounts to a coordinated attempt to circumvent the restructuring process.

Sadly, the unions' shortsighted maneuvering reflects the same myopic disregard that initially drove American Airlines into bankruptcy. Their eagerness to renew contracts that are not viable in the long term threatens to curtail the reorganization process needed to correct the problems that face the airline. If US Airways were to acquire the company now through back-channel negotiations, it essentially would be incorporating a distressed company whose problems later could spread even broader.