Posted on: Saturday, April 5, 2003
United, two unions agree to contract
By Megan Reichgott
Associated Press
CHICAGO — United Airlines reached tentative agreements yesterday with its flight attendants and flight dispatchers unions over labor contracts to help the carrier through bankruptcy.
Spurred by the prospect of having deep cuts imposed by a bankruptcy judge, the leadership of the Association of Flight Attendants and the Professional Airline Flight Control Association agreed to a six-year contract that would enable United to lower its industry-leading labor costs.
Details of the agreement will not be available until after the unions meet next week, the unions said.
United said the concessions were necessary to help the company emerge from bankruptcy.
"These agreements move us much closer to achieving the savings we need to transform United into a resilient and profitable enterprise," chief executive Glenn Tilton said, praising the flight attendants' leadership for the sacrifices they agreed to.
Each union will present the agreements to its membership for a vote.
The announcement comes a week after a similar agreement between United and its pilots' union.
The cuts were painful but better than leaving the decisions up to a bankruptcy judge, said flight attendants union president Greg Davidowitch.
"Our ability to shape our concessions and the future of our airline through negotiations is much preferred to a court-imposed abrogation of the contract," Davidowitch said.
United's next big labor test will be getting contracts in place with its machinists.
Negotiations are ongoing, said Joseph Tiberi, spokesman for the International Association of Machinists and Aerospace Workers.
Shares in United parent UAL Corp. are no longer traded on the New York Stock Exchange because the bankrupt carrier's stock fell below $1 a share for a 30-day period, the exchange announced last week.
Meanwhile, AMR Corp., parent of American Airlines Inc., will offer stock to its suppliers, creditors and aircraft leasing companies in exchange for help in avoiding bankruptcy, the Fort Worth-based company said yesterday.
The move is almost unheard of among airlines but has been tried in other industries by companies in financial trouble.
The offer is part of AMR's strategy to stay out of bankruptcy court, an effort that got a big boost Monday when American's three largest unions tentatively agreed to $1.62 billion in annual employee concessions. Under those deals, American employees also would get an equity stake in AMR totaling 24 percent of the company.
The suppliers who take the shares will be expected, in return, to renegotiate their deals with AMR. That could allow the company to lower its costs without spending crucial cash.
American spokesman Bruce Hicks said he could not discuss any details of the plan, including how many shares the company will issue to suppliers.
