UAL Gets Pilot, Flight Attendant, Court Support
United Airlines yesterday received good news from unions representing pilots and flight attendants as each agreed to new contracts. Both groups indicated the latest round of cost cuts would be the last they would agree to as part of UAL Corp.'s bankruptcy restructuring. Meanwhile, the judge overseeing the company's case yesterday imposed temporary pay cuts on employees represented by a mechanics union, which last week rejected the newest offer from management and threatened to strike if a long-term agreement is unilaterally forced upon it by the bankruptcy court.
The Air Line Pilots Association yesterday said three-quarters of voting members approved a revised contract with United, providing the company $180 million in annual savings. "We will be relentless and steadfast in holding management to an unprecedented degree of accountability as they now have all of the tools they claim they need to exit from bankruptcy," said United MEC chairman Capt. Mark Bathurst. The presiding judge previously rejected a deal approved last month by ALPA.
The Association of Flight Attendants, which represents 20,000 United flight attendants, yesterday said membership had ratified, with 56 percent approval, a new agreement that will save the airline $131 million annually. "The ratification of these concessions is not an endorsement of United Airlines management," said AFA United Master Executive Council president Greg Davidowitch. "We demand that current management develop a bankruptcy exit strategy that does not destroy the hard-earned pensions our members are counting on for retirement security. That would be one sacrifice too many. Indeed, this narrow vote is saying to management, flight attendants have sacrificed enough, and we will not allow this management to extract any more."
Employee pension programs are among UAL's most pressing concerns as it positions itself to emerge from bankruptcy protection later this year. In a recent message to employees, CEO Glenn Tilton said the company has 90 days to resolve the pension issue.
The company also must prevent one of its mechanics unions from walking off the job. The Aircraft Mechanics Fraternal Association Local 9, which represents more than 4,000 United workers, on Friday said membership rejected the latest tentative agreement with management. In a statement, AMFA said the rank and file "overwhelmingly authorized" the call for a strike, should the bankruptcy court alter its collective bargaining agreement without union approval.
Helane Becker, analyst with The Benchmark Co., said the AMFA rejection was not expected. "United is in a difficult position because without labor contracts in place, its management cannot continue to try to restructure the airline," she said.
UAL management continues to negotiate with other unions in an attempt to cut $725 million in annual labor costs. Unionized employees already agreed to concessions totaling $2.5 billion earlier in the company's bankruptcy reorganization.
Meanwhile, after receiving another extension from the court, UAL's current management team now has until April 30 to either file a new business plan or request even more time. The exclusivity period, during which no other parties may submit reorganization plans, has been extended several times during UAL's 26-month Chapter 11 case.
United last week reported a $664 million net loss for the fourth quarter and a $1.6 billion loss for the year. The company has lost nearly $4.5 billion since filing for Chapter 11 protection in December 2002 and nearly $10 billion since the beginning of the industry downturn in the second half of 2000.