Delta Attendants' Union Rejection May Be Voided by U.S.

Bloomberg

 

Delta Air Lines Inc. flight attendants’ vote to reject union representation may be nullified by a U.S. labor board controlled by Obama administration appointees, according to a senator and an analyst.

The National Mediation Board, which in August ordered a new election for technicians who work on simulators for Delta, will take similar action after reviewing flight-attendant allegations of company interference in balloting, said Ray Neidl, an analyst at Maxim Group LLC in New York. “The deck is stacked in the union’s favor,” he said in an interview.

Democratic appointees of President Barack Obama gained a majority on the three-member board last year, and in May eased rules for organizing elections in the airline industry. Given that stance, the panel will probably order a revote by flight attendants, said Senator Johnny Isakson, a Georgia Republican.

“Nothing tells me they won’t do that,” Isakson said in an interview. “To come around and revote again, it’s a lack of respect for the employees.”

Nullifying the vote results announced Nov. 3 would present a new challenge to the position of Atlanta-based Delta as the least-unionized major U.S. carrier. The flight attendants rejected union representation with 51 percent of the 18,760 votes cast against organizing.

A mediation board spokesman didn’t return a telephone call for comment. The board referees relations between labor and management at railroad and airline companies under the 1926 Railway Labor Act.

Claims ‘Ridiculous’

A spokeswoman for Delta, the world’s second largest airline after United Continental Holdings Inc., declined to comment on what the board may do. “Claims of interference are ridiculous,” said Gina Laughlin, the spokeswoman.

The union plans to file interference charges by a Nov. 12 deadline, or seek an extension if the organization needs more time, said Pat Friend, president of the Association of Flight Attendants. Union leaders are discussing whether to seek a revote or a recount, in which votes cast via company computers would be disqualified, possibly changing the outcome, she said.

The computer ballots may have allowed the company to track whether employees voted, a violation of their privacy, Friend said. “We expect that this board will in fact investigate,” she said. “I believe they will ultimately agree with us that there was egregious interference.”

Laughlin of the airline said, “Delta did not track anyone’s votes.”

Previous Efforts

Harry Hoglander, a former pilot-union official who became the mediation board’s chairman in July, twice sided with the flight attendants’ union when it brought interference charges following losses seeking to organize at Delta in 2002 and 2008. In the first case he called for a new election and in the second urged additional investigation.

Hoglander was overruled both times by the board’s Republican majority. He declined to comment on the Delta allegations.

Obama gave the board a Democratic majority by adding former flight-attendant union President Linda Puchala, who replaced a former lobbyist for Northwest Airlines.

The Democratic-controlled board found in August that Delta tainted the organizing election for 91 flight-simulator technicians by announcing a pay increase and holding “coercive” one-on-one meetings. The board ordered a revote.

The workers in February had rejected representation by the International Association of Machinists, with 40 voting in favor. In the revote, the union lost support, with 18 voting for representation, Delta announced Sept. 16.

Republican Opposition

Hoglander and Puchala also made a change that lets employees form a union with majority approval from those who vote, rather than most of all workers in a class. Unreturned ballots are no longer counted as “no” votes. The change was made over protests from the panel’s sole Republican, Elizabeth Dougherty, a former White House special assistant.

The board’s political bent that began with the George W. Bush administration “is here to stay,” said Kate Bronfenbrenner, a labor professor at Cornell University in Ithaca, New York. “This board is clearly very divided.”

The board made a political decision in 2008 when it found no basis to further investigate Delta flight-attendant allegations, contrary to evidence, Bronfenbrenner said. In the upcoming case she said she the board will follow the law.

Given the board’s May action to change voting rules, it will be watched carefully as to how it handles the flight- attendant protest, said William Swelbar, a research engineer specializing in air transport at the Massachusetts Institute of Technology in Cambridge.

“I see this board as having to tread very lightly,” Swelbar said. “There’s a lot of credibility to win or lose.”

Neidl said a revote probably will produce the same result, a defeat for the union organizers. “Delta is a strong entity,” he said. “They can survive nicely with or without a union.”

American Struggles With Costs, Unions as Mergers Boost Rivals

Bloomberg

 

American Airlines, which stood by as its biggest U.S. rivals completed two mergers, is struggling to return to profit as it confronts the highest costs among its peers, worst margins and the threat of a strike.

American parent AMR Corp. seeks to end two years of losses by expanding alliances, buying more fuel-efficient planes and refocusing operations on U.S. hub airports. “There are a number of opportunities that we are on the verge of tapping,” Treasurer Beverly Goulet said in an interview.

