Labor relations at UAL Corp.’s United Airlines hit a new low yesterday as United’s the International Association of Machinists union asked the bankruptcy judge overseeing the carrier’s chapter 11 case to appoint a trustee to operate the company.
Still fuming over over United’s recent decision not to make required contributions to its underfunded pension plans, the machinists contended in their trustee motion that United has shown “misconduct, … dishonesty and incompetence” by breaching fiduciary duties related to the plans, favoring some classes of creditors over others and failing to produce a workable business plan for a reorganization.
Frankly, the machinists’ motion has about as much of a chance of succeeding on their motion as I have of winning the “Most Handsome Cowboy” contest at the Bluebonnet Dance Palace this Saturday night. United’s decision not to make the pension payments was prudent and made to attract new capital to the company that would fund a reorganization plan that would avert a liquidation of United. The machinists have not accepted the reality that a United liquidation would be even worse for them than a reorganized United that terminates its pension plans but continues to provide jobs for the union’s members.
Although it is unlikely that the bankruptcy court will grant the union’s motion, the discord between the union and United management could affect United’s improved operational performance of the past two years, which would cause further delays in generating the private capital necessary to fund a plan for United to emerge from chapter 11.
From my vantage point, the unions lack of a coherent strategy in the United reorganization is appalling.