Posted on: Tuesday, December 14, 2004

United to cut nonunion pay, benefits by $112M

By Lynne Marek
Bloomberg News Service

CHICAGO — United Airlines, seeking cost cuts to stem losses and exit bankruptcy, will reduce nonunion workers' pay between 8 percent and 15 percent and trim benefits to save more than $112 million annually.

Salaried employees, managers and top executives, including chief executive Glenn Tilton, will take permanent cuts of between 4 percent and 11 percent plus a 4 percent temporary cut on Jan. 1, UAL Corp.'s United said in a statement yesterday. Tilton's pay cut was announced last month.

The carrier sought Chapter 11 bankruptcy protection two years ago and hasn't said when the reorganization will be completed.

The cuts "are important both psychologically and financially," said Joseph Schwieterman, a DePaul University professor in Chicago who researches transportation issues. "United is still trying to streamline its management ranks and reassure labor groups that it's spreading the pain across the whole company."

United, which had an October net loss of $114 million, is in negotiations with its unions on a second round of pay, pension and benefit cuts designed to help save $1.36 billion annually. The airline told the bankruptcy court last month that it will seek to scrap the employee contracts by mid-January if agreements can't be reached.