"United asks court to end union contracts"

Thursday, November 25, 2004

United asks court to end union contracts
By DON BABWIN
The Associated Press


CHICAGO -- United Airlines is asking a bankruptcy court to void its union
contracts if the company can't secure an extra $725 million in cost savings
from workers by mid-January

The nation's No. 2 airline says it needs the additional labor concessions
and the ability to drop traditional pensions to secure financing and leave
bankruptcy. The cuts would come atop the $2.5 billion United employees have
already made in annual labor concessions.

In its court filing Wednesday, the company said it "is committed to
attempting to negotiate agreements with its unions on the required savings,
but its urgent financial needs compel the company to file this motion in
case consensual resolutions cannot be reached."

The additional labor cuts include $191.1 million for pilots, $137.6 million
for flight attendants, $101.2 million for mechanics and airplane cleaners,
$2.9 million for flight controllers and $180 million for ticket agents,
baggage handlers and other employees who deal with the public.

In its filing, United's parent UAL Corp. also said it was proposing a
one-time 4 percent pay cut for all employees from Jan. 1 until the carrier
exits bankruptcy "to help weather the remainder of the bankruptcy."

A hearing on the motion was scheduled for Jan. 10.

United has already given its pilots' union a series of proposals for
achieving the wage and benefit cuts the carrier says it needs to pull out of
bankruptcy - from a straight 18 percent pay cut to smaller cuts and changes
in work rules.

The proposal is contained in an analysis by the Air Line Pilots Association
negotiating committee The Associated Press obtained Wednesday. United made
the suggestions last week.

Pilots' spokesman Dave Kelly called the proposal "an opener" in negotiations
with United.

"Nothing is set. There's nothing definite," said Kelly, who would not
comment on details of United's suggestions or the ALPA committee's analysis
of the proposal.

United spokeswoman Jean Medina agreed the proposal is just a start. "We're
very open to sitting down and discussing what options the unions might like
to put forth to meet those same savings," she said.

Medina said Wednesday's court filing was procedural and the "next step to
begin the process."

The Association of Flight Attendants declined comment on Wednesday's filing
but it has already promised to fight the company "over every dime" of its
plan for another round of cutbacks.

According to the pilots' union negotiating committee's analysis, United is
also proposing that it be allowed to cut pilots' wages another 4 percent if
necessary for a period of six months after the airline emerges from
bankruptcy.

The analysis, distributed to all the airline's 6,400 pilots, indicates that
if they accept "all the work rule and benefit erosions" proposed by the
airline, their pay would be cut 8 percent. Or, the analysis continued, the
union "may remove some of the work rule concessions with the additional pay
cuts up to approximately 18 percent."

Among the proposed work rule changes is increasing the time pilots of the
biggest jets fly from 85 hours a month to 95 hours a month, eliminating the
premium pilots are paid for flying late at night, and reducing sick leave
pay.

United's proposal, called a term sheet, arrived the same week a federal
bankruptcy judge gave the airline more time to negotiate with its unions on
labor concessions.

Last week, Judge Eugene Wedoff extended from Dec. 1 until Jan. 31 the
deadline for United to file a reorganization plan without risk of a rival
plan submitted by outside investors. Wedoff also approved United's agreement
with its lenders to temporarily ease its loan requirements.

United, which already has cut $5 billion from annual expenditures since
filing for Chapter 11 bankruptcy in December 2002, has said it needs $2
billion more to emerge from bankruptcy.

Besides the $725 million in pay and benefit reductions, company officials
have said they could save $650 million a year by terminating pension plans.
An additional $655 million in non-labor cost savings, already identified,
would put the company close to the $2 billion mark.

Last year, the pilots' union announced its members had agreed to reduce
their pay by 30 percent and make further cuts through changed work rules.

The 18 percent pay cut proposal comes about a month after pilots at bankrupt
US Airways Group Inc. ratified a new labor contract that calls for an 18
percent pay cut on average.


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