Catherwood LibraryILR School

United Airline has asked a federal bankruptcy judge to void its labor contracts with its unions to open the way for permanent reductions in wages and benefits and the creation of a low fare airline. The last time a major airline used the bankruptcy code to revoke its labor contracts was Continental Airlines in 1983. There is special significance in the action in the case of United because the employees owned 55 percent of the airline before it filed for bankruptcy, United's labor unions held three seats on its board and had the right to veto the selection of a chief executive. Those rights were terminated two weeks ago when employee ownership fell below 20 percent. Analysts expect negotiations between United and its unions to continue, however the threat of war has caused bookings to drop dramatically, which may result in across the board cut backs.