Despite Labor Pact, UAL's Future Remains Uncertain

Indeed, in private emails and conversations with machinists, the legacy of enmity between machinists and management may be so deep that the relationship could be permanently broken. While the labor disputes go back for decades, the seeds of the current discontent were planted in 1994, when the unions joined the employee stock ownership program and gained a 55% stake in the company.

At the time, hopes were that the ESOP would improve relations between the two sides, with the employee owners having a vested interest in the success of the parent company. It was hailed as a landmark plan that would revolutionize the industry, but it has backfired, largely because UAL's stock has been in a tailspin since 1994.

When business was good and the stock market strong, employees didn't receive raises with company shares rallying. But over the last two years, business has deteriorated to a point where management is again asking for wage concessions -- all while the stock is heading toward zero. As a result, machinists feel about as valuable as the company stock.

"UAL has squandered our ESOP money from 1994 and we feel we shouldn't make the same mistake twice," said one machinist. "After paying nearly $153 per share for ESOP stock in 1994, the stock is less than $3. We have been ripped off by the IAM and UAL after the longest bull market in U.S. history. How does that make you feel when your stock is worthless?"