And all employee groups but ALPA thought their cuts were bad

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United Airlines wants to cut labor costs 20%
By Marilyn Adams, USA TODAY
United Airlines has told its unions this week that it needs to cut annual labor costs by about 20% for six years to qualify for federal loan guarantees and avoid bankruptcy court, say people familiar with the talks. The target, $1.5 billion a year, would be combined with $500 million in savings in other areas. Some of the labor savings might be achieved through work-rule changes instead of pay cuts.
The development prompted the head of United''s Air Line Pilots Association to question whether the Bush administration is using the Sept. 11-related loan program to permanently cut labor costs at United. Big cuts in labor costs at United, the world''s second-largest airline, likely would ripple through the industry.
Pilot Paul Whiteford said Wednesday that he questions whether the Air Transportation Stabilization Board — established to aid the airline industry — is actually seeking a restructuring under the guise of a crisis-assistance plan.
The pilots union has been the only employee group willing to give temporary contract concessions to help United recover from heavy losses. That union''s board had agreed to give up $520 million a year for three years. Non-union employees were to give up $430 million over three years.
"If the plan now is a restructuring, that''s a totally different plan ... to reach some other goal," Whiteford said.
Whiteford, who serves on the board of United''s parent, UAL, declined to discuss specific numbers. A UAL spokesman declined comment. The company is on track to spend just under $7 billion in labor expenses this year.
UAL''s demand puts the pilots and mechanics unions in a nearly impossible position. Because UAL is more than 50% employee owned, both unions have seats on the board. If UAL seeks Chapter 11 protection, employees'' equity would be wiped out, and United could ask the bankruptcy court to void labor contacts.
UAL Chief Jack Creighton warned two weeks ago it would seek Chapter 11 protection if it can''t win deep cost cuts from unions because it''s unable to raise cash through normal channels to pay off $875 million in debt this fall. United has asked the government to guarantee $1.8 billion of a $2 billion loan.
At Wednesday''s board meeting, UAL''s directors heard from federal loan board executive director Dan Montgomery about the program. Montgomery didn''t return a call Wednesday.
Union leaders said United''s new numbers made them more pessimistic that a cost-cut agreement will be reached before the carrier''s deadline in mid-September.
"Two weeks is not realistic," said Jeff Zack, a flight attendants spokesman.
 

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