- The Washington Times - Tuesday, December 3, 2002

CHICAGO (AP) United Airlines and union leaders moved quickly yesterday to set up a second vote by the carrier's mechanics regarding wage cuts, an important step in its last-ditch bid to avoid bankruptcy filing.
Under an agreement reached early yesterday, mechanics will vote Thursday on the same wage cuts of 6 percent to 7 percent that they voted down, 57 percent to 43 percent, last week. Contract terms on benefits were revised slightly in hopes of a reversed outcome.
The agreement also bought time for United to decide whether to make a $375 million debt payment that would seriously deplete its cash resources. The payment formally came due yesterday, but the company was expected to defer it under a grace period that expires Dec. 16.
United declined comment on the status of the payment pending a meeting of its board of directors yesterday at its Elk Grove Village, Ill., headquarters.
The second mechanics' vote gives United another chance to complete its proposed package of $5.2 billion in labor cuts over 5 years, the key plank of its application for a $1.8 billion federal loan guarantee.
The announcement also gave investors new hope after Wall Street had nearly written off the carrier's chances of avoiding taking its restructuring into bankruptcy court.
Shares in United parent company UAL Corp. climbed 77 cents, or 30.7 percent, to close yesterday at $3.28 on the New York Stock Exchange. The stock's price was still down from before the mechanics' last vote, which prompted a huge sell-off on Friday.
"United still faces a difficult task in avoiding bankruptcy, but the second mechanics' vote provides the airline with a glimmer of hope," Standard & Poor's analyst Philip Baggaley said in a research note.
Even if the mechanics approve the concessions, he noted, United still would need almost immediate approval of the loan guarantee from the Air Transportation Stabilization Board. It also would have to swiftly process and draw on a $2 billion private loan, which the government's backing would enable, to make its Dec. 16 debt deadline.
Without the mechanics' approval of concessions, the airline's request for a loan guarantee is considered certain to be rejected. With cash reserves thought to be $1 billion and fast dwindling, United has indicated that it would file for Chapter 11 bankruptcy protection if it fails to get the government's help.
The mechanics' targeted share of the $5.2 billion in cutbacks is $700 million.
A second-vote rejection of that amount would almost certainly sink the entire package, since cost-cutting agreements accepted by United's pilots, flight attendants and other employee groups expire Dec. 31 unless all groups sign on.
The machinists union, which represents the 13,000 mechanics and related employees, said that the changes from the previous tentative agreement include a pledge from United's chief executive officer, Glenn Tilton, to resolve "quality of work-life issues" and a clarification that employees would be able to select which four vacation days would be unpaid.

Scotty Ford, the union president, said that those two matters were cited as sticking points by an overwhelming majority of mechanics who rejected ratification last Wednesday.
Asked to specify quality of work-life issues, union spokesman Joseph Tiberi said that they include various items for different working locations, such as scheduling of shifts, employee input and other matters intended to result in "a better work environment for everybody."


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