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Labor pains for airlines
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November 21, 2000: 7:18 p.m. ET
Travelers during holiday weekend could see flights grounded by labor disputes
By Staff Writer Chris Isidore
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NEW YORK (CNNfn) - Holiday air travelers this week could be experiencing labor pains, as three of the nation's largest airlines struggle with flight cancellations and disruptions that they attribute to job actions by employees trying to gain bargaining leverage.
The unions involved deny they are leading any kind of organized activity to ground flights at United Airlines, Delta Air Lines and Northwest Airlines, which are all among the nation's four largest carriers. But federal judges have issued orders against two of the mechanics unions within the last week, and Delta is threatening to take action against its pilots.
All of these moves could create havoc for travelers during the coming days, when extra seats and flights are scarce. Sunday is expected to be the busiest travel day of the year at the nation's airports, and Wednesday is likely to be among the busiest.
Earnings seen at risk
Even if not many passengers are concerned yet about disruptions, Wall Street analysts are starting to get nervous. Glenn Engel, the airline analyst at Goldman Sachs, lowered his earnings estimates for UAL Corp., which owns No. 1 United, although he kept his "market outperform" rating for the stock, suggesting the stock is still under-priced and worth an investment.
 "UAL's relationship with its mechanics is likely to get worse before it gets better," Engel said. "Expectations are high among rank-and-file, and union leaders probably feel they have to take the company to the brink of a strike to convince workers that they have extracted the best possible terms, but we don't see the National Mediation Board permitting a strike until after the holidays."
Engel raised his fourth-quarter loss estimate at UAL to $4.63 a share from $3.00 a share, which was already above the consensus loss estimate of $2.44 a share, according to earnings tracker First Call. The company earned $1.91 a share in the fourth quarter of 1999.
He also lowered 2001 earnings estimate to $3.75 from $4.50. The consensus estimate there is $5.37.
Other analysts say they're going to watch how the airlines deal with the labor problems during the busy holiday weekend before they adjust their earnings.
"If your employees are disgruntled they can still do damage to you, no matter what the court orders," said Ray Neidl, analyst with ING Barings. "But all of this is going to make it harder for United to win back its good business customers, which they've been trying to do."
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United lost many business customers, and had to up frequent flier incentives for its business fliers, this summer when action by pilots during their negotiations caused even more widespread flight cancellations. But United also led the way in raising business fares on Friday.
Neidl said that better than 50 percent of airline revenues come from the frequent business traveler. He also said the lack of legal action against the pilots this summer may have embolden its mechanics to ground planes recently.
United won a temporary restraining order against the International Association of Machinists and Aerospace Workers Friday evening, saying that members of the union were grounding planes that were safe to operate and dragging their feet on repairs.
The number of flights canceled Monday was still well above normal levels. But Tuesday's total of 43 flights canceled, with 27 of those due to mechanical problems, is about the normal total for the airline, which operates about 2,300 flights a day.
The union and company negotiators both met with the members of the National Mediation Board, which oversees labor relations in the industry, on Monday, but there were no talks Tuesday and none are scheduled, said Joe Hopkins, a spokesman for United.
Flight attendants at United also held informational picketing and leafleting at some major airports Monday, although there were no flight disruptions by those crews. The flight attendants are the only union employees who don't own a significant stake in the company at employee-owned United.
Hopkins said that the airline is better prepared than it was during the summer when flights were grounded by pilots refusing to fly overtime.
"We have more reserve airplanes," he said. "Last summer, we only had 11 or 12 planes designated as spares. Now we have 25.
Northwest still hit by groundings
Northwest won a similar injunction Monday against its mechanics, who are represented by the Aircraft Mechanics Fraternal Association. But the nation's No. 4 airline said that 36 aircraft were grounded by mechanical problems Tuesday, when a normal day would see only 10 grounded by such problems.  Northwest said it would deploy additional staff at airports to accommodate any disruptions and will take all steps it can to minimize what it says is an illegal job action.
But Terry Harvey, assistant national director of the AMFA, restated the union's claim that it is not leading any kind of job action by its members. "If they're out of service, they're out of service because they're having a mechanical problem," he said. "There surely is no concerted effort on part of the association to ground aircraft."
There are no talks scheduled between the union and company, although Harvey said union officials are due to meet with the NMB on Nov. 27.
Delta pilots force flight cancellations
By comparison with United and Northwest, No. 3 Delta is having relatively good labor relations. The Air Line Pilots Association and airline took the unusual step of jointly asking for 90 days of federal mediation on Friday, and that ensures there could be no strike by pilots for at least four months.
 But Alesia Watson, spokeswoman for Delta, said the Atlanta-based airline has been forced to cancel flights due to pilots refusing to fly on overtime, although to this point she said the airline has been able to accommodate passengers on the cancelled flights.
Watson could not give a number of flights that has been cancelled, but said the airline is looking at taking legal action against pilots, even though she said it appears the lack of overtime flying is a rank-and-file effort rather than something led by the union leadership.
"We're saying it's a job action, and we are prepared to take legal action if our schedule is significantly disrupted due to the action," she said. "We've asked APLA to ask its members to return to their normal flight levels."
Shares of UAL gained 44 cents to $37.50 in trading Tuesday, while shares of Delta gained $1.56 to $49.75. Northwest shares rose $1.75 to $29. 
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