So far, American has been unable to stem a slide toward third place in the U.S. by traffic from No. 1 in the world as competitors combine, or to win over unions balking at the new labor contracts the airline says are pivotal in curbing expenses. The stock’s 14 percent drop this year is the only decline among the six biggest U.S. carriers.

“They have performed so poorly, people have written them off,” said Don Hodges, chairman of Dallas-based Hodges Capital Management. “They just don’t consider American a factor when they think about investing in airlines.”

Hodges, whose company held 25,650 AMR shares as of June, includes AMR in his Pure Contrarian Fund of “good companies going through a temporary problem area.” While he recommends the stock to well-off clients who can afford to take risks, he has cut his stake from 2 million shares in 2008.

Talks Today

American’s scheduled contract talks today with its pilots’ union come four years and a day since bargaining began. Flight attendants, airport ground workers and mechanics began talks as much as three years ago. Among almost 50,000 workers represented by unions at Fort Worth, Texas-based American, only a group of 90 technical specialists has approved a new contract.

“I can’t get comfortable recommending the purchase of American stock as long as that labor situation is an issue,” said James M. Higgins, an analyst at New York-based Soleil Securities Corp. who advises holding AMR.

American won $1.6 billion in annual union concessions in 2003 to avert bankruptcy, instead of shedding costs in Chapter 11 as UAL Corp.’s United Airlines, Delta Air Lines Inc., US Airways Group Inc. and Northwest Airlines Corp. did last decade. Chief Executive Officer Gerard Arpey took the job as those agreements were reached.

Airline Consolidation

As recently as 2008, American was the world’s largest carrier. Delta bought Northwest that year, and Continental Airlines Inc. and United agreed in May to a tie-up they expect to close by Oct. 1. The combination will leapfrog Delta as the global leader by traffic.

To counter a possible loss of corporate accounts to rivals with broader networks, Arpey, 52, is working to deepen pricing alliances with carriers outside the U.S. and add flights at hubs in five domestic markets used by business travelers. By early 2011, 98 percent of American’s capacity will touch those hubs, up from 88 percent “several years ago,” the carrier said.

In February, American persuaded Japan Airlines Corp. to stay in the Oneworld alliance, preserving the Asian portion of its global network by fending off Delta’s efforts to lure JAL into the SkyTeam group of carriers.

“Where do premium customers and the rest of the customers want to fly?” said Kenji Hashimoto, American vice president for strategic alliances. “Where American and our partners fly, it lines up really nicely to that list.”

Revenue, Savings

By the end of 2012, American expects about $500 million in annual revenue and savings from its recently approved joint venture with British Airways Plc and Spain’s Iberia Lineas Aereas de Espana SA, a pending Japan Airlines venture and the “cornerstone strategy” for U.S. hubs. New York, Los Angeles, Chicago and Dallas-Fort Worth are the four largest metro areas, and Miami is a gateway to the Caribbean and Latin America.

Cash and short-term investments at the end of June totaled $5.5 billion, and AMR has about $5 billion in debt due in 2011 and 2012, according to Goulet, the treasurer.

“We have a very good plan going forward,” Goulet said. “We can do long-term planning and make changes in our network and let it bear fruit over time, without having to worry about feeding ourselves day to day.”

Investors haven’t been as optimistic. Since May 31, 2007, when the last of AMR’s competitors left court protection, the shares have tumbled 77 percent, the most among the 12 carriers in the Bloomberg U.S. Airlines Index. AMR rose 7 cents yesterday to $6.64 in New York Stock Exchange composite trading.

The company also may be the only one of its peers with a 2010 loss, with 14 analysts projecting an average of 97 cents a share. Analysts estimate the five other major U.S. airlines will post profits, according to Bloomberg surveys.

Operating Costs

Counting fuel, labor and other expenses, American’s cost to fly each seat a mile in 2010’s first half was 12.76 cents, the most among the 6 biggest U.S. carriers and topping Delta’s 12.31 cents, based on data compiled by Bloomberg. Its pretax margin was -4.3 percent, the only negative among its peers.

“They’re playing the hand they were dealt by avoiding bankruptcy,” said Hunter Keay, a Stifel Nicolaus & Co. analyst in Baltimore. “It’s unfortunately costing them dearly.”

Keay recommends buying AMR because “the downside is pretty limited.”

Part of the financial drag on American comes from its Boeing Co. MD-80s, which make up the largest part of the airline’s 619-plane fleet.

