The Airline Industry: A Few Kings and Millions of Peons
That loud noise you’ve been hearing is the sound of millions of people yelling “DUUUHHH!!!” after reading this news item. After years of record-setting salaries and bonus packages for airline CEOs combined with massive pay cuts and layoffs of pilots and flight attendants, tensions are rising in the airline industry. NO!!!
The article calls it “a workforce on the verge of a nervous breakdown.”
An MIT management professor said “Labor is deeply demoralized, having taken deep cuts in pay.” Now that the industry is starting to make more money, “the money is not flowing to the people who took the cuts when these carriers were in bankruptcy or near bankruptcy."
As you’ve probably guessed, that money is flowing to the CEOs, rewarding them for their massive failures and screwups. Northwest Airlines CEO Doug Steenland will be receiving a $26.6 million dollar bonus package this year. And what will Northwest pilots be getting in return for their millions of dollars worth of pay cuts and benefit reductions when the airline was “reorganizing”? Zip point shit.
United Airlines has reduced its workforce by 25%. Meanwhile their CEO, Glenn Tilton, “earned” $40 million last year.
If you think flying has been enjoyable lately, just wait. The fun hasn’t even started yet. Labor Lawyer Lowell Peterson says: “In any enterprise, especially one that is 24-7 high-stress like airlines, workers make accommodations to make things go smoothly … they are willing to go that extra mile. They’re not going to do it in the current climate.”
A lot of these labor contracts are coming up for renewal in two years. Food Fight! The article says: “If you think flight delays and cancellations are getting to you now, there’s a good chance contract talks will get ugly as workers finally get their voice at the bargaining table.”
Peterson said “People are overworked because of staff cuts, and they are fed up with getting lower pay and worse benefits while the executives get lush packages. When they come up for negotiations, the flying public should buy a lot of Greyhound Bus tickets.”
Sure makes you want to fly somewhere, doesn’t it?
Labels: Doug Steenland, Glenn Tilton, Lowell Peterson, Northwest Airlines, United Airlines
posted by Tom Harper @ 12:45 PM
8 Comments:
What I can't understand is: why is it that shareholders keep turning a blind eye to such "rewarding of incompetence"?
Somewhere, somehow, shareholders forgot *why* they actually buy shares in companies and corporations: if a company goes well, profits are shared in return by shareholders, who in turn then reward CEOs for a good job done. If a company goes bad, profits are down (or become non-existent), losses are incured by shareholders and CEOs should be then given the boot (without lofty severance packages) as a consequence.
Seems like Capitalism 101 to me - then again, I am no expert economist or anything like that ...
Mentarch: Unfortunately your "Capitalism 101" is outdated. "Find a need and fill it," "build a better mousetrap," accountability to shareholders -- that's all sooo 1900s.
Today's new improved capitalism is based on Good Ol' Boy networking and cronyism. These CEOs sit on each other's Boards of Directors and they all rubber-stamp each other's huge salaries, bonus packages and golden parachutes. Executives are richly rewarded no matter how God-awful their performance is; and employees get their paychecks and benefits reduced (or they get laid off) no matter how hard they work.
I think this "workforce on the verge of a nervous breakdown" (as the article put it) is probably spreading to a lot of industries. The results won't be pretty.
Well Mentarch, all shareholders care about is that their shares go up in value, nothing else.
the easiest way to make shares go up is to show a quarterly profit for Wall St so the fund managers will buy. The easiest way to show a profit is to cut labor costs.
Trying to build a sustainable for-profit business model on long term growth and stability? Wall St won't have it...no patience. Your stock will tank then you risk hostile takeover by vulture funds who will in turn do even worse things...like cut wages MORE, fire more employees, force longer hours, and cut more benefits let alon foregoing necessary repairs.
Just wait...I'm sure soon they'll be outsourcing pilots from bangalore and India, flying them to the United States, where they will pilot the planes for a shift of two before being flown back home...
Look at how many times over the past several years airline employees took massive paycuts, pension reduction, healthcare cutbacks and are forced to work longer hours.
Every year this happens. Nobody can or should live like that forever.
There is nothing the Airlines are doing that every other Industry hasn't been doing already. I mean they already outsource their customer service to India.
Erik
PoliShifter: Unfortunately those points are all true — shareholders don't care about the plight of a company's employees. But since they're all looking out for themselves, they should care when a bunch of fuckups keep rewarding themselves with 7-figure bonuses and salaries. I'm not sure how the law works in these cases, how much control shareholders have over executives' salaries and perks. But they should demand performance from the CEOs of the companies whose stock they own, or else sell their stock and invest somewhere else. They'd be benefiting themselves and lighting a fire under the feet of these bloated overpaid executives.
Larry: You're right, this is totally unacceptable. Airline employees may not be able to strike, but they can sure make flying a lot more unpleasant than it already is.
Erik: Yup, this has already spread to most other industries. Hopefully there'll be some changes, whether they come from legislation or from workers or shareholders asserting themselves.
The fat cats at the top get fatter while the little worker bees at the bottom work their fingers to the bone for less pay.
Suzie-Q(S-Q): Yup, that's a good description.
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