Released: April 29, 2012

Two can play the airline bankruptcy game

Source: Steven Pearlstein, The Washington Post

Over the past decade, major airlines have figured out how to use the bankruptcy code to accomplish what they have never been able to at the bargaining table: reduce wages and benefits to “market” levels. Back in the days when fares and routes were regulated by the government and compensation was effectively set in an industry-wide pattern, there wasn’t much incentive for airlines to resist above-market wages, gold-plated benefits and inflexible work rules. And even after the industry was deregulated and the major carriers faced competition from lower-cost, non-union upstarts, the threat of a crippling strike gave the airline unions the upper hand in contract negotiations.

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