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Sunday, 30th May 2010

Bankruptcy Reform Needed Now; Congress Must Stop Airlines from Exploiting Workers

Bankruptcy Reform Needed Now; Congress Must Stop Airlines from Exploiting Workers
Source: Air Line Pilots Association

In testimony before a U.S. House Subcommittee today, the president of the Air Line Pilots Association, Int’l (ALPA), called on Congress to comprehensively reform the U.S. Bankruptcy Code to better protect workers and stop companies from manipulating the bankruptcy process to garner huge bonuses for executives while stripping workers of their collective bargaining rights.

“Despite the original intent of Congress, Section 1113 of the U.S. Bankruptcy Code today fails to protect workers or serve as the mechanism of last resort to save a failing business,” said Capt. John Prater, ALPA’s president, to members of the Commercial and Administrative Law Subcommittee of the U.S. House Committee on the Judiciary. “Instead, it has been exploited as a business model of first resort for companies to gain long-term economic concessions by gutting the wages and working conditions of airline and other employees.”

Prater explained that the current bankruptcy process enables employers to impose contract changes through the court and outside of the normal collective bargaining process. Recent bankruptcy court decisions have greatly loosened the standards for employers to force economic concessions from workers. As a result, employers have been able to breach their employees’ contracts with impunity, and workers have lost critical leverage in the process, with grossly unfair results. Management representatives testifying at today’s hearing acknowledged during questioning that the system is in need of some reform.

Between 2000 and 2010, more than two dozen U.S. airlines declared bankruptcy, with workers at nearly all of them taking severe wage cuts, said Prater. He underscored that pilots have given up nearly $30 billion in wage concessions and that pilot wages decreased nearly 50 percent at airlines that filed under Chapter 11. At the same time, many airline CEOs received exorbitant compensation packages and lavish bonuses.

+ Oral testimony (PDF)
+ Written submission (PDF)
+ Slide show (PDF)


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