Magazine article Workforce Management

United Faces Tough Morale Challenges

Magazine article Workforce Management

United Faces Tough Morale Challenges

Article excerpt

Labor relations

UNITED AIRLINES executives may be busy worrying about an employee strike, but the company will have to confront more long-term employee morale issues in the next several months.

After rounds of salary cuts and the pending termination of the company's defined-benefit plan, United will be forced to deal with disgruntled workers and the task of convincing prospective employees that the carrier is a company for which they want to work.

Assuming that it does pull itself out of bankruptcy, United will have to find ways to make up for the fact that its compensation packages are among the lowest in its industry.

"Until those rates of compensation recover, that is going to be their biggest problem," says Robert Mann, president of R.W. Mann & Co., a Port Washington, New York-based airline analyst.

United pays among the lowest salaries to flight attendants and machinists, two groups threatening to strike. The annual salary for a flight attendant who has worked for six years at United is $26,721, compared with $27,882 at Southwest Airlines and $29,331 at Delta Airlines. Top base salary for mechanics at United is $22.89 per hour, compared with $26.12 at Delta and $32.96 at Southwest.

Management will have to make some huge gestures to get employees to stay, says Richard Gritta, a professor of finance and transportation at the University of Portland. An amped-up 401(k) plan with a sizable match or a competitive profit-sharing program would be a good first step, but it's going to take more than that, Gritta says.

When asked what United would have to do to improve employee morale, Sara Nelson Dela Cruz, a spokeswoman for Association of Flight Attendants, said nothing less than management stepping down would make a difference.

"This management team cannot run this airline," she says. After 30 months of bankruptcy, Nelson Dela Cruz says, "they still don't have a viable business plan. …

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