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An independent maintenance audit exposes that United Airlines
(NASDAQ:UAUA) violated a key clause of its labor agreement with the
Aircraft Mechanics Fraternal Association (AMFA). The audit, conducted
by an independent accounting firm, found that UAL exceeded the
contractual limit by 50%.
"This means millions of dollars of excessive outsourced work that
translates into hundreds of lost jobs," said David Frizzell, an AMFA
Airline Representative. "Since 2001 the number of mechanics and
related staff represented by the Union at United fell from 15,000 to
5,600."
The contract limits outsourcing to 20%. The audit of the 2005
financial data, conducted by a Company-approved accounting firm, found
that UAL outsourced over 30% of its total maintenance spending.
Lee Seham, AMFA's General Counsel, explained that "aviation is a
safety-sensitive industry and excessive outsourcing should be a
concern of the flying public."
Calvin Scovel, the Department of Transportation Inspector General,
told a House aviation subcommittee on March 29 that the FAA cannot
adequately oversee the quality of the growing volume of maintenance
that airlines outsource to contractors.
The audit acknowledged that UAL reported an outsource rate as 16%
of its total spending. The reason these two rates vary is that United
counted labor and materials in the "Total Maintenance Spending" number
(the denominator) but counted only labor in the "Outsource Maintenance
Spending" number (the numerator). This inconsistent methodology is the
root cause of the disagreement. The Union says the contract requires
all expenses (labor, materials, etc.) be included on both levels of
the calculation.
AMFA hired, with UAL agreement, a mutually acceptable independent
auditor to conduct the audit. The audit is based on procedures agreed
to by AMFA and UAL. The agreed upon procedures engagement was
conducted in accordance with attestation standards established by the
American Institute of Certified Public Accountants. The independent
auditor reported the results of procedures performed and issued no
opinions.
"AMFA urges UAL to work with the Union toward a resolution," said
Jim Seitz, AMFA's Airline Contract Administration Coordinator for
United Airlines. "The Company must immediately cease any additional
outsourcing and begin to arrange the return of maintenance to AMFA
members. The Union will work with the Company to identify the
outsourced maintenance to return. AMFA seeks to resolve this issue as
soon as possible with UAL and offers to meet with the Company at any
place and any time."
For additional information on UAL's violation of its outsourcing
agreement, contact AMFA Local 9 President Joseph Prisco.
ABOUT AMFA - The Aircraft Mechanics Fraternal Association
represents Mechanics and Related staff at Alaska Airlines, American
Trans Air, Horizon Airlines, Mesaba Airlines, Northwest Airlines,
Southwest Airlines, and United Airlines. AMFA Local 9, based in San
Francisco, is AMFA's largest Local. AMFA commits to the traveling
public to ensure the safety of the air transport industry through
ceaseless vigilance.
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