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The Honolulu Advertiser
Posted on: Thursday, September 26, 2002

Union offers United $5 billion in labor cuts

By Deanna Bellandi
Associated Press

CHICAGO — United Airlines' union leaders said yesterday they are ready to allow the financially struggling company to reduce labor costs by $5 billion over five years, but would not agree to $9 billion over six years as the carrier had sought.

One union official said the employee proposal includes "significant savings from management" but he did not offer specifics.

The proposal by United's five employee unions came in response to a United recovery plan announced last month that included $1.5 billion in annual labor cost savings.

The unions said their recovery plan will allow the carrier to improve its annual profitability by $2 billion or $3 billion.

A coalition of United unions delivered the proposal late yesterday to Glenn Tilton, chairman of United's parent, UAL Corp. The group did not release its plan.

In a statement, United said it appreciated employees' effort to address the company's financial needs.

"We will study the framework very carefully and we are committed to responding to the coalition and its members in the days ahead to finalize an updated business plan," the statement said.

United has said it needs major concessions to secure a $1.8 billion federal loan guarantee and avoid bankruptcy. The Air Transportation Stabilization Board has demanded cost cuts before it would agree to back a loan, United has said.

The Elk Grove Village-based company has posted losses of nearly $3 billion over the past 18 months. United's financial problems have left it unable to secure private capital financing.

Tilton has not said publicly how much in labor cost savings he is seeking. His predecessor, Jack Creighton, wanted about $1.5 billion in annual labor concessions — reportedly including about $700 million from pilots, $450 million from machinists and $100 million from flight attendants — over six years.

Greg Davidowitch, president of the United branch of the Association of Flight Attendants, said in a statement that it was in the interest of his union's members to be "part of the solution that assists United in surviving its near-term financial crisis."

Davidowitch said the union's recovery plan includes savings from management but he did not offer specifics.

In its letter to Tilton, the coalition said United has "the most committed employees and strongest airline franchise in the world."

"We will not let it fail," the unions said.