Need workers' control
Airlines in tailspin
By Milt Neidenberg
One robber baron is down--but the system he
represents goes on.
Donald J. Carty, chief executive officer of American
Airlines--the biggest airline carrier in the world--has
reluctantly resigned. He and other top executives in the
industry were caught sticking their grubby, greedy hands into
AA assets.
Gerard J. Arpey, a board of directors' favorite, is now CEO.
He is a beneficiary of the same freebies that Carty and the
others secretly grabbed.
Meanwhile, AA union members have suffered mass layoffs and
drastic cuts in wages and benefits. Work loads have increased
immeasurably. Worker safety has been endangered.
In an airline crisis of unprecedented proportions, AA
workers had voted to give up $1.62 billion annually to save the
company.
In stark contrast, Carty and seven top executives tried to
take "retention" bonuses for the next two years worth up to
twice their base salaries. Carty's bonus would have been more
than $1.6 million, based on his salary of $811,000.
Infuriated by these obscene financial arrangements, the
unions forced Carty and others to forgo their bonuses. But the
bosses refused to give up a trust fund they control, which
protects their pensions regardless of what happens to
AA--including bankruptcy.
Carty admitted that this trust fund was built up with a $41
million payment last October--at a time when AA was losing
money by the minute. When the leaders of the Allied Pilots
Union, the Transport Workers Union and the Association of
Professional Flight Attendants found out, they withdrew their
"yes" votes on the recent $1.62 billion in concessions.
Unfortunately, a few days later, these same union leaders
called on a handful of Democrats to broker a settlement. Under
the threat of bankruptcy, the unions agreed to reverse their
decision and accept the cuts with some minor
sweeteners--although the flight attendants held out to the
bitter end.
Underneath the rock of greed and corruption
For a moment, rank-and-file anger against corrupt corporate
leaders shook up a powerful corporation. It's a lesson for
other airline workers.
Similar disclosures have revealed that Delta Air Lines and
United Airlines poured millions of dollars into special pension
trust funds and "retention" bonuses for management. Meanwhile,
workers' 401k and other pension funds are seriously
under-funded, some nearly bankrupt. Regulatory filings will
show that all too many companies have set up privately funded
payouts for upper management.
Recently, AA filed its annual proxy state ment with the
Securities and Exchange Commission. Retention bonus es were
still there, along with the pension trusts. (New York Times,
April 25)
This high-powered government regulatory agency is supposed
to provide oversight against Wall Street swindles--including
the widespread practice of cooking the books. But the truth is,
they're all employed by the same ruling class, which covers up
corrupt practices that exploit workers and oppressed
nationalities.
It is not only AA executives' greed involved in doling out
exorbitant pension benefits to themselves. Corruption is built
into the system of capitalist exploitation.
Interlocking relationships among corporate heads and bankers
allow them to milk the corporations dry. Last year, J.P. Morgan
Chase conspired with Enron to obtain hundreds of millions of
dollars in illegal tax deductions that gave Enron's executives
enormous financial benefits. The bank was rewarded as well.
Recently, the SEC, in consultation with New York Attorney
General Elliott Spitzer, tapped the wrists of some of the
biggest investment companies with a $1.4 billion penalty. Some
analysts say these fines are chicken feed compared to the
billions investors lost because of conflict of interest
violations. It's comparable to profits accrued in a few minutes
by the giant Wall Street firms.
SEC Chair William Donaldson revealed the real reason: "to
restore investors' faith in the objectivity of research," which
is code for luring small investors back to the stock
market.
It's too late. Millions of workers and middle-class people
have lost their savings, pensions, retirement funds, health
benefits and other insurance plans in the stock market decline.
Mass layoffs, plant closings and bankruptcies have exacerbated
the crisis. The banks will continue to do business as usual and
profit from the misery caused by corporate malfeasance.
If American Airlines goes into Chapter 11 bankruptcy,
Citicorp--a global banking empire--will be the major
underwriter to finance the bankruptcy. The bank is now the
beneficiary of the frequent flier miles program and a valuable
credit card business.
