- The Washington Times - Friday, November 29, 2002

CHICAGO (AP) United Airlines, dealt a setback by one of its unions in its campaign to avoid bankruptcy, pledged yesterday that it still would achieve $5.2 billion in labor cutbacks.
The airline's statement came a day after its mechanics decisively rejected 7 percent wage reductions.
United acknowledged that the fate of its financial recovery plan hinges on securing givebacks from the 13,000 mechanics and said it wasn't giving up.
"We intend to achieve the full labor cost savings included in our business plan," the company said. "To that end, we are initiating immediate discussions with the leadership of the International Association of Machinists District 141-M to develop contract modifications that will achieve the same savings level called for in the agreement that was not ratified this morning."
"Reaching our $5.2 billion target is essential if we are to secure federally backed loans and avoid a Chapter 11 filing," United said.
Labor savings are the backbone of United's bid for a $1.8 billion federal loan guarantee, and the airline has warned of a likely Chapter 11 bankruptcy filing soon if the government rejects its request. The Air Transportation Stabilization Board is expected to announce its decision any day.
United's pilots and other employee groups have accepted proposed wage cuts, but their agreements expire Dec. 31 unless all the airline's workers agree to concessions.
The nation's second-biggest carrier also faces a $375 million debt payment on Monday and says it is in urgent need of a $2 billion loan to shore up its dwindling cash reserves, believed to have fallen to less than $1 billion. It says lenders are unwilling to grant the loan unless the government guarantees 90 percent of it.
One district of the Machinists union, representing 24,500 baggage handlers, customer-service workers and other United employees, approved 6 percent pay reductions Wednesday as their share of the proposed labor package.
However, the district representing 13,000 mechanics turned thumbs down on a tentative agreement for 7 percent wage cuts, with 57 percent voting "No."
"In the end, some thought the risk was worth taking, and others felt they had sacrificed enough," said Scotty Ford, president of the mechanics' unit.
Flight attendants were voting on $412 million in wage reductions between now and 2008, with results to be announced Saturday. Their concessions, like the $2.2 billion from pilots, won't take hold unless the mechanics go along.
CEO Glenn Tilton has said United will keep flying its normal daily schedule even if the carrier files for bankruptcy.
United, based in suburban Elk Grove Village, was weakened by a falloff in business travel and the effects of Sept. 11. It already has reduced daily flights by 25 percent since before the terrorist attacks and plans to cut back 6 percent more in 2003.


Copyright © 2018 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.

 

Click to Read More and View Comments

Click to Hide