Posted on: Tuesday, December 17, 2002
United Airlines unions wrestle with cut proposals
By Dave Carpenter
Associated Press
CHICAGO — United Airlines' unions met with their advisers yesterday to review the bankrupt carrier's proposal for severe cuts, which one union said would more than double the previous targeted concessions.
The flight attendants' union told its members that at the demand of the lenders enabling United to keep flying in bankruptcy, the carrier is seeking to slash labor costs by $2.4 billion annually within the next two months. That compares with approximately $1 billion in yearly cuts that unions agreed to this fall as part of United's failed bid for a government loan guarantee.
United spokesman Joe Hopkins said yesterday that the airline had no comment on the cost-cutting process.
The Association of Flight Attendants said United management informed negotiators for the airline's unions of the restructuring plan total on Friday.
"Those cost reductions must be secured by mid-February," the union said in the update on its Web site. "Thus, things will happen very fast."
Spokesman Jeff Zack of the union representing 18,000 United flight attendants said the group was given "significant leeway" in how to come up with its share of the required savings, using a combination of wage cuts and productivity improvements.
Flight attendants had agreed to 4 percent wage reductions last month as part of the recovery package, which was nullified when the government rejected the wage plan. United has cut 3,500 flight attendants' jobs. Zack said it remains uncertain how many further jobs might be at risk in the bankruptcy restructuring.
United's pilots and machinists, whose pay has been at or near industry-leading levels, face bigger, double-digit wage cuts as well as the likelihood of layoffs.
The world's second-biggest airline had warned in filing for Chapter 11 bankruptcy protection on 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. The airline must meet strict requirements showing financial progress throughout bankruptcy or risk defaulting on its $1.5 billion in interim financing.
Pilots' union spokesman Steve Derebey said his union is going over management's proposal but declined to discuss it, saying the pilots had not yet been told.
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 the union sent out to its members.
The company has informed the union representing mechanics that it wants to revise healthcare terms and change work rules 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 note to members on Saturday. "District 141-M is now reviewing the term sheets with our financial and legal advisers. We also expect to discuss the proposed terms with the United Airlines union coalition."
Meanwhile, United and US Airways said yesterday they will expand the recently launched code-sharing arrangement for their flights on Jan. 7 — a deal United expects to generate more than $200 million for it in annual revenue.
The partnership will allow the two struggling carriers to sell tickets on each other's flights, coordinate schedules and offer reciprocal perks such as frequent flier miles.
US Airways customers will be able to travel to nine cities in the western United States initially, including five cities currently not served by US Airways, while United passengers will have access to 12 additional cities in the East and Southeast.
Shares in United parent UAL Corp. fell 25 cents to close yesterday at $1.50 on the New York Stock Exchange.