Edward A. Brennan, former chair of Sears Roebuck, is the new
chair of the AA board of directors. He also sits on the boards
of McDonald's, 3M, Excelon and, most important, Morgan
Stanley--financial advisor to AMR Corporation, which is the
parent of American Airlines. Philip J. Purcell, CEO of Morgan
Stanley, sits on the AMR board. Michael Miles, chair of the AA
compensation board, which approved the handouts, sat with CEO
Carty on the boards of Dell Computer and Sears Roebuck.
The interlocking relationship among boards of directors,
CEOs and bankers is inherent in the system of monopoly
capitalism. They, together with the owners of privately held
companies, constitute a ruling class, which oversees the
capitalist government and the current Bush administration.
The U.S. global war plan is calculated to strengthen this
empire of high finance. Many billions of dollars are pouring in
to the Pentagon occupation of Iraq and future military
conquests, while tens of thousands of airline workers are being
laid off.
A job is a right!
The airlines, in the throes of collapse, show the same
symptoms that led to crashes in the steel, telecommunications
and dot-com industries, and that now threaten the auto
industry.
Overproduction in the boom years, reckless spending of
billions of dollars to expand, and too much debt have led to
the current debacle.
More than 1,300 airplanes stand idle and rusting in the
Arizona desert. Fear of flying since Sept. 11, 2001, the
invasion of Iraq and the emergence of Severe Acute Respiratory
Syndrome have exacerbated the crisis.
AA has now reported a first-quarter loss of $1.04 billion.
Bankruptcy looms despite worker concessions. If it happens,
AA--the biggest airline in the world--will join United
Airlines, the second-biggest, in Chapter 11 bankruptcy.
Together with US Airways, this would place three out of six of
the major airlines in bankruptcy court.
United Airlines filed for bankruptcy in December 2002, while
holding around $23 billion in assets. In bankruptcy, UAL is no
longer the owner of the property or the assets. Legally, its
status is that of a debtor--it owes about $22 billion--which
has been granted possession to run the airline at the
discretion of the bankruptcy judge and an appointed trustee.
UAL executives are unable to sign a check, pay a bill, or
receive their salaries without the court's signature.
The court approved the retention bonuses and pension trust
for the bosses.
The banks are brought in to lend the company--the debtor in
possession--money to pay bills and reorganize the operations.
UAL lawyers point out that the list of other creditors who want
their money fills 32,000 typed pages. (Wall Street Journal,
Dec. 10)
These vendors and investors are unsecured creditors who will
lose much of their equity.
The powerful banks led by J.P. Morgan Chase and
Citibank--the secured creditors--will lay claim to the UAL
property if the loans are not paid.
Chapter 11 bankruptcy makes it more difficult for airline
workers to overcome the collusion between UAL--a bankrupt
airline--and the banks that are protected by the bankruptcy
court.
But it also opens up the opportunity to challenge them and
the bankruptcy court's decisions that threaten the workers'
jobs and benefits.
Clearly, the hundreds of thousands of UAL union members
should lay claim to ownership. They are the principal
creditors. They built the company with their experience, skills
and sacrifices. What they gave up in lost wages, pensions,
severance and other benefits is deferred income.
It amounts to loans to the company--a total of $12 billion
over the next five years, or $2.4 billion annually. The workers
have the right to run the company. It won't happen without a
struggle against the ruling-class conspiracy.
United Airline workers, particularly flight attendants, have
made a tireless effort to educate their members about these
facts. They have formed Airline Workers Unite
(AirlineWorkersUnite@yahoo.com).
Their most recent communication declared that the members
have the right to run the airlines and proclaims that "a job is
a property right."
Holding assets during bankruptcy is a common practice of the
banks. It's time for airline workers to recognize that the
assets belong to them--and to take a cue from their 1930s
forerunners by fighting for workers' control.
Reprinted from the May 8, 2003, issue of
Workers World newspaper
This article is copyright under a Creative
Commons License.
Workers World, 55 W. 17 St., NY, NY 10011
Email: ww@workers.org
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