FROM WOODEN WINGS
VI. THE DISMANTLING OF UNITED AIRLINES
It was apparent to almost everyone that Ferris couldn't wait to take on the pilots again. More significantly, though, Ferris had steered the corporation on a course that was bleeding the airline of money and upstreaming it to the holding company through its other subsidiaries. Rapidly losing market share to aggressive competitors, United was becoming a dying airline as its assets and cash were being siphoned off by UAL Inc. to purchase hotels and rent-a-cars.
Said Hall, "I saw a scenario very similar to what Lorenzo later did at Eastern." Just like Eastern, UAL had spun-off United's Apollo reservation system into a subsidiary called Covia. Instead of keeping the Apollo profits, United was now required to pay Covia for every reservation it made-just like the other airlines that used its services. UAL Inc. also formed UAL Leasing to which it sold a number of United aircraft. United then had to lease back its own airplanes. The pattern was becoming very disturbing. Many feared it wouldn't be long before the airline was being charged for its own maintenance, food service and every other function that it currently performed for itself.
Said Dubinsky, "The airline was being put at a competitive disadvantage because the profits that were normally being made by the airline were being upstreamed to UAL Inc. through the subsidiaries. As a result, UAL Inc. shows a profit, the other subsidiaries show a profit, but lo and behold, the poor airline is destitute. It can't borrow money, it can't buy airplanes and it can't afford to pay its employees decent wages. You end up with management complaining that it's the employees who are wrecking the company. That was the plan-and it was happening."
To add insult to injury, then United President Jim Hartigan began telling the pilots that "unprofitable" United Airlines would now have to compete with the profitable subsidiaries for UAL Inc.'s capital. The pilots were hearing the same tired message: "Unless you give us more concessions, United will not grow." Just like Eastern, the pilots saw United being set up for failure.
Dubinsky and his two other MEC officers, Vice Chairman Jamie Lindsay and Secretary/Treasurer Felix Isherwood, worked throughout the winter and early spring of 1987 with a diverse group of advisors on preparations for an employee buy out of United Airlines. They were convinced it was the employees' only hope for saving their airline-and their careers.
During this period the atmosphere became more oppressive for the pilot group. The corporation's management structure seemed to have taken on a personality that internalized Ferris' anti-union sentiments.
Jim Guyette, the architect of Ferris' strike effort, was promoted to Executive Vice President of Operations. Kurt Stocker was appointed Vice President of Corporate Communications. He had been a Vice President at Hill and Knowlton, the firm used by Ferris before and during the strike in his public relations campaign against the pilots.
David Pringle, United's chief negotiator during the 1985 strike, travelled to California and appeared before a professional group telling them that one lesson United learned from the strike was that "We obviously weren't prepared. We should have started replacing the pilots a lot quicker."
Frank Jarc was appointed United's new Chief Financial Officer replacing John Cowan who was promoted to the same position at UAL Inc. According to a copy of a memo circulated within United, Jarc had helped Lorenzo develop his bankruptcy plan that "broke the unions at Continental". And John Cowan, in a speech before financial analysts in Boston during January 1987, probably best typified the mentality United's pilots saw in their management when he said, "The best part about our new flight attendant agreement is that we can hire foreign nationals (in the Pacific) and get people to work for rice-bowls." The utter contradiction in Cowan's statement to the analysts that United intended to be the nation's premier airline and at the same time treat employees with such disrespect was not lost on those in attendance.
Finally, in a meeting with more than 200 pilots in San Francisco the same month, Hartigan made his feelings about the pilots very clear. In response to a question about why the United pilots couldn't get captain's jumpseat authority, Hartigan shot back, "No. There will be no perks for pilots."
At similar meetings in the other domiciles in January, Hartigan and Barry met with the pilots to "exchange ideas." Most, however, felt the real purpose was to test the waters about their intention to reduce the seniority of the 570. The pilots left no doubt in their minds about how they felt. As one pilot said to Hartigan, "It used to be legal to refuse to hire blacks and women as pilots. It used to be legal to fire flight attendants for getting married. But just because it was legal didn't mean it was right. And just because it's now legal for you to punish the 570 doesn't make that right, either."
When it became obvious that Hartigan and Barry had their minds set, the exchanges became loud, pointed and taunting. "I knew the pilots were angry," said one ALPA council officer, "but I never thought I'd see both Hartigan and Barry roughed-up like they were tonight." After the two returned to Chicago, Dubinsky asked Barry if the meetings had changed his mind. He replied, "Of course not."
That same month, Joe Hertrich resigned. He had distinguished himself in office by getting caught in the O'Hare pilots' bag room peeling ALPA-PAC stickers from pilots' flight bags. In a brilliant move Barry appointed John Ferg to replace Hertrich as Director of Domicile Management.