Greed and Mendacity: The saga of UAL AA Mechanics

Greed and Mendacity

The saga of UAL and AA mechanics

Greed seems to be a popular driving trait of many in industry and politics today. Mendacity is a less well-known trait that at its worst means a liar and at best means intentional misleading or falsification of facts.

Those of us who remember the movie "Cat on a Hot Tin Roof" will recall Big Daddy's comment about mendacity being present in his house. He felt that Maggie and Rick lied to him about his health among other things. Many commentators today say that business is chock-full of both greed and mendacity at the corporate level. Criminal indictments and civil lawsuits run throughout the corporate scene today.

Recent egregious examples of course include Enron and others who wove a pattern of deceit and violation of the law much to the detriment of those employed by the various companies. Pension plans and health benefits went south with the criminal and civil violations.

Well, the good news so far is that no company or executives in the air carrier business have been indicted for violation of the law. But, how many have been playing fast and loose with their employees during the present industry downturn?

UAL - AA
Both of these air carriers have been in the news for the past two years involved with labor strife in general and with their mechanics in particular. We all should remember the United affair where management stated that if the mechanics did not accept a reduction of pay and benefits the company would be forced to file bankruptcy. Well the mechanics did not bend and the company did file Chapter 11. They are still in bankruptcy court. Even if the mechanics went along with the company it is felt by many that bankruptcy was inevitable anyway. Also, during this time the mechanics were sued by UAL in an attempt to stop communication between the employees. Basically, a stupid legal move on the part of management that completely alienated many mechanics. Not exactly good employee relations!

Similarly, American has been faced with the same problems with a slightly different twist. They said the same thing as UAL. That they would file bankruptcy but the twist here was that the mechanics agreed by a small margin to go along with a reduction in pay and benefits. Many still think bankruptcy may still follow and indeed the company has so stated ad nauseam. Late last month they reported a loss of $1.04 billion for the first quarter of this year!

AA management - what a deal!
The mechanics agreed to go along with the reductions. At the same time the company filed an obscure statement with the SEC stating that about 40 of the top management had a trust set up for them that would protect their retirement payments in the event of the company filing bankruptcy. These trusts were fully funded with current corporate cash while the mechanics and others were being asked to reduce their wages and benefits. The CEO (Don Carty) admitted this oversight and called his lack of communication poor judgment. It was not poor judgment, it was an intentional attempt to slip it by the rank and file hoping nobody would notice and even if they did, the vote would hold. They did and it did!

The CEO believed that if the mechanics had refused to go along with the reduction in their benefits AA would file bankruptcy, or so they said. Bankruptcy can seriously affect the management pocketbook as well as take a lot of company control away. Boeing for example sought a trustee for Hawaiian Airlines. It wanted to take the bankruptcy process away from the management of the airline. Boeing contended that it was self-dealing and had substantial conflicts of interest.