- The Washington Times - Saturday, January 8, 2005

CHICAGO (AP) — United Airlines lost a key bankruptcy court ruling over its new pilots’ agreement yesterday but achieved last-minute negotiating breakthroughs with two other unions to postpone an awkward courtroom showdown over its push for new labor contracts.

The flurry of developments just ahead of a self-imposed labor deadline brought mixed progress for the nation’s second-largest airline in its efforts to slash labor costs for the second time in its two-year bankruptcy.

Judge Eugene Wedoff dealt United a setback by rejecting a disputed cost-savings deal for the pilots that he said would “unduly tilt the bankruptcy process.”

Hours later, after negotiating throughout the day to avoid a labor trial, United announced a tentative short-term labor agreement with its mechanics’ union and said it was on the verge of a similar pact with flight attendants.

Details of the two contracts, which were not disclosed, were negotiated after United obtained a three-hour delay in the scheduled start of the trial.

Company officials said they intended to negotiate with the flight attendants through the weekend in hopes of nailing down a deal that would result in the labor trial being formally called off.

United’s Chief Financial Officer Jake Brace called it “overall a productive day” despite the adverse verdict on the pilots’ deal.

“We were disappointed with the pilots’ ruling … but with the afternoon we were very pleased,” he told reporters after the trial’s postponement.

Barring agreements, Chief Executive Glenn Tilton had been poised to testify at the trial’s opening late yesterday on the need to slash wages and benefits further — saving United $725 million annually — and eliminate defined-benefit pensions.

The carrier, a unit of UAL Corp., maintains soaring fuel costs, industry overcapacity and profit-eroding fare wars with discount carriers forced it to seek drastic labor givebacks on top of $2.5 billion in cuts in 2003.

A trial on its motion to break existing collective-bargaining agreements could last as long as a week and risks alienating workers.

Flight attendants have threatened to strike if their contract is broken without their consent.

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