This is a multi-part message in MIME format.
------=_NextPart_000_0015_01C26DDC.23EA8540
Content-Type: text/plain;
charset="Windows-1252"
Content-Transfer-Encoding: quoted-printable
United Air's Family Is Anything But
By EDWARD WONG
S <http://graphics7.nytimes.com/images/dropcap/s.gif> AN FRANCISCO --
Why does Patrick Palazzolo gripe about his job?
Mr. Palazzolo, a pilot for 24 years at United Airlines, seems to lead
the kind of life that drives people mad with envy. His work takes him to
the far corners of the globe, keeps him in the cockpit less than 60
hours a month, on average, and provides him with an annual salary
exceeding that of 95 percent of all household incomes in America. All
that has allowed him to settle down with his wife, Hilda, in a tidy
suburb near here, and to put two sons through college.
But Mr. Palazzolo is relieved that those sons are not following in his
footsteps.
He says that he believes in his heart of hearts that United is still
suffering from a worker-management relationship that has turned sour =97
often downright ugly =97 in the last two decades.
"Management needs to take a clean chalkboard and build a new airline,"
Mr. Palazzolo said recently while sitting in uniform in a hotel lobby
here, awaiting a five-hour shift aboard a Boeing
<http://www.nytimes.com/redirect/marketwatch/redirect.ctx?MW=3Dhttp://cus=
t
om.marketwatch.com/custom/nyt-com/html-companyprofile.asp&symb=3DBA> =
777.
His attitude is typical not only of the privileged pilots at United,
most of whom earn six-figure salaries, but also of the less-pampered
machinists and flight attendants. Together, those three labor groups
account for more than 80 percent of the 83,000 workers at United. As the
company, which is based in Chicago, bleeds billions of dollars each year
and tries to avoid issuing itself a ticket to bankruptcy court, its
unions have only grudgingly considered management's cost-cutting
demands. They did agree late last month to offer $1 billion in annual
concessions over five years, but that falls far short of the $1.5
billion over six years that the company asked of them in August. And the
unions have not worked out among themselves just how the concessions
would be divvied up.
Last week, Glenn F. Tilton, the new chief executive of UAL
<http://www.nytimes.com/redirect/marketwatch/redirect.ctx?MW=3Dhttp://cus=
t
om.marketwatch.com/custom/nyt-com/html-companyprofile.asp&symb=3DUAL> ,
United's parent, met with labor leaders to discuss the unions' proposal.
His predecessor, John W. Creighton Jr., who served an interim stint of
less than a year, had said that if the unions did not agree to deep
concessions, United would fail to get a $1.8 billion federal loan
guarantee needed to keep its planes in the air. Yet United's employees,
who own 55 percent of the company, refuse to meet management's terms,
despite the fact that its two most powerful labor groups =97 the pilots
and machinists =97 have the most generous contracts in the industry and
one seat each on the 12-member board.
How did United, once regarded as a potential model for employee-owned
companies, end up on this tortuous path?
The problems were endemic well before the terror attacks of Sept. 11,
2001, shook the airline industry.
Executives at United have traditionally blamed what they called
self-serving attitudes of the unions for pushing the airline's costs sky
high.
But union leaders and some industry experts say the roots of labor
intransigence lie in disastrous business decisions made by management
that alienated employees. The poorly structured employee stock ownership
plan has also failed to immediately benefit =97 and thus motivate =97
workers. And now, there is rampant fear among the unions that management
and the Bush administration are using the federal loan guarantee program
as leverage to crack down on labor.
Even during the current crisis, it has been tough to persuade the unions
to agree on solutions, primarily because of labor politics and income
disparities among the different employee groups.
The unions pulled together to offer their concession package, but that
does not mean they will necessarily forge ahead toward a common goal.
They are siblings in a family more akin to the Sopranos than the
Cleavers: sometimes squabbling, sometimes supportive, but usually
looking out for their own interests.
What they have in common, though, is a deep-seated distrust of
management, and they have their list of suggestions for Mr. Tilton, the
company's fourth chief executive in seven years: replace the old-school
executives with fresh blood, form task forces that will seek advice from
workers and, above all, overhaul the culture of United by impressing on
workers that they are the airline's owners, responsible for its
fortunes.
"As shareholder-owners, we don't have the voice we need," said Charlie
Lincoln, a lead mechanic and shop steward of the local chapter of the
International Association of Machinists and Aerospace Workers. United's
executives, he said, "need to show the people they're willing to listen
to us."
Mr. Tilton, a former ChevronTexaco
<http://www.nytimes.com/redirect/marketwatch/redirect.ctx?MW=3Dhttp://cus=
t
om.marketwatch.com/custom/nyt-com/html-companyprofile.asp&symb=3DCVX>
vice chairman who lives in the exclusive Pacific Heights neighborhood
here, declined to be interviewed for this article. As he and other
executives negotiate for further concessions, they have been extremely
guarded in their public comments on labor tensions.
In a voice mail message to employees last week, Mr. Tilton said, "In the
long term, our cooperation and our alignment will lead to a lasting
advantage for United."
If workers' perspectives at the United hub here, the airline's
second-largest in number of employees, are a good gauge of overall labor
sentiment, any immediate concessions should be regarded as little more
than a quick financial Band-Aid. Knocking down deep-rooted cultural
barriers, a requisite for true recovery, is never simple at a plodding
leviathan like United.
The company's problems are reflected in the market valuation of its
publicly traded shares, which tumbled from a high of $5.2 billion in
1997 to a paltry $124 million today. Though United is generally
considered to have the best route structure in the industry, it lost a
record $2.1 billion last year on revenue of $16.1 billion and has lost
$851 million in the first half of this year on revenue of $7.1 billion.
That set of figures is among the worst in airline history.
That was far from what the employees envisioned in 1995, when Gerald
Greenwald, a former Chrysler executive, signed on as chief executive to
guide the airline as it put in place the employee stock ownership plan.
The pilots, machinists and salaried nonunion employees had formulated
the plan the previous year with Stephen M. Wolf, Mr. Greenwald's
predecessor. Those employee groups agreed to give up $4.8 billion in pay
cuts, raises and pension contributions in exchange for 55 percent of the
company stock and one seat each on the board. The pilots would own about
half of the employees' shares.
------=_NextPart_000_0015_01C26DDC.23EA8540
Content-Type: image/gif;
name="s.gif"
Content-Transfer-Encoding: base64
Content-Location: http://graphics7.nytimes.com/images/dropcap/s.gif
R0lGODlhHQAjAMQAAP/////v7/fe3u/Ozu+9veetrd6cnN6MjNaEhM5zc85jY8ZSUr1CQr0xMbUh
Ia0QEK0AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAACH5BAEA
AAAALAAAAAAdACMAQAXlICCOZGme4gKt7GqUAfKwCZq0eI4zARosPZSooYOYCIyirkEQFmbKYiM4
ijIMAqFWJEg4ojqFCAEuQxzUkuELbhSERPNyQCoyhAG6Tb56KF5aAXF8LAtbRweDOiQGUBAPTScC
ji13IoKEOAiHAAEEBwgICQgHkZwkAwcKDGwODAsHelsDbHJAJwOUhFMkBUoNCqJJObckuiuWJgMN
D4AmSs6nIrVKDrCyQgKZKw4HPoq7aSRk2xCmKAIGCuBFDtIkB0pZI7kQvELDOSM3OQpvI+mOubjE
LtO/ET/KedPSpWChaCRCAAA7
------=_NextPart_000_0015_01C26DDC.23EA8540--
