United machinists reject pay cut
By Melanie Coffee
Associated Press
CHICAGO — United Airlines' largest union has rejected a 10 percent pay cut that was part of the carrier's plan to right itself after losing $2 billion since Sept. 11.
The decision by the machinists may jeopardize the tentative agreement by United pilots to take a 10 percent pay cut and United's bid for a $1.8 billion federal loan guarantee.
The bid is part of a government program offering $10 billion in loan guarantees to airlines in the wake of the Sept. 11 attacks.
United has said it needs concessions from all employee groups to show the government it could be financially stable again.
The carrier has since ordered pay cuts for its 11,000 management and salaried employees, estimated at $430 million over three years, and reached a tentative pay-cut agreement with its 9,200 pilots worth another $520 million over three years.
Shares in United's parent company, UAL Corp., tumbling as part of a widespread selloff on Wall Street, sank 78 cents yesterday to close at $8.93 on the New York Stock Exchange — their lowest level since 1986.
The machinists' union yesterday said the wage-cut request won't fly with its 35,000 members. The workers have agreed to defer $498 million in retroactive pay to help the company return to financial stability, said Frank Larkin, spokesman for the International Association of Machinists and Aerospace Workers.
"While they are willing to look for cost savings, additional financial relief will not be coming from these employees," Larkin said. "They feel ... almost a half-billion in the form of concessions constitutes a considerable sacrifice," he added.
The IAM, which represents United's mechanics, aircraft cleaners and other workers, sent its decision on the wage cuts to United on Friday, Larkin said.
Officials with Elk Grove Village, Ill.-based United said the union's rejection was disappointing but that the carrier would forge ahead with its plan for profitability.
"Our goal would be to have shared sacrifice from all of the people that work for United ... making United a stronger company," said spokesman Joe Hopkins. "We will continue to focus on our financial recovery plan and continue to seek broader participation in it."
Airline analyst Jamie Baker said the machinists' decision could affect whether the Air Transportation Stabilization Board will approve United's loan request.
"The rejection by the mechanics should surprise few," Baker said. "That being said, the ultimate level of employee sacrifice will likely impact the loan process. It's unclear if the ATSB's appetite for concessions will be satiated by the pilot and senior management concession packages."
