May 26, 2010 - In testimony before a U.S. House Subcommittee on Tuesday, the president of the Air Line Pilots Association, Int’l (ALPA), called on Congress to comprehensively reform the U.S. Bankruptcy Code to better protect workers and stop companies from manipulating the bankruptcy process to garner huge bonuses for executives while stripping workers of their collective bargaining rights. 

“Despite the original intent of Congress, Section 1113 of the U.S. Bankruptcy Code today fails to protect workers or serve as the mechanism of last resort to save a failing business,” said Capt. John Prater, ALPA’s president, to members of the Commercial and Administrative Law Subcommittee of the U.S. House Committee on the Judiciary.

“This miscarriage of justice is bad for the pilots at these individual airlines, and it is also bad for the U.S. airline industry and the U.S. economy,” said Prater. “After 9/11, many airline managements not only used the 1113 process to eviscerate employee contracts, they also misused it to cut staff to the bone, with deteriorating customer service as just one of the outcomes.” 

The Protecting Employees and Retirees in Business Bankruptcies Act of 2010 (S. 3033 and H.R. 4677) clarifies the standards that bankruptcy courts must use to determine the outcome of a case. It directs courts to weigh in their deliberations the ramifications that a reorganization plan will have for workers, including effects on wages, job security, health-care benefits, pensions and other retirement plans, and the legal requirement for adequate notice of job termination.  

In addition, the legislation reestablishes collective bargaining as the primary means to make any changes to a labor contract and clarifies that a union may seek damages from the employer, or strike, if the bankruptcy process results in forced changes to a collectively bargained agreement. 

“These critical reforms will promote bargaining, help restore battered employee morale and trust, and make labor a more effective partner in rebuilding the long-term financial health of airlines,” said Prater.  

“If passed, this bill will also make certain that working families are not forced to deeply sacrifice while CEOs reward themselves and will level the playing field and share the pain of bankruptcy, rather than leaving workers to unfairly shoulder the burden. ALPA urges Congress to act quickly to pass this legislation.”