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Unions Going after American Airlines in Bankruptcy

Many large corporations have figured out a way to use the bankruptcy code to get unions back to the bargaining table. This seems to be true for American Airlines who has been busy filing bankruptcy to reduce overall operating costs including pension obligations and wages. Until now, airlines have been forced to pay market rate wages and lose money every year.

In the past, the government regulated routes and fares and pay was set by the industry. So airlines went ahead and signed up with unions for above market wages, unbelievable pensions and work rules that benefited the employee. After the air travel industry was deregulated, the large airlines faced huge competition from nonunion smaller airlines making it hard for them to show a profit. Unions are now strong-arming the airline industry by threatening a crippling strike giving them the upper hand in all contract negotiations.

Now airlines are allowed to file for bankruptcy and all of this has changed. The airline industry has found a way to toss out these union agreements and cut wages by filing bankruptcy. Since they aren’t making any money, it’s still cheaper to hire a bankruptcy attorney and go through the Chapter 11 bankruptcy process than to pay extortion money to unions. With a few airlines using this strategy, the threat of union strikes has been neutered.

Recently, American Airlines who is currently embroiled in a bankruptcy filing, asked a bankruptcy judge to approve a Chapter 11 plan that would eliminate 13,000 employee positions, reduce all benefits to current employees and retirees and change work rules for employees. The employee unions had another idea of getting US Airways to buy out American out of bankruptcy. They went as far as striking new labor agreements with US Airways to strong arm American out of business. It seems they have now taken on a vendetta to toss out American Airlines executives on the street.

It’s sad to see employee unions forcing businesses into filing bankruptcy because of their unsustainable wages and pensions. It’s happening throughout the entire American fabric and municipalities and government jobs also.

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