The Update Message from the International Association of Machinists representing Continental, ExpressJet and Continental Micronesia Flight Attendants in the 2339 Local Lodges

Friday, September 16, 2005  

Delta Air Lines and Northwest Airlines filed for bankruptcy protection Wednesday in the U.S. Bankruptcy Court in New York's Southern District. Four of the U.S.' six largest airlines are now operating in bankruptcy protection. Delta's filing comes after a yearlong effort to cut costs and restructure in order to compete effectively with discount airlines. Delta last week said it will cut more than one-quarter of its flights out of Cincinnati to reduce costs.  Northwest's filing comes after defaults on some payments. United Airlines and US Airways are also operating under bankruptcy protection.  Northwest has told its pilots that it will cut 400 pilot jobs. It also plans to negotiate pay cuts with workers. Meanwhile, Delta asked the bankruptcy court to allow it to stop paying retirement benefits higher than the limits of the company's basic pensions.  In a related story, after three days of talks, Northwest Airlines and leaders of its mechanics union did not reach a new contract agreement. An airline spokeswoman said no new talks have been scheduled. The strike began August 20. Northwest has begun hiring permanent replacement workers. 

Analysts say American Airlines and Continental Airlines, are unlikely to follow rivals Delta Air Lines and Northwest Airlines into bankruptcy anytime soon. But American - which barely avoided bankruptcy two years ago - and Continental are also struggling with high fuel prices and big pension obligations. If Delta and Northwest use the bankruptcy process to dump their pension obligations and cut employees' pay, it could force American and Continental to do the same, analysts say. "The managements at Delta and Northwest are going to be very aggressive about cutting costs. It's going to be tougher for other legacy carriers like American and Continental to compete against all these bankrupt carriers," said an industry analyst.  American has lost $7.4 billion since the beginning of 2001, yet it is believed that it may be the strongest financially of the legacy carriers.  American’s relative health is believed to be due largely to the fact that it was the first major carrier to sharply cut wages and benefits. In 2003, American's employees agreed to $1.8 billion in annual wage and benefit concessions, most of it from unionized pilots, flight attendants, mechanics and ramp workers. 

U.S. airlines could report losses of $10 billion in 2005, according to the Air Transport Association. Soaring fuel prices have hurt the industry. The airlines intend to ask lawmakers to support a one-year holiday from the federal tax on jet fuel. The move would save $600 million, the ATA said. 

We would like to encourage all members to attend your Local Lodge business meeting. Each base must have a quorum to conduct business. The following is a schedule for upcoming meetings:  

Cleveland: Thursday, October 13, 4:00 pm at 669 North Rocky River Drive; 

Guam: Wednesday, September 21, 4:00 p.m. at the Airport Conference Room;

Houston: Wednesday, September 28, 1:00 p.m. at 15710 JFK Blvd;