- The Washington Times - Monday, March 10, 2003

ELK GROVE VILLAGE, Ill., March 10 (UPI) — United Airlines' unions have a week reach new labor agreements with the bankrupt carrier or possibly see hard-won contracts go up in smoke.

United is trying to reduce labor costs $2.56 billion a year through 2009 and has given the unions until Monday to renegotiate old deals. The carrier has warned if new contracts are not in place with its pilots, mechanics, flight attendants and ground personnel by March 17, it could file a 1113(c) motion asking a U.S. Bankruptcy Court judge to abrogate current labor agreements.

Company negotiators are trying to project optimism but union leaders, including the Air Line Pilots Association and the Association of Flight Attendants, are skeptical of United's plan to create a low-cost discount carrier code-named "Starfish."

Leaders of the International Association of Machinists District 141, which represents baggage handlers and reservations agents, reported no progress on the thorny issues of job security, part-time work and subcontracting.

However, United publicly remains committed to bargaining.

"Our goal is not to go down the 1113 road," United spokesman Jeff Green told Sunday's Chicago Tribune.

United says its unions are still willing to talk but two actions last week did little to build confidence that the voluntary givebacks can be negotiated.

United, which lost $382 million in January, said it would lay off another 900 flight attendants because of weak travel demand. Flight attendants last month offered more than $1 billion in concessions over six years — but United wants nearly a third of a billion dollars more in wage and benefits givebacks.

United has lost more than $4 billion since 2000 and must meet specific cash flow targets to receive continued debtor-in-possession financing to keep planes flying.

Stock sales from the employee stock ownership program last week reduced the union's equity stake in UAL Corp., United's parent, below 20 percent. That triggered "Sunset" provisions ending the union's majority shareholder veto power over major decisions.

At one time, the 9-year-old ESOP owned 55 percent of the stock. The union has three seats on the 12-member board of directors.

UAL Corp. stock closed at $1.03 a share Friday after plunging when the carrier filed for bankruptcy in December. Bankruptcy Judge Eugene Wedoff had prohibited the ESOP trustee, State Street Bank & Trust Co., from unloading 33 million shares it wanted to sell to avoid a change in management.

UAL said the "Sunset" provisions wouldn't jeopardize tax benefits the company is eligible for on net operating losses should it emerge from Chapter 11 protection.

Crain's Chicago Business reported Monday that the Air Force and Justice Department are investigating allegations United Services, a wholly owned UAL subsidiary, performed improper repair work and falsified maintenance records on the C-17 Globemaster, the military's workhorse cargo plane in Middle East operations between 1998 and 2002.

Crain's said Justice Department officials have asked UAL to post a $50 million deposit against any future government claims.

The investigation has delayed United's ability to collect $388 million in tax refunds and overpayments from the Internal Revenue Service.

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