United Airlines unions face $2.4 billion in cuts

By Dave Carpenter
Associated Press

CHICAGO — The lenders that are enabling United Airlines to keep flying during bankruptcy are requiring that the carrier slash annual labor costs by $2.4 billion in the next two months, according to its flight attendants' union.

That total would more than double the approximately $1 billion in yearly cuts that unions agreed to earlier as part of the airline's failed bid for a $1.8 billion government loan guarantee.

United spokesman Joe Hopkins said today that the airline had no comment on the cost-cutting process.

But the Association of Flight Attendants told its members that United management informed negotiators for the airline's unions on Friday that the restructuring plan calls for $2.4 billion in labor savings.

"Those cost reductions must be secured by mid-February," the union said in the update on its Web site, posted late Friday. "Thus, things will happen very fast."

Representatives for the flight attendants' and Machinists' unions did not immediately return phone calls today.

Pilots' union spokesman Steve Derebey said his union was going over management's proposal but declined to discuss it, saying the carrier's pilots themselves had not yet been told.

"Our financial and legal advisers are studying it," he said. "We'll be working with the company and our advisers to decide what to do about it."

United, the world's second-biggest airline, had warned in filing for Chapter 11 bankruptcy protection Dec. 10 that painful cuts were coming that would go well beyond its previous financial recovery plan, which called for $5.2 billion in labor cutbacks by 2008. It must meet strict benchmark requirements showing financial progress throughout bankruptcy or risk defaulting on its $1.5 billion in interim financing.

Mechanics, who rejected a tentative agreement for 7 percent pay cuts last month, are now being asked to take 13 percent reductions, according to a communique that went out to its members.

The company also has informed the union representing mechanics that it wants to revise the terms of healthcare plans and change work rules in order to improve productivity and efficiency.

"United indicated that their proposal was a starting point for further discussions," Scotty Ford, president of District 141-M of the International Association of Machinists and Aerospace Workers, said in the communique Saturday. The union "is now reviewing the term sheets with our financial and legal advisers."

Shares in United parent UAL Corp. fell 28 cents to $1.47 in late-morning trading on the New York Stock Exchange.