United Airlines' pilots union leaders last night agreed to send a new tentative agreement to its members for a ratification vote, according to a message sent to company employees. No details were available on the deal between management and the Air Line Pilots Association, which was submitted this morning for approval to the bankruptcy court overseeing United's Chapter 11 case. Meanwhile, a tentative deal between US Airways and its flight attendants union would dismiss threats of a potential strike against the airline.
In bankruptcy court documents filed this week, United said it needed another $725 million in annual labor cost savings in order to secure exit financing for its emergence from Chapter 11 protection, now targeted for June 2005. Calling the need for altered collective bargaining agreements with major unions "irrefutable," United said current projected cash flows would bring its total cash balance to "precarious levels during the historically lean winter months, putting the entire operation at risk." It also said it must terminate and replace existing employee pension programs.
The new deal with pilots would be the first in a new round of concessions negotiated with major labor unions. United next month will state its case for court-imposed cost cuts for any union that does not reach a consensual agreement with management
(BTN, Dec. 6).
"We are concerned about whether or not an agreement can be reached with the other union groups, specifically the mechanics and the flight attendants," said Helane Becker, analyst with The Benchmark Co.
United earlier this week announced a new $112 million package of wage cuts, benefit changes and productivity enhancements for management and salaried employees.
United's bankrupt domestic partner US Airways also received good news from labor. The airline yesterday said it and the Association of Flight Attendants reached a tentative agreement that would save $94 million. The deal still must be authorized by AFA's Master Executive Council, ratified by union membership and approved by the court overseeing US Airways' bankruptcy. The airline said voting by the union's 5,200 members would be completed by the end of the month.
The deal, if approved, would help the troubled carrier dodge another bullet. AFA this week said flight attendants authorized strike-related activities against US Airways in the event management uses the bankruptcy process to unilaterally change the union's collective bargaining agreement.
US Airways has secured new deals with other unions-notably ALPA-but still must negotiate new terms with the International Association of Machinists.
In other US Airways news, the carrier yesterday said the bankruptcy court approved a new financing deal with GE Capital Aviation Services and GE Engine Services. The crucial agreement provides the airline $140 million in cash and debt deferrals but includes several conditions.