This Washington Post article reports on the seemingly simple choice that US Airways machinists face this week — either they can approve the carrier’s latest contract proposal calling for pay, benefit and job cuts or they can turn down the contract and walkout, which might just send the struggling airline into liquidation. That part of the article is fascinating as the WaPo reporter attempts to present in a coherent manner the machinists’ position that they would prefer to lose their jobs than making the concessions necessary to help keep the airline afloat so that they can keep their jobs.
But what is even more interesting is the article’s comparison of the US Airways situation with that of Eastern Airlines, which former Continental Airlines CEO Frank Lorenzo attempted to steer through a chapter 11 case during the late 1980’s. Although Mr. Lorenzo successfully reorganized Continental under chapter 11, he failed in regard to Eastern, which ultimately liquidated amidst internecine labor disputes.
My sense is that putting US Airways out of its misery would be a positive step for the long term health of the U.S. airline industry. Nevertheless, it is utterly amazing to watch the rationalizations that workers will come up with in such reorganizations to explain why they should push the liquidation button at the expense of their own jobs. Why would not it be better than simply losing their jobs entirely for the recalcitrant workers to negotiate a small equity stake in the reorganized airline in return for giving up their jobs to hungrier workers who want them? Or stated more simply, why do the workers feel compelled not only to shoot themselves in the foot, but to shoot their entire foot off?