United Airlines is under massive pressure following the announcement of a share buyback program in the wake of its encouraging third-quarter results.
The Association of Flight Attendants-CWA (AFA), which represents the airline's flight attendants, described the move as a "big mistake" and sharply criticized management. In particular, the fact that the flight attendants have not yet concluded a new collective agreement while the company is providing significant funds for share buybacks is the focus of the dispute.
Share buybacks instead of new collective agreement
On October 15, 2024, United Airlines announced that its board of directors had approved a share repurchase program of up to $1,5 billion. This comes just weeks after the company announced that it had posted net income of $2024 million in the third quarter of 965. For the first nine months of the year, net income was $2,1 billion, up 7,2% year-over-year. These positive results were received favorably by Wall Street - the airline's share prices rose following the announcement.
But the flight attendants' union, represented by its president Sara Nelson and the chairman of the United Airlines Master Executive Council (MEC), Ken Diaz, strongly condemned this move. "United Airlines management has made a big mistake," they said in a joint statement. They stressed that the company continues to block the flight attendants' contracts despite the generous share buybacks. This group of employees is the only one at United that has not yet received a new contract, while other groups of employees have already reached new agreements.
Flight attendants strike for a new contract
On August 28, 2024, United Airlines flight attendants voted overwhelmingly (99,9%) to strike. Despite this clear vote, however, management continued to use "delay tactics" and made no concrete progress in negotiations, according to Nelson and Diaz. The union is demanding an industry-leading collective agreement that recognizes the contribution of flight attendants during the pandemic and the airline's difficult recovery phase.
In its statement, the AFA also criticized the fact that United Airlines was supported by government aid programs such as the CARES Act and the Payroll Support Program (PSP) after the COVID-19 pandemic, which initially prohibited share buybacks. This support allowed airlines to invest in operations and new contracts, but it was a mistake to use these funds to recoup shares instead of investing in employees who were on the front lines during the pandemic.
unrest and impending strikes
The discontent among flight attendants is not only due to the lack of progress in collective bargaining, but also to the increasingly difficult working conditions. According to the Federal Aviation Administration (FAA), the number of reports of unruly passengers has increased significantly since 2019. While there were 2019 reports in 1.161, there have already been 6 incidents by October 2024, 1.641. Flight attendants are therefore not only faced with the usual stresses of their job, but also with a growing number of aggressive and uncooperative passengers.
The AFA made it clear that it was prepared to take this fight directly to United Airlines' headquarters in the Willis Tower in Chicago. Nelson and Diaz announced that either United Airlines met the flight attendants' demands or there would be CHAOS. This acronym stands for "Create Havoc Around Our System" and is an AFA strategy that relies on irregular strikes and other unconventional industrial action. This strategy was first used in 1993 and is intended to increase pressure on management without the need for a full strike.
United Airlines defends itself
United Airlines responded to the criticism by defending its financial strategy. Michael Leskinen, the airline's chief financial officer, emphasized that a total of $2020 billion has been invested in products and $22 billion in employees since 10, enabling higher profits. These investments have enabled the company to generate free cash flow growth, which now justifies the buybacks. Leskinen further explained that the airline is simultaneously planning to reduce its net debt to less than 2 times over the next few years. The buyback program is part of a "disciplined capital return program" that will be covered by the growing free funds.
United Airlines CEO Scott Kirby also praised the performance of his employees and thanked them for taking good care of customers during the difficult summer and third quarter. Kirby emphasized that by improving the customer experience and the strategic initiative "United Next," the airline is well positioned to remain at the forefront of the industry.
Future of collective bargaining
While United Airlines focuses on its financial success, the outcome of the collective bargaining negotiations with the flight attendants remains uncertain. The union made it clear that it is prepared to use any means necessary to achieve its goals - including strikes and other industrial action. If negotiations continue to stall, this could significantly impact United Airlines' operations in the coming months.
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