Management asks for $9B, unions offer $5B

avek00

Senior
Aug 28, 2002
391
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[A href=http://famulus.msnbc.com/famuluscom/reuters09-25-165328.asp?sym=UAL]http://famulus.msnbc.com/famuluscom/reuters09-25-165328.asp?sym=UAL[/A][BR][BR]Management sought $9 billion in labor cost reductions. The unions have offered a paltry $5 billion in response. IMHO, at least $6.5 billion needed to be offered as a starter to keep any meaningful discussions going. [BR][BR]Anybody want to start a pool on when UAL will file?
 

UAL777flyer

Veteran
Aug