UAL President Resigns-What Price Union Pressure?

Article excerpt

On September 19, John A. Edwardson, president and chief operating officer at UAL Corp., based in Chicago, resigned unexpectedly. Many speculated whether Edwardson's resignation came when he realized he no longer enjoyed the support of two key union groups in his bid to become the next chairman and chief executive officer of the airline.

Edwardson a former CFO at Ameritech Corp. and Northwest Airlines-had joined United in 1994 under the assumption he'd become chairman of the board after Gerald Greenwald, the current chairman, retires next summer. For the past four years, Edwardson has handled all of UALs labor negotiations-starting with the task of launching an employee stock-ownership plan at the company in 1994. The stockownership plan was created with the cooperation of the Air Line Pilots Association and the International Association of Machinists, which backed Edwardson initially. The pilots and machinists unions each have a voting seat on the board. Formation of the employee stock plan gave employees control of 55 percent of the company's common stock.

According to a report by Knight Ridder Tribune Business News, to gain their stake in the company, employee groups made wage and benefit concessions in exchange for stock. However, in recent months, many members of both unions had soured on Edwardson as a potential successor to Greenwald. According to a spokesperson for the pilots' union, Edwardson's idea of how the culture at a majority employee-owned company should be apparently didn't mesh with theirs.

Is it common for union members to exert pressure on company leaders, causing them to quit? "It happens," says Don Ladov, a labor lawyer with the firm of Cohen & Grigsby in Pittsburgh who represents managers exclusively in all areas of labor and employment law. But he adds that it's a dangerous thing for a union to do because most times, when they oust one leader, they might not have a say in who takes his or her place. "The devil you know is sometimes better than the devil you don't know," says Ladov.

However, at United, since union members are on the board, they do have a say. "Part of a bargainer's job is to be an effective communicator and not become the issue," Ladov adds. While Edwardson apparently wasn't in bargaining talks at the time of his exit, union disfavor isn't a good card to have when you're trying to play the leadership game. …