What does it take to bring an airline to its knees? Uncompetitive union-negotiated labor contracts and a fundamental unwillingness to recognize that in a down economy, unions have a hard time raising wages without destroying jobs.
That was a lesson that unions refused to learn in the case of American Airlines, which yesterday announced that it has filed for Chapter 11 bankruptcy protection, making it the last large U.S. full-fare airline to seek court protection from creditors. American was forced to take that action when the airline pilots union refused to budge on its demands for massive signing bonuses and wage increases. The airline’s competitors are flying high in profits after restructuring union contracts in their own bankruptcy proceedings.
Unions also didn’t learn any lessons after taxpayers bailed out General Motors and Chrysler, and then-White House “auto-czar” Ron Bloom gave the UAW preferential treatment in the restructuring process despite their contracts being largely at fault.
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