American Airlines’ bankruptcy filing on Tuesday is another powerful argument for the socialist policy of removing the airline industry and the banks that finance it from private ownership and placing them under public ownership.
The move—the latest in a series of airline industry court-supervised reorganizations this decade—is an overt act of war against the firm’s 78,000 employees with dire implications for the working class as a whole. Thomas Horton, the newly named CEO of the airline’s parent company, AMR Corporation, made clear that the firm filed for Chapter 11 protection in order to rip up existing labor contracts and impose drastic cuts in jobs, pay, conditions and pensions.
Claiming that American’s labor costs are $800 million a year higher than those of its rivals, Horton said a “competitive cost structure” was a “key imperative” in the bankruptcy process and announced plans to launch talks with “all of our unions to reduce our labor costs.”
He did so knowing that a friendly federal bankruptcy court could be relied on to simply impose cuts in wages and jobs and rubber-stamp a decision by the company to terminate its pension plans. The outcome of bankruptcy court-supervised reorganizations at United, Delta and US Airways was massive job losses, wage cuts on the order of 30 percent, and pension benefit reductions as high as 50 percent.
The New York Times quoted Bob McAdoo, an airline analyst at Avondale Partners, as saying, “This is not a defensive move, but an offensive bankruptcy where they go after their labor groups to reduce costs. They have a great franchise and a lot of cash. They are not being forced into bankruptcy here. They have a problem with their cost structure that they want to tackle.”
The Wall Street Journal cited Josh Gotbaum, the director of the federal Pension Benefit Guaranty Corporation, who said, “Employees and retirees worry—and they should. Based on our estimates, American Airlines employees could lose a billion dollars in pension benefits if American terminates their plans.”
For their part, American Airlines executives will continue to reap multi-million-dollar compensation packages. Departing CEO Gerard Arpey leaves with $4.7 million in pension benefits.
via www.wsws.org
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