The article below from NYTimes.com has been sent to you by psa188@xxxxxxxxx /--------- E-mail Sponsored by Fox Searchlight ------------\ I HEART HUCKABEES - OPENING IN SELECT CITIES OCTOBER 1 From David O. Russell, writer and director of THREE KINGS and FLIRTING WITH DISASTER comes an existential comedy starring Dustin Hoffman, Isabelle Hupert, Jude Law, Jason Schwartzman, Lily Tomlin, Mark Wahlberg and Naomi Watts. Watch the trailer now at: http://www.foxsearchlight.com/huckabees/index_nyt.html \----------------------------------------------------------/ Airline Workers See Their Security Quickly Vanish October 8, 2004 By MICHELINE MAYNARD As if times were not troubled enough in the airline industry, employees at US Airways, Delta and United are facing the stark realization that the security they hoped their jobs would provide is being quickly taken away. Over the last week, US Airways and Delta employees have learned that they will not have company-paid health care benefits when they retire. Those airlines are also reducing vacation and sick time, and eliminating or curbing contributions to their pension plans. United has said it may terminate its pension plans as it tries to emerge from Chapter 11 bankruptcy protection. Pay levels are also under attack. Yesterday, US Airways asked a bankruptcy court judge in Alexandria, Va., to impose pay cuts of 23 percent and other benefit reductions on members of unions that had not negotiated concessions. [Page C 2.] On Monday, the airline said that the pay of executives, managers and administrative staff members would be cut 5 percent to 10 percent. People in comparable jobs at Delta, which is trying to avoid its own Chapter 11 filing, learned on Sept. 28 that they would have 10 percent pay cuts. The attack on compensation is a psychological blow to both blue- and white-collar employees at companies once thought to offer attractive jobs. And experts said other airlines could be forced to make similar cuts to avoid being at a cost disadvantage, even if their financial situations were not as dire. "This is the new world order of airline economics, and there isn't a pilot who isn't shaken up by it," said Jack Stephan, a US Airways captain and the spokesman for the pilots' union there. "We're seeing the shredding of the social contract," added David L. Gregory, professor of labor law at St. John's University in Queens. The latest moves are just "previews of coming attractions," he said. Even so, the cuts strike some as a delayed reaction to financial problems that have swept the industry since 2000. In that time, the airlines collectively lost $30 billion and are expected to lose nearly $5 billion this year - battered by high jet fuel costs and the inability to raise ticket prices resulting in part from competition with low-fare carriers. "It's amazing that it has taken this long to catch up," said Paul Fronstin, a spokesman for the Employee Benefit Research Institute in Washington, a nonprofit organization that studies compensation levels. For example, some 23 percent of the nation's biggest companies have reduced or eliminated health care benefits for future retirees over the last two years, Mr. Fronstin said, while a wide variety of companies are cutting their pension contributions or replacing traditional plans with 401(k) programs. "What's happening with the airlines has already been happening to a lot of industries," Mr. Fronstin said. Even so, the swiftness of the latest cutbacks has caught many airline employees unaware. And they prove that the first cut was not the deepest. United, which filed for bankruptcy protection in December 2002, did not touch the structure of its pension plans last year when it obtained an initial round of concessions worth $2.5 billion annually. Likewise, US Airways left retirement health care intact during its first bankruptcy, which it emerged from in April 2003. American, the largest airline, did not attack any specific benefits in 2003, when it asked its unions for $1.8 billion a year in cuts. A spokesman, Tim Wagner, said the company gave each union a cost-cutting goal but left it up to them to propose how the reductions should be achieved. American has no plans to mimic the benefit reductions being applied by its competitors. But, Mr. Wagner said, "Obviously, we have to watch what happens in the industry." That is also the case at Southwest, the sixth-largest carrier and the largest among the low-fare airlines. Its chief executive, Gary C. Kelly, said this week that the airline, which has remained profitable despite its competitors' troubles, could afford its labor contracts and employee benefits as long as costs remained low and productivity high. "We've never tried to live off low wages and poor benefits," Mr. Kelly said. "That's not what Southwest is about." But he added, "If, after those airlines get through the bankruptcy process and make their changes, and we find ourselves higher with our cost structure, then yes, we have to look at that and see what adjustments we have to make." Despite the speed with which the latest cuts in pay and benefits have fallen into place, Mr. Kelly sees them as the result of airlines' inability to adjust their cost structures to the changing airline market, in which low-fare operators like his own have quintupled their market share over the last decade. That period coincided with some of the richest union contracts in the industry's history, and the protection in those agreements is now being eroded. Mr. Stephan of the pilots' union at US Airways acknowledged that the cuts had led some union members to wonder what safeguards organized labor could offer, if gains were simply and abruptly taken away in bankruptcy. But without the union's protection, "we would be lambs before the slaughter," Mr. Stephan said. Professor Gregory said he sympathized. "People worked for these benefits for decades, but they are being eviscerated wholesale," he said. "Their lives are being ruined." Yet others point out that JetBlue, one of the fastest-growing low-fare carriers, does not have unions. It pays employees less than at other carriers and does not have a traditional pension plan, only a 401(k) program. But it has been profitable since its inception in 2000, resulting in annual profit-sharing payments of 17 percent last year, and JetBlue has roughly 50 applicants for every employee it hires. Vincent Stabile, the airline's vice president for human resources, said, "There's a new normal, and that new normal is an ever-evolving new normal." Indeed, at US Airways and other carriers, some experts maintain that jobs like reservations and airline ticket-counter agents can no longer be looked upon as providing careers, particularly as technology evolves to make such positions less necessary. "There are very few careers left in our economy," Professor Gregory said. "The message is that you have to be prepared to have many jobs, and many careers." Mr. Stephan said he was dismayed by that attitude. "Do you want airlines that are expendable - like a toaster?" he asked. "You throw them away once they get expensive and start all over again?" Yet Mr. Kelly of Southwest said the pain of lost benefits at the traditional airlines was inevitable as the companies readjusted to a market where the luxury product they once offered was gone. "Nobody likes to contemplate radical change," he said. "It is much easier to contemplate incremental change," like the struggling airlines made in their first cost-cutting efforts. "It takes some sense of urgency, like imminent demise, to institute some of these changes," Mr. Kelly said. http://www.nytimes.com/2004/10/08/business/08benefits.html?ex=1098242568&ei=1&en=75b9725f495c3846 --------------------------------- Get Home Delivery of The New York Times Newspaper. Imagine reading The New York Times any time & anywhere you like! Leisurely catch up on events & expand your horizons. Enjoy now for 50% off Home Delivery! 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