Jet Fleet

While they’re being replaced by Boeing 737s that are about 35 percent more fuel-efficient for each seat flown a mile, the MD-80s still account for about 40 percent of American’s mainline jets, and won’t all be retired until about 2016 at an average replacement rate of 3 to 4 planes a month. American’s main jet fleet averages about 15 years of age, tied with Delta for the oldest among the six biggest U.S. airlines.

On labor costs alone, American says its disadvantage against rivals is $600 million, a figure disputed by unions.

“It’s significant,” said Jeff Brundage, American’s senior vice president for human resources. “It’s a big brick in our backpack to being competitive in this industry.”

American has said boosting productivity would allow it to increase wages while keeping its current cost structure. Studies show the airline at or near the bottom of the industry in productivity, said Jerry Glass, president of F&H Solutions Group in Washington and a former US Airways labor executive.

“It’s critically important that the labor groups understand that work rules are what is preventing American from reporting profits in 2010, to a large degree,” Stifel Nicolaus’s Keay said.

Union Demands

American’s unions insist that at least some of the 2003 concessions be restored. The Transport Workers Union withdrew a tentative contract for 10,600 baggage handlers and ramp workers in June, saying it couldn’t recommend ratification. Mechanics and stock clerks rejected a proposed three-year contract last month and gave TWU leaders approval to call a walkout among their 12,700 members.

Pilots are working at 1993 hourly rates, leaving them with “massive anger and frustration” over a lack of progress in talks that began in 2006, said David Bates, president of the Allied Pilots Association, which represents 9,600 active pilots at American.

“What we are looking for is not something that’s going to hurt the company,” said Laura Glading, president of the Association of Professional Flight Attendants, which has 16,550 active-duty members at American. “You can’t come to labor and keep taking and taking and taking.”

Glading was prepared to press a U.S. mediator in meetings this week to declare a stalemate in bargaining and recommend that the National Mediation Board trigger a countdown toward the first strike at a major carrier since 2005. The mediator yesterday canceled the sessions with the attendants.

The union tensions cast a shadow over American’s recovery strategy, Soleil Securities’ Higgins said.

“The changes they are making in their flying are going to help,” he said. “They are doing a lot of sensible things. For me, they’re all completely dwarfed by labor and the question about what’s going to happen there.”

Labor Unions March on Wall Street, Securities Workers Complain

San Francisco Chronicle

 

Labor union members led by AFL-CIO President Richard Trumka marched on Wall Street to demand taxes on bonuses as securities workers said the protesters should go to work and stop demonstrating.

"It's time for special taxes for bank bonuses," Trumka told an estimated 7,500 at a rally outside City Hall yesterday that began after trading ended at the New York Stock Exchange. "When you engage in rampant and risky speculation, you are going to pay your fair share in taxes."

The rally capped a drive by the nation's largest organization of labor unions called the "Make Wall Street Pay" campaign. Protestors, some dressed as pirates and others wearing prison garb, held signs saying "Break Up Megabanks" and "Hey Big Banks -- Less Bail, More Jail." Rallies have targeted Goldman Sachs Group Inc., the most profitable securities firm, and the five biggest U.S. banks.

Trumka started the march yelling "Let's let Wall Street hear us, all the way down to the bull" at Bowling Green, the end point for the protest. They marched under sunny skies with temperatures approaching 70 degrees (21 Celsius).

Brendan Plunkett, 46, a corporate bond trader, was heading home to Essex Falls, New Jersey, as the marchers walked down Broadway.

"If they care so much about the country, they should go to work and be productive and stop with the protests," he said. "It's all nonsense to me, and it always will be."

Ralph Metz, a 29-year-old stock broker for Spartan Capital Securities LLC at 45 Broadway, echoed that sentiment. "People have got to take responsibility for the decisions they make," he said.

Difference With Goldman

His friend, 31-year-old stock broker John Phillips, said the protestors picked the wrong target by focusing broadly on Wall Street. "There's a difference between Goldman Sachs and the rest of us," he said. "A lot of the guys in government used to work for Goldman Sachs."

Police estimated more than 7,500 people gathered in the park south of City Hall, before the crowd headed south past the stock exchange carrying signs reading "Reclaim Our Democracy" and "Hold Banks Accountable."

"They are tax dodgers, they aren't putting anything back into the community," said Otis J. Loweryberg, 84, a former International Business Machine Corp. worker in Delaware. "They only think about self -- self motivation, self-preservation. How do these guys go home at night when people have no food on the table."

The AFL-CIO, the 11-million-member labor federation, is urging Congress to impose a transaction tax on securities trading to help cover the $900 billion cost for a government jobs program they want lawmakers to create.

