I. M. Esperto
11th Dec 2002, 13:13
http://www.iht.com/cgi-bin/generic.cgi?template=articleprint.tmplh&ArticleId=79876
With collapse of United, a bold experiment dies
Greg Schneider/WP The Washington Post
Wednesday, December 11, 2002
Workers lose money as ownership plan ends
At first, it was just a way to keep the company from breaking up. But over time, the employee ownership plan at United Airlines struck a pilot, Bob Giuda, as something more, something noble.
In 1994, pilots, mechanics and other employees sacrificed as much as 25 percent of their wages and pensions to control just over half of the airline's stock, providing $4.9 billion to save the company from financial strife. In return, they got three seats on the 12-member board of the parent company, UAL, and a powerful stake in their own futures.
The bold experiment was not only supposed to make them wealthy; it was supposed to set an example for the rest of corporate America about the power of the average worker.
It was even touted as a reason to fly United: the company whose employees would take extra care because each had a personal stake in keeping customers happy.
The decision Monday by United to file for bankruptcy-law protection brought the big experiment to an ignoble end. The money that the employees sank into their company - a typical pilot might have given up $200,000 in wages and pension contributions; a mechanic, roughly $80,000 - is lost.
The employee ownership plan was the "greatest experiment in the history of relations between airline labor and management," said Giuda, a former leader in the pilots' union. "But that entire investment is gone with no chance of ever being recovered. It's over. That's capitalism."
Critics say the very idea of employee control doomed the airline, that having union members on the board prevented management from making tough decisions to cut jobs and hold down salaries. Competing airlines have complained that United, because of its size, set a lax standard for cost control that dragged down everyone else.
But insiders say the airline never really embraced employee ownership as a new way of doing business. Like expecting a new paint job to turn a turboprop into a jumbo jet, United never overcame its long history of conflict between labor and management.
Advocates of employee ownership worry that United's spectacular flameout will scare other companies from trying it.
"I'm certain United's experience with this is going to discourage that same model from other large publicly traded companies," said Corey....................................................... .....
With collapse of United, a bold experiment dies
Greg Schneider/WP The Washington Post
Wednesday, December 11, 2002
Workers lose money as ownership plan ends
At first, it was just a way to keep the company from breaking up. But over time, the employee ownership plan at United Airlines struck a pilot, Bob Giuda, as something more, something noble.
In 1994, pilots, mechanics and other employees sacrificed as much as 25 percent of their wages and pensions to control just over half of the airline's stock, providing $4.9 billion to save the company from financial strife. In return, they got three seats on the 12-member board of the parent company, UAL, and a powerful stake in their own futures.
The bold experiment was not only supposed to make them wealthy; it was supposed to set an example for the rest of corporate America about the power of the average worker.
It was even touted as a reason to fly United: the company whose employees would take extra care because each had a personal stake in keeping customers happy.
The decision Monday by United to file for bankruptcy-law protection brought the big experiment to an ignoble end. The money that the employees sank into their company - a typical pilot might have given up $200,000 in wages and pension contributions; a mechanic, roughly $80,000 - is lost.
The employee ownership plan was the "greatest experiment in the history of relations between airline labor and management," said Giuda, a former leader in the pilots' union. "But that entire investment is gone with no chance of ever being recovered. It's over. That's capitalism."
Critics say the very idea of employee control doomed the airline, that having union members on the board prevented management from making tough decisions to cut jobs and hold down salaries. Competing airlines have complained that United, because of its size, set a lax standard for cost control that dragged down everyone else.
But insiders say the airline never really embraced employee ownership as a new way of doing business. Like expecting a new paint job to turn a turboprop into a jumbo jet, United never overcame its long history of conflict between labor and management.
Advocates of employee ownership worry that United's spectacular flameout will scare other companies from trying it.
"I'm certain United's experience with this is going to discourage that same model from other large publicly traded companies," said Corey....................................................... .....