Originally posted at - AMFA Local 9 [1], August 24, 2007
Re: UAL seeks Joint Venture / maintenance partnership
To: AMFA Local 9 members
From: Local 9 President Joseph Prisco and Airline Representative Malik Miah
Media reports yesterday revealed that United Airlines is seeking third party investors to take over its maintenance division, with the exception of line maintenance, via a partnership or Joint Venture. “We are contemplating bringing in third parties who can invest in the maintenance, repair and overhaul business,” said United spokeswoman Jean Medina.
The articles also explained that the Company seeks “a labor friendly cooperation” in accomplishing its objectives. “We are working cooperatively with our labor groups to ensure that any arrangement would be for the long-term with a partner that creates value for our customers, investors and employees.”
Has the Union leadership been involved in such discussions? Have we agreed to any options offered by management? There have been neither negotiations nor agreements.
Over the last two weeks AMFA leaders have been invited to meetings with the Company’s senior leadership to listen to their new “MRO Strategy” going forward. (Local 9’s BriefingNotes first covered these briefings in its August 14 edition, along with reprinting excerpts from the CBA.)
At the two meetings we attended, we asked for clarifications and two simple questions: Does United Services management want to stay in the maintenance business? Will it honor the Union’s contract, including making clear to any potential investors the responsibility to do so? They responded yes to both questions as outlined in their new strategy.
The Union is not conducting any negotiations (secret or otherwise); we’ve taken no position on current or future investors. At this point we are simply an informed party. We made clear that the contract and job security of our members constitutes our number one concern.
Why the change in maintenance strategy? The primary answer is twofold: the lack of capital investment and inability of management to implement the business plan. The Company’s S200 maintenance plan, conceived in bankruptcy, sought to eliminate waste, create capacity, and produce revenue that could be reinvested into the business as capital.
The goal was to develop its maintenance program into a viable Maintenance, Repair, and Overhaul (MRO) business. The Company experienced limited success with LEAN and continuous improvement programs but not to the extent of producing significant capital to grow the business. After bankruptcy the Company made clear it would not provide the capital investment the division needed to transform itself.
The Company’s position flows from its failure of leadership. While it identified and articulated a maintenance business plan, management failed to execute and implement that plan. The Union fully participated and cooperated through its commitment to LEAN and continuous improvement programs as it recognized its members’ vested interest in the outcome. Unfortunately the Union does not run the business or make key decisions.
The Company now concludes that it cannot realize its maintenance business goals without bringing in a partner, joint venture or otherwise. It looks for a partner that can bring in needed capital and leadership as well as offer strategic solutions such as addressing a rising material supply cost.
AMFA sees its number one job is to protect and defend its members and contract. The Company’s stated position is that they need a “labor friendly deal.” This position recognizes both the protective clauses in the contract as well as the marketplace reality that any buyer needs the cooperation and goodwill of the workers.
Only labor peace can provide a buyer or partner with a genuine opportunity to turn a profit. Any change to the contract requires membership ratification.
Due to these extraordinary circumstances, many rumors spread rapidly through our ranks. This is an understandable situation. Rest assured, as the Union learns the facts about any prospective change of ownership or new investors, it will communicate that information to the members in a timely fashion. BriefingNotes, WayPoints, special bulletins and the Local 9 website will continue to serve as credible sources for information.
Please stay informed, question management and be vigilant as we enter a rapidly changing environment at UAL maintenance.
Chicago tribune Article - http://www.chicagotribune.com/business/chi-thu_unitedaug23,0,3679316.story [2]
Local 9 media response - http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/08/23/BUUIRO9D2.DTL [3]