Geithner Opposition

Treasury Secretary Timothy Geithner has said he opposes the transaction tax, though Trumka told reporters yesterday it is picking up interest within the Obama administration. "We talk about it all the time," Trumka said. "The conversation is getting better and more analytical."

The U.S. Chamber of Commerce, the nation's largest business lobbying group, opposes the tax, which it says would hurt more than bankers.

Wayne Usilton, 63, a former Chrysler worker from Delaware, said he joined more than 40 other union members from his state on a bus trip to the Manhattan event.

"The average person on Main Street is just fed up with big business and Wall Street manipulation," Usilton said.

Europe Goes on Strike

The Wall Street Journal

On Wednesday, a union-backed general strike shut down Greece. Roughly a million workers protested their government's plans to bring its 12.7% budget deficit under some semblance of control. Shipping, air traffic, trains, schools, and numerous private industries ground to halt. In the one country that can least afford to put an economic gun to its own head, the unions have decided to pull the trigger.

Nor were Greek workers alone. In Spain, tens of thousands of union members and fellow-travelers rallied in the streets. In France, air-traffic controllers and refinery workers have walked off the job. In Germany, a brief strike by Lufthansa pilots has left Europe's airports even more clogged than usual. Only in the U.K. do British Airways' cabin-crew members remain coy as to when exactly they will bring operations to a grinding halt.

What accounts for this Continent-wide outbreak of unrest at a time when Europe's economies can so ill-afford it? Call it the welfare-state mentality coming home to roost. For decades, European workers have been told that somebody else will provide for them. You want a shorter workweek? Paris is here to help—along with a laughable promise that the 35-hour law will reduce unemployment. Are fuel prices too high? Here's a subsidy, extracted from excise taxes that account for more than half the cost of other people's gas. You want more vacation, longer and better-paid family leave, more generous benefits? Your employer surely has the necessary funds stashed away somewhere or other.

In Greece, one union representative gave voice to the general mentality. "We understand the difficulties in the economy, but the average worker can't give anything more," said Stathis Anestis, a spokesman for a private-sector umbrella union. "If the EU wants more measures [to improve Greece's finances], the rich and those who evade taxes should pay for it."

Mr. Anestis is right that Greece has a serious tax-evasion problem. But it's equally clear that Athens has made promises to its public-sector employees that it cannot afford to keep even if it were to collect every euro cent owed to it by every tax cheat.

In a different world (or on a different continent) the anger and frustration now being vented on Europe's streets would be directed at government policies that have led to economic stagnation, anemic or nonexistent private-sector job creation and a welfare state that in many countries consumes half of all economic output for distribution to others. But a statist mentality has become so entrenched that few people even think to ask for greater freedom to provide for themselves. They demand, instead, that someone else provide for them.

This mindset is not immutable. It's the product of economic and political arrangements that tax the fruits of success at 50% and more. Change the incentives and you change the mentality. The question is whether there's a politician anywhere on the Continent willing to offer his countrymen a better bargain than welfare, unemployment and unrest.

Whole Foods, Starbucks, Costco Propose Compromise Over Congressional Union Bill

Originally Posted to Triangle Business Journal

Whole Foods Market Inc., Starbucks Corp. and Costco Wholesale Corp. introduced a proposed compromise over the weekend to a bill before Congress that would make it easier to create unions.

Austin, Texas-based Whole Foods was joined by Seattle-based Starbucks and Issaquah, Wash.-based Costco in the proposal, which they say is an alternative to the controversial Employee Free Choice Act.

The EFCA – pushed by labor officials and many Democrats and heavily opposed by business leaders – would allow a majority of employees at a company to form a union by signing cards. Currently, if a majority of employees sign the cards, a process known as "card check," then employees vote in a secret-ballot election on forming a union.

The proposal from the companies, calling themselves the Committee for A Level Playing Field, would reject unionization via card check. It also would strip from the EFCA a controversial provision requiring unions and employees to go to federal arbitration if they cannot reach a deal within 120 days of a union's formation.

But the compromise legislation would allow unions access to employees during nonworking hours at a neutral location – a first – and mandate a fixed time for elections so companies wouldn’t be able to delay a vote. Delays in union votes are common complaints among labor organizers.

Speaking to reporters in a conference call, attorney Lanny Davis, who is representing the companies in the proposal, said the goal is to “trigger a conversation” between the two sides in the debate.

North Carolina business leaders are among those opposed to the card check bill, which they say would put a major dent in many of the state's economic development advantages.