United, unions probe cost-cutting measures
CHICAGO (AP) – United Airlines and its mechanics union met in private as the carrier pressed for hundreds of millions of dollars in cost cuts it says are necessary to stave off bankruptcy. The mechanics last week rejected a proposed package of steep wage and benefit cuts that nation’s No. 2 airline says are necessary to land a $1.8 billion federal loan guarantee that would keep it out of Chapter 11 bankruptcy court proceedings.
United spokesman Jeff Green said the two sides were meeting as late as 10 p.m. Sunday, but would not discuss any aspects of the talks, including their location.
Machinists union spokesman Joseph Tiberi said Sunday night that neither side would comment while talks continued.
The meeting came a day after the airline’s 24,000 flight attendants agreed to $412 million in wage concessions.
However, that deal and other cost-cutting agreements accepted by United’s pilots and other employee groups will expire Dec. 31 unless the mechanics sign on.
United is seeking $5.2 billion in companywide labor cuts over 51/2 years. The mechanics’ proposed share is believed to be $600 million to $700 million.
The cash-strapped airline also must decide whether it can make a $375 million debt payment Monday, although under a grace period it could push that deadline back to Dec. 16.
Its cash reserves are believed to be around $1 billion and on a pace to run out this winter.
A ruling is expected any day on its application for a $1.8 billion federal loan guarantee, which United says it must have to obtain $2 billion in private loans.
Without the loan guarantee, United has said it would have no choice but to file for bankruptcy.
United has been struggling since the Sept. 11, 2001, terrorist attacks to reverse multimillion-dollar losses each day. It has reduced service and laid off 20,000 workers because of the weak economy and sharply reduced spending by business travelers. On Friday, speculation that United was headed into bankruptcy sent shares of UAL Corp., the airline’s parent company, tumbling 31 percent.
A bankruptcy is likely to have no immediate effect on passengers, since United has said it would continue flying its normal schedule. But the prospect of such a filing has raised concerns among some of the other unions that represent United workers, which fear that a bankruptcy court would order even more severe concessions.
The president of the local representing ramp workers and public contact workers criticized the mechanics for not being more flexible, saying the alternative to working with United on cost cutting is “so undeniably worse I question the motives and judgment behind such a decision.”
“Simply put, every benefit we currently enjoy can be lost at the stroke of a judge’s pen,” Randy Canale wrote in a letter to District 141 members Friday.
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On the Net:
United: http://www.united.com
District 141: http://www.iam141.org/ual.htm
District 141-M: http://www.iam141m.org/united.htm