these are and were some of the nation's oldest and most respected air carriers those that were part of the original cohort of companies that established a viable and ultimately indispensable industry i remember fly eastern with all those other airlines that no longer exist republican cetera et cetera their success in turn was based on the dedication and commitment of talent and hard working pilots flight attendants mechanics customer service agents baggage handlers dispatchers and other employees some of these airline bankruptcy cases the airline  section eleven thirteen of the bankruptcy code to change existing wage rights work rules and other terms of collective bargaining agreements to the detriment of workers for example u s airways successfully petition the bankruptcy court to reject collective bargaining agreements with several of us labor union string of second trip to bankruptcy first time an airline was able to successfully reject a labor contract in bankruptcy in twenty three years similarly similarily united airlines successfully convince the bankruptcy court to terminate its collective bargaining agreements with corporations would not use the bankruptcy project process strategically to get out of their obligations under collective bargaining agreements more specifically section eleven thirteen was enacted in response to a supreme court decision that effectively allowed a business better to reject the terms context of a lot of bankruptcies we'll hear about some proposals to fix those problems some are witnesses today employees covered under title one of the railway labor act are exempt from the procedures established by section eleven thirteen which covers railroad workers and rail carriers se know it's always a trip and i am grateful that you're here and you know in all deference to the rest of you it's not unusual i know for someone to recognize especially captain sullenberger who is certainly a that one a lot and i hope they're all like you mr chairman bankruptcy law is not often really is about striking a proper balance between competing interests the competition in bankruptcy between labor contract airline rest reorganization has made modifying collective bargaining agreements one of the most difficult issues in an airline bankruptcy and i know that rejecting collective bargaining agreements and reducing employees wages and benefits is not something that airlines take lightly nor do i however many airlines have been so constrained by unavoidable labor costs and union work rules that without relief sometimes reorganization would have been impossible and this is why section eleven thirteen of the bankruptcy code reasonably attempts to balance the rights of unionized employees with the bankrupt companies ability to eliminate labor contracts collective bargaining agreements can only be rejected if rejection is quote necessary to permit reorganization of the debtor no that's not true with private with nonunion employees they can just be told the situation and rejection can only occur after the parties have met to try to reach an agreement on modification you know this is mr chairman something in many cases there are several meetings again not afforded to workers that are not unionized some would like to make it more difficult for distressed airlines to reject collective bargaining agreements but if airlines are forced to liquidate because labor costs cannot be reduced the employees will lose their jobs anyway and retirees of course will lose their benefits i guess i'll use the example of u airways again it was the first i think it entered bankruptcy in august of two thousand and two and by mid two thousand and four management determined that a further realignment of its costs was unavoidable us airways entered into a second bankruptcy in september two thousand and four where it sought to rid itself of historical costs that made the carrier less competitive at the lower fare structures that had become the industry norm during the second bankruptcy as a result of steps taken to achieve a more competitive structure u s airways was able to attract a merger partner as it emerged from bankruptcy in the fourth quarter of two thousand and five u s airways was acquired by the former america west airline through the bankruptcy proceedings u s airways was lawfully relieved of its pre bankruptcy pension obligations this was a very difficult and painful step which questionably impacted employees in a profound way however had the us airways not been really the pension obligations through bankruptcy it is highly unlikely that america west airlines would have sought to merge with u s airways in the first place the america west u s airways merger ensured that the jobs of many thousands of former u s airways employees were preserve say the airline of course that had i may have had to ride a bicycle back and forth to washington so the fundamental question we should ask ourselves is this do we want to make it impossible for airlines to reject their collective bargaining agreements forcing them to liquidate or do we want them to allow them to make the cuts under the bankruptcy laws necessary for their reorganization mr chairman that the bankruptcy code currently attempts to strike a proper balance between distressed airlines and their labor in this balance allows the airline to make the necessary changes to its cost structure and obtain the financing it needs to successfully reorganize saving jobs and preserving retirement benefits and i look forward to the witness's testimony and yield back thank you m finished subcommittee members after all questions are asked will have five minutes also to ask questions our first witness is captain chesley b sullenberger the third captain sullenberger is an airline pilot and safety expert and heroism that is recognized as truly being an american hero he would lose his pension if his airline decided to go into bankruptcy and he would lose it if he was running a train i'd like him to explain that to us he's been an international speaker on airline chairman cohen ranking member frank thank you for your wonderful introduction and your kind words but before i began let me point out to the committee that i'm not the only one in this room today who had a hand in the remarkable events of january fifteen thank you sir appreciate your being here thank you also lose your pension i guess it is my honor to appear before you today to provide testimony regarding an issue that is critical to airline employees across our nation i realize that i have been asked here largely because of the events of january two thousand  but what i have to say to you the value of my testimony is what took place in the thirty years prior to that like my colleague next to me captain arnie genteel i am a u s air as pilot and i have personal knowledge