The United Airlines bankruptcy

On Dec. 9, United Airlines, the world’s second largest, filed for bankruptcy. USAir, Swissair and Sabena preceded it to court this year.

As with other bankruptcies, United’s is ultimately due not to mismanagement, but to 'overproduction': the capitalist class has produced 'too much' to assure profits. Jetliners sit parked in the Arizona desert.

Overcapacity was already a problem a decade ago when United’s management proposed a 'solution' – an employee stock ownership plan (ESOP). Unions would give up $4.9 billion in wages in return for stock.

Class-conscious workers pointed out that this was a ploy to get the unions to support cutting wages, benefits and work conditions. The offer bitterly divided United’s unions. But it ultimately passed in 1994. United became the largest ESOP company in the U.S. With wages cut, United’s shares rose, briefly exceeding $128. Some workers thought they had become wealthy, although the ESOP put sharp restrictions on share sales.

With industry 'deregulation' of the 1980s, the capitalist class had also begun financing airlines with no unions and poorer wages, benefits and work conditions. Southwest Airlines and JetBlue are examples. This in turn set the stage for even more 'overcapacity.' United’s ESOP had not resolved any of capitalism’s contradictions.

The downturn in the U.S. economy in the fall of 2000 quickly exposed the 'overcapacity,' not only in the airline but every industry. Profits fell, unemployment rose. Fewer and fewer businesses and individuals booked flights.

Sept. 11 added to airlines’ woes. For weeks on end, flights were flying half-empty or worse. More jetliners went off to the Arizona desert. The debt, though, continued to accumulate.

The capitalist class’s response to airline 'overcapacity' is telling. It immediately moved not to build demand, but to cut thousands of jobs, mostly unionized. It turned to the state for welfare – for the airline bosses, of course, not the workers, and above all to service debt. The government made airline loan guarantees dependent on the unions accepting even more cutbacks.

When the Machinists union at United finally balked at further cutbacks last month, lenders forced the airline into bankruptcy. The bankruptcy courts are likely to make even tougher demands on the workers. United’s shares are essentially worthless. After giving up billions in wages and benefits, tens of thousands of United employee 'stockowners' have lost their savings. The capitalist class’s claims, above all through debt, 'contractually' come before workers’ jobs, health care, even their stockholdings.

What next? Former airline executive Michael Levine, now a Yale Law professor, told the Boston Globe, 'United must use a bankruptcy filing to wring more productivity concessions out of its workers.' United’s pilots, he said, fly an average of 50 hours a month; Southwest Airlines’ pilots fly 72 hours a month. 'Where the game gets fought is if United dares to change work rules while in bankruptcy,' Levine said. 'That is the only good that can come out of the filing. USAir is trying to do that now, but they’re not big enough. If United lowers its operating costs permanently, its size would create enormous pressure on American, Delta, Northwest and Continental to reduce their costs, too.'

So the exploiters’ response to their system’s contradictions is for the workers to work 72 hours for 50 hours’ pay! The Communist response is to reduce work hours with no loss in pay and no layoffs! Uncompensated-for productivity increases easily make that possible.

The capitalists’ response to their system’s contradictions is to attack the unions. Our response is to defend and strengthen the unions. The capitalists’ response to their system’s contradictions is to say – 'Pay the debt before paying for health care or pensions.' We say: 'Health care and pensions before debt!'

In fighting against the capitalists’ unending demands for cutbacks and layoffs, United unions actually point the way in making certain that productivity increases go to benefit humanity, not hurt it. The task of tasks is to centralize and generalize such struggles, with the goal of bringing an end to this inhumane capitalist system. Only then will production serve people’s needs. In the final analysis, that’s what Communism is all about.



The author can be reached at pww@pww.org