United-Continental Deal Resulted in Almost 3,000 Buyouts

The 2010 merger of United Airlines and Continental Airlines was followed by buyouts of about 2,900 union workers in the past two years at a cost to the company of $172 million, according to a United Continental Holdings Inc. regulatory filing. That averages out to $59,310 per worker.

The buyout numbers were disclosed in the footnotes section of the Chicago-based airline’s most recent annual report filed with the Securities and Exchange Commission.

Flight attendants from the United side of the merger have borne the brunt of job cuts. The buyouts included 1,300 mostly United flight attendants, and in 2012 about 1,800 flight attendants from the United part of the deal took advantage of a company call for voluntary leaves of absence to avoid forced layoffs.

By this April, United had planned to furlough more than 680 additional legacy United flight attendants. “We did not have enough people who wanted to take advantage of voluntary programs, and we were put in a position to do involuntary programs,” said Megan McCarthy, a spokeswoman for United.

But those cuts were averted when union leaders agreed to modify a contract to allow them to work with Continental flight-attendant crews.

“We came to an agreement so we wouldn’t have to furlough any flight attendants,” McCarthy said. “We have not announced any job reductions going forward.”

United, the nation’s second-biggest airline by traffic, employs about 87,000 people, including about 4,000 at Newark Liberty International Airport, where it bought a trans-Atlantic gateway hub when it merged with Continental. McCarthy said the total head count has only declined by “a couple hundred” since the merger, despite all of the buyouts and voluntary leaves of absence.

Meanwhile, United and Continental flight attendants continue to work under separate contracts, work rules, pay scales and scheduling systems, more than three years after the merger transaction was completed. United flight attendants, for the most part, are working only on legacy United aircraft, and Continental flight attendants work only on former Continental aircraft, an inefficient scenario because it limits scheduling options.

The company, which lost $489 million in the first quarter while rivals Delta Air Lines and American Airlines posted record quarterly profits, has been focused on downsizing the legacy United flight-attendant workforce, which has been overstaffed.

At the end of 2010, United’s 46,000-member workforce was 13 percent larger than Continental’s, which included 40,000 workers, according to a regulatory filing. But United’s flight-attendant staff at that time stood at 12,755, 36 percent larger than Continental’s, which had 8,153 flight attendants.

Talks have been under way for about a year-and-a-half on a joint flight-attendants contract. The company said Monday that it will start an expedited negotiations process with the Association of Flight Attendants. The flight-attendants union did not respond to repeated requests for comment for this report.

Technicians, represented by the International Brotherhood of Teamsters, also do not have a joint contract yet.

At a recent Deutsche Bank investor conference, United Chief Executive Officer Jeff Smisek said United intends to “increase quarterly earnings each quarter going forward, (and) we are confident of our ability to do so.”

Kevin Crissey, an analyst at Skyline Research LLC, based in Mahwah, N.J., said the company’s inability to integrate United and Continental flight attendants in a timely manner should not be an obstacle.

“Not having an integrated workforce doesn’t have to lead to underperformance on the financials,” he said. “It can, but it doesn’t have to.”

Colorado-based aviation consultant Mike Boyd added that the lack of an integrated flight-attendant work force “has not translated into a reduction of customer-service levels.”

Boyd is a frequent flyer on United, and he speaks highly of the airline’s management of its labor force.

“I would not call it ‘labor troubles,’ ” he said. “I’d call it a ‘labor situation.’ It’s a situation that they have to work through.”

This article appeared in print in the June 19th, 2014 edition of Hamodia.