Third-Party Audit Shows Carrier Has Exceeded Contractual Limit By 50%

Representatives with the Aircraft Mechanics Fraternal Association state an independent maintenance audit shows that United Airlines violated a key clause of its labor agreement with the union -- a limit on outsourced maintenance. The audit found UAL exceeded the contractual limit by 50 percent, according to the union.

"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 outsourced work to 20% of United's total maintenance needs. The audit of the 2005 financial data, conducted by a Company-approved accounting firm, found that UAL outsourced half-again as much of its total maintenance spending -- or over 30%.

Lee Seham, AMFA's General Counsel, states "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."

FMI: www.amfanatl.org, www.united.com