- The Washington Times - Tuesday, November 19, 2002

CHICAGO (AP) United Airlines, hoping to avoid bankruptcy, closed in yesterday on a tentative wage-cutting agreement with its 36,000 machinists the key missing element in its plan to slash labor costs by $5.8 billion over 5 years.
The carrier's pilots also contributed timely support for United's campaign for a federal loan guarantee, announcing they had ratified the recent agreement on their $2.2 billion portion of that austerity package. It confirmed their willingness to take 18 percent pay cuts to try to revive the struggling airline.
The flurry of developments most notably Sunday's restructuring plan envisioning 9,000 more job cuts, 9 percent fewer flights and $2 billion less in capital spending renewed investors' flagging hopes that United can dodge bankruptcy. Shares in parent UAL Corp. climbed 55 cents, or 19 percent, to close at $3.50 on the New York Stock Exchange.
But as even Chief Executive Glenn Tilton acknowledged, it is still not clear whether the series of cutbacks will enable United to avoid landing in bankruptcy court by year's end. Its daily operations are continuing to hemorrhage more than $7 million in losses a day.
Mr. Tilton told employees that regardless of whether United carries out its restructuring out of court or under Chapter 11 protection, "all that we're doing today is going to serve us well in the future and to create a more competitive and a more vigorous United in the world marketplace."
A decision on whether to go the bankruptcy route may be made by Dec. 2, when cash-starved United is required to repay $375 million in aircraft-backed loans.
United and leaders of the two International Association of Machinists (IAM) groups representing mechanics and ground workers continued talks yesterday on the recovery plan. Mr. Tilton and spokesman Joe Tiberi of the IAM said agreements appeared near, although union members would still be able to reject any deal in a ratification vote.
"We think we'll be able to have something to our members and ratification voting completed by early December," Mr. Tiberi said. The voting process typically takes about two weeks.
Securing those agreements would be the biggest boost yet for United's chances of getting a $1.8 billion government loan guarantee from the Air Transportation Stabilization Board (ATSB), which remains mum on the airline's prospects. The machinists are the last employee group not to have agreed to cuts as part of the targeted $5.8 billion.
Separately yesterday, United confirmed that its salaried and management employees will take wage and other cuts contributing $1.3 billion in savings.
Airline industry analyst Ray Neidl of Blaylock & Partners said United's odds of receiving the loan guarantee had improved, albeit "barely."
"The question remaining is whether the [machinists] rank and file will approve these changes," Mr. Neidl said. "My guess is they will. The bigger question is whether the ATSB believes these cuts are real. That's still a matter of guessing."


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