Posted on: Friday, December 27, 2002
United plans to void labor deals
By Geoffrey White
Associated Press
CHICAGO — Bankrupt United Airlines, facing a Feb. 15 deadline to cut costs or lose the loans that have kept it flying, said yesterday it plans to file a motion today to start the process of voiding labor contracts.
The company and its unions called the expected filing "procedural." If granted, the motion would give United and its six labor unions 51 days to agree on $2.4 billion in annual wage cuts or face a judge's ruling on the labor contracts.
United, which says its labor expenses are the highest in the industry, has not provided specifics about its latest cost-cutting proposals. Spokesman Joe Hopkins said the carrier had no comment beyond a one-sentence news release announcing its plan to file today.
The carrier announced last week that it would make the motion yesterday if labor groups did not agree to the wage cuts.
Union representatives have criticized United for giving them a list of proposed givebacks instead of a complete business plan. Labor groups want to see such a plan before agreeing to cost cuts, Air Line Pilots Association spokesman Dave Kelly said yesterday.
"Until we get that information, it's really hard for us to determine what the company is asking for and how we can work with the company to reach that rational business plan," Kelly said.
The airline needs to slash labor costs $2.4 billion a year to satisfy its lenders, according to the flight attendants' union. That figure compares with about $1 billion in yearly cuts that unions agreed on this fall as part of United's failed bid for a government loan guarantee.
United risks defaulting on its $1.5 billion in interim financing if it does not meet strict benchmark requirements showing financial progress.
The world's second-biggest airline had warned in filing for Chapter 11 bankruptcy protection on Dec. 10 that cuts were coming that would go well beyond its previous financial recovery plan, which called for $5.2 billion in labor cutbacks by 2008.
