Make your own free website on
Charting the company's descent
Denver Post
August 20, 2000
Go to DPO front page

When United Airlines and its workers implemented an employee stock ownership plan in 1994, they set a clock ticking toward mid 2000, when new contracts would have to be reached.

Here's a timeline of how United's labor situation evolved into the strife disrupting operations this summer.

July - Shareholders of United's parent company, Chicago based UAL Corp., approve selling 55 percent of the airline to its employees, creating the nation's largest employee stock ownership plan, or ESOP, a majority of United's stock will be distributed to workers through mid 2000, in return for nearly $5 billion in wage, benefit and work rule concessions.

About 54,000 or UAL's 75,500 employees - from unionized pilots and mechanics to salaried managers - sacrifice an average of 14 percent of their compensation to complete the deal. United's 18,000 flight attendants, however, are not included.

Gerald Greenwald, a former Chrysler executive chosen by United's unions, replaces Stephen Wolf as the airline's CEO. The pilots union and machinists union each receive one seat on the 12 member board of directors, with veto power over certain issues such as mergers and CEO succession.

The ESOP is heralded as the beginning of a new era of harmony between United's labor and management, and an opportunity for the airline and its workers to prosper.
November - United abandons its months old bid for USAir Group Inc., the nations 6th largest airline. Greenwald says the deal did not meet United's criteria, one of which was union support.
December - United and its employees are flying high. Earnings are up, as is the stock price, which has tripled since the ESOP was approved.
March - United and its pilots agree to a series of wage and benefit increases that will restore pilot salaries to 1994 levels by 2000. Mechanics, ramp employees and technicians have approved similar increases.
September - United Airlines President and Chief Operating Officer, John Edwardson resigns. Edwardson, who joined the company with Greenwald, failed to win the support of United's pilot and mechanic unions in his bid to succeed Greenwald.

James Goodwin, a 32 year United veteran and head of United's North American operations, is named to replace Edwardson Goodwin has good rapport with labor.

December - Facing an April 2000 deadline, United management and the union representing its 10,000 pilots begin negotiating a post ESOP contract. Pilots want an "industry leading" contract that compensates for the cuts they accepted as part of the ESOP. They also see work rule changes and protection from job losses caused by increased regional jet operations and international airline alliances.

February - America West Airlines rebuffs buyout efforts by United and several other airlines.

March - United names Goodwin to succeed Greenwald as Chairman and Chief Executive Officer in July. Labor supports the choice, as do shareholders, who lift United's stock price 5 percent.
March 23 - United and its pilots union say they will ask federal mediators to help negotiate the new contract because they can't agree on major issues.

April 12 - The pilots' contract expires and is extended indefinitely as mediated negotiations continue. Pilots say they are disappointed the ESOP did not lead to improved relations between labor and management. Some resent what they gave up to get the stock, which they can't cash in until they retire or quit the company, and they want their employer to compensate them for their loss in earnings.

May 9 - United acknowledges that some pilots are refusing to work overtime, which is legal under their contract. The Actions are causing the airline to cancel flights, though the airline won't say how many. The company later says that hundreds of flights are being affected, and it trims 2 percent of its flight schedule for the summer.

May 23 - United announces plans to acquire US Airways in an $11.6 billion deal aimed at giving United the strong East Coast presence it has long sought. The transaction, which would be one of the largest in U.S. aviation history, faces significant hurdles, notably winning support from federal regulators and the many unions that represented more than 100,000 workers at both companies.

June 2 - United's pilots vote against supporting the merger. But pilot opposition doesn't stop the deal, because the union representing the ground workers supports it.

July 5 - The U.S. Department of Transportation reports that United landed only 57 percent of its planes on time in May, the lowest in the industry. United also canceled the most flights during May. The airline blames heavy thunderstorms and a congested air traffic control system for most of it's problems. DIA was fourth worst in the nation in terms of arrivals.

2000 (continued)

July 12 - The contract covering the 49,000 ground workers - including mechanics, ramp workers, reservations personnel, customer service representatives, ticket office employees and air freight operators - expires. Like the pilots' contract, it's extended as negotiations continue, and like the pilots, the ground workers are refusing to work overtime. Actions by ground workers quickly begin to affect United's operations.

July 19 - United's stock falls 10 percent as the airline warns that its third quarter and yearly earnings will fall because of schedule reductions, flight cancellations and higher wages. The stock is down 30 percent for the year, in part because of rising fuel costs.

United president Rono Dutta says labor is causing 60 percent of the carrier's cancellations and delays. That number later climbs to 65 percent. To help alleviate the problems, the airline increases its scheduled flight times across the board.

July 20 - Denver Mayor Wellington Webb asks Transportation Secretary Rodney Slater to intervene in United's labor negotiations. In the next few weeks, other Colorado politicians join the fray.

July 27 - United pilots activate their "Strike Preparation Committee," and set a Sept. 4 target date for a new contract. The pilots cannot strike until 30 days after the federal mediator calls off negotiations, which has not happened. United also says it hopes to reach a contract by early September.

Aug. 4-6 - A combination of severe thunderstorms and increased employee actions causes United to cancel 700 flights over the weekend. Thousands are stranded at Denver International Airport. Dutta offers an apology to travelers. The company says it's hiring 1,300 new pilots this year.

Aug. 11-18 - Pilots call off talks over the weekend, saying United wasn't willing to negotiate on scheduling. Goodwin and pilot union head Rick Dubinsky meet with Slater and Illinois Sen. Richard Durbin without result. Talks resume the following week, and pilots report progress on scheduling.

Meanwhile, United reports that only 36 percent of its flights are arriving on time so far this month, down from 42 percent in July and 48 percent in June. Despite United's thinning of its flight schedule by 3 percent through October, cancellations are running at nearly 100 a day out of 2400 flights.

Aug. 28 - United and the Pilots Union reach a tentative agreement on all outstanding issues.