about how airline bankruptcies affect airline employees based upon my forty two years of flying and my thirty years as a line pilot my pay was also drastically cut by forty percent and my  all under the veil of bankruptcy code provisions that are specific only to airline employees like me thousands of our commercial pilots served our country in jet fighters or other cockpits of the armed services we know what commitment is and we know when commitments are broken for professional pilots or had their retirement commitment broken in large part because they do not have the same rights during a business bankruptcy as every other organized employee in the united states a basic and fundamental injustice that needs to be rectified airline pilots do not live in a vacuum and we clearly understand and are sympathetic to the fact that many americans have recently experienced economic difficulties but airline employees have been hit by an economic tsunami that dates back to two thousand and one one of the driving forces has been the discriminatory application of the bankruptcy code to this specific group of employees in all over one hundred airlines have filed for protection against their debtors since the late one nine hundred seventy s the time of airline deregulation airline managements have shown a willingness to file bankruptcy and use their leverage to ravage airline collective bargaining agreements resulting in lower wages loss of pensions and poor working conditions for airline employees i believe it is essential that our lawmakers realize the unintended consequences of exposing airline pilots during bankruptcy proceedings which have directly led to working conditions that challenge even the most seasoned pilots the rapidity and near unanimity with which the united states house of representatives approved the airline safety and pilot training improvement act of two thousand and nine demonstrate the house's keen appreciation of the fact that our industry has reduced the margins above the regulatory minimum on we on which we have historically relied pilot compensation was for many years comparable to what other professionals earned that is no longer the case at large carriers many current airline pilot salaries are equal to in hundred two levels levels from twenty years ago without any adjustment for inflation given a wide variety of career choices military trained pilots and other young ambitious well educated individuals must weigh the financial sacrifice associated with the airline pilot and profession because this profession isn't valued as much as it used to be because of the other choices available to those entering the workforce hiring standards at many airlines have been lowered significantly from when i started even as recently as two thousand and one a well managed regional airline requested three thousand hours of flight experience and one thousand hours in turban powered aircraft that same airline today has dropped its requirements to five hundred hours total other regional airlines have hired pilots with less than three hundred hours requiring only one hundred ninety hours of experience the f a a minimum in addition to compensation pilots collective bargaining agreements have long provided margins developed over decades that pilots deemed necessary to ensure adequate rest and sufficient level of training in many cases those contractual provisions no longer exist without the appropriate level of bankruptcy protection collective bargaining agreements will be in jeopardy of further erosion when my company offered pilots who had been laid off the chance to return to work sixty percent refused members as i testified to the house aviation subcommittee in february of this year i attempt to speak accurately and plainly so please do not think i exaggerate when i say that i do not know a single professional airline pilot who wants his or her children to follow in their footsteps it has been pointed out several times during testimony here today that airline employees stand alone in bankruptcy we do not have the same rights under our l a that railroad employees do and the absence of these rights has created a situation where airline employers may as a pr matter got our wages work rules and pensions with near impunity let me be clear i am not advocating the elimination of bankruptcy laws certainly bankruptcy laws have played an important role in american industry but there is no basis for the discriminatory treatment of airline employees inside the bankruptcy process it certainly was not the intention of the framers of the r l a unfortunately the current situation has created a tremendous disadvantage to airline voice the result is the destruction of professions within the industry better fundamentals of the safe operation of our nation's air transportation system unlike all other organized labor railroad and airline employees fall under the r l a the logical solution is for airline employees to fall under bankruptcy code section eleven sixty seven like their railroad counterparts with airline employees under section eleven sixty seven management and labor will better recognize each other's needs and a certain level of cooperation will ensue creating a partnership that will serve both sides better into the future you can help those honorable members of congress to work together across party lines and the inequity and promote a better balance in the airline industry when we must keep the american commercial aviation industry saving affordable for passengers and financially viable for all stakeholders including those who work in the industry day to day accordingly  members of congress for the fair treatment of airline employees inside a business bankruptcy and strongly suggest this could be accomplished by having airline employees fall under bankruptcy code eleven sixty seven i thank you for the opportunity to share my perspective with you frank and other members of the committee my name is arnold gentil chairman of the government affairs committee of the u s airline pilots association and a u s airways captain with over thirty eight years and i'm grateful for the opportunity to give testimony today concerning the protection of employees i'm here to ask to put an end to a particular inequity concerning the application of bankruptcy code and its effect on a single industry employee group airline employees  question of the essence of merit of bankruptcy law as we fully support the concept of permitting companies to restructure rather it is a question of inequities in bankruptcy code up of the u s airways captain i have witnessed the effects of this inequity  pilot group experience to bankruptcy forty to sixty percent of our salaries and terminated our pension u s airways pensions like all pensions were earned by professionals they are now with pennies on the dollar and the burden of all remaining pension costs have been shifted to the people and the american taxpayer just between the recent u s airways and united airlines over one hundred eighty three thousand pensions were lost our pilot group witness family are proving decimate airline collective bargaining agreements to understand and address the vulnerability of airline employees and all unionized labor into three groups one railroad employees hired by the fall under bankruptcy may potentially damage both the employer and the employees nevertheless this right is the potential for exercising this right that allows for the consequences of what is otherwise  the result is only airline employees are subject to the eleven thirteen process without any recourse and they are the only employees covered by the or without any access to eleven sixty seven and the section  the long term our company's chances for success pilots more than any other professional work group have a culture inside our company and a vested interest in the success of language to treat all orally covered employees equally has been drafted and is attached to testimony thank you for allowing me the opportunity to share my perspective i'll be happy to answer any questions thank you captain appreciated third witnesses captain to correct an unfair difference in the way or line employees are treated in chapter eleven bankruptcy for rail employees covered under railway labor in bankruptcy filing labor contracts administered under the cannot be unilaterally forty bankruptcies overall in this decade alone i'm afraid that the process has become an opportunity an economic opportunity rather than a final attempt to survive has become a way to companies labor contracts to the detriment of reject labor contracts during the bankruptcy process without following the provisions outlined in the railway labor act unlike airline management management cannot use chapter eleven to unilaterally abrogate project labor contract part of a financial reorganization the courts have ruled that section eleven not apply to airlines even though airlines are the only other industry covered by the railway labor act therefore airlines may reject their labor contracts in bank following the provisions specified in section eleven thirteen of the bankruptcy under section eleven thirteen airline management changes collective bargaining agreement are necessary for reorganization and the legal burden is placed on managements have almost always been able to get court approval to reject labor agreements thousand the management of nearly all the major carriers with the exception of southwest airlines have used bankruptcy or the threat of bankruptcy  enormously concessionary contracts from unions a process that also includes terminations of defined benefit pension plans in fact early two thousand and three meyer line american airlines told that it would declare bankruptcy on a specific da pensions more than one hundred seventy five million compensation an amount that is about the same order as the pension funding shortfall at the same time these terminations have contributed to additional stress on the pension benefit guaranty corporation negotiation instead becomes a unilateral imposition of threats and demands the delicate balance of power codified by the railway labor act between the management and its employees simply evaporate management's ability to reject  delta for example where i represented the company in addition to six hundred fifty million dollars on a profit sharing plan the pilots got a two point one billion dollar agreed claim which amounted to thirteen cannot increase demand for one product nor allow a company to buy or aircraft below current market prices congress must consider meaningful changes to better protect america's rank and file but it is imperative that not be implemented th nine eleven worse than the industry's financial troubles due to significant losses resulting from the temporary shutdown of the nation's airspace and passenger apprehension about flying following the attacks congress saw to alleviate the airline industry financial crisis after september eleventh when it passed the air transportation safety and system stabilization act which provided five billion dollars in direct emergency assistance and grants congress also authorized the department of transportation to reimburse air carriers for increases in their insurance and provided billions of dollars of additional dollars for loan guarantees following record high fuel prices earlier this year and the crash of the nation's financial markets the airline industry is projected to lose between five and six billion dollars a year despite passenger capacity reductions and recent cuts in fuel costs turbulent economic markets may continue to wreak havoc upon the industry indeed although congress has provided significant public in public assistance the airline industry over the last several years may have to provide even more next year in its deliberations congress should consider and further examine the fact that since the disagree i think that as an industry apart from price the airline industry is incredibly heavily regulated with respect to safety with respect to training with respect to all kinds of issues  so i disagree with the characterization that because airlines are not as regulated as railroads of distinction there think the fact that neither one can strike they both on the railway labor act they're both essential to the economic vitality of our country that they should be treated equally as far a bankruptcy goes to i mean they provide modes of transportation as well as shipping the goods of this country from place to place i mean they serve equivalent functions in terms of criticality to the economy and therefore they should be treated identically captain sullenberger when you've experienced bankruptcy in the past two bankruptcies at u s airways tell us what do you what losses you incurred as a result of those bankruptcies and how that affected the morale of the pilots it is greatly affected the morale of the pilots u s airways has thirty three thousand plus dedicated employees who in spite of our experiences keep our pastor safe every day it requires a great deal of concentration and dedication to compartmentalize and keep focus on what's at hand with all the distressing distractions that we have lived under for for many years i personally have lost forty percent of my days per month as captain kaufman alluded to the bankruptcy process is allowed airline management to essentially go on a fishing expedition and got contracts in every area even things that had little or no economic importance it was it was a life changing event for everyone in the industry and all their their families and that's not just for pilots