United had already awarded huge pay increases to their pilots. Now, the mechanics are getting up to 37% in wage increases, making them the highest paid in the industry.
So what's next?
Well, the company has REALLY painted itself into a corner. They'll undoubtedly try to ask for wage concessions from other work groups, causing friction among employees. So, when the company comes hat-in-hand looking for givebacks (or the next time a workgroup wants to negotiate a pay increase!), the argument will go like this:
UAL : Guys, we're really hurting. Loads are down. Yields are down. We simply can't survive like this. We need you to allow for a XX% pay cut to help cut costs.
Union: Not so fast. Not only will we NOT take a pay cut, but we're going to ask for a XX% increase on our next contract.
UAL : Obviously we'd love to be able to do that, but we simply can't justify it based on the losses we're incurring because of our cost structure.
Union: Sure you can! After all, you gave the mechanics a 37% pay increase, and that was when we were supposedly in REALLY deep you-know-what after 9/11. If you could do it for them, you can do it for us, too.
UAL : We simply can't do it, sorry. If we don't get wage concessions, we may have to look at reducing our staff to get costs in line. That means layoffs. Do you really want to be responsible for seeing some of your co-workers furloughed because you weren't willing to give up some of your pay?
Union: Well, we'll just tell everyone it's your fault, so it doesn't matter.
For those of you reading this and having a severe case of deja-vu, that's because it went EXACTLY like this at Eastern Air Lines in the late 70s/early 80s.
- the company was hurting financially
- the company discussed wage concessions with all workgroups
- the IAM demanded huge increases and threatened to strike
- the company got concessions from all workgroups except the IAM, which still demanded increases or they would strike
- the company caved in and gave a huge pay hike to the IAM, slapping all other employees in the face after they had accepted wage cuts
The rest is history. All employee groups lost faith in management. The IAM's demands worsened over the years, eventually resulting in the sale of Eastern to Texas Air, and ultimately a strike that cut the airline's size by two-thirds. After that, a recession and a huge spike in the price of jet fuel (from the Iraqi invasion of Kuwait in August 1990) pushed Eastern over the edge, forcing them to shut down and liquidate in January 1991.
United is not Eastern, but if their management continues to make critical missteps, they may suffer the same fate.
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan
Comments made here are my own and are not intended to represent the official position of Alaska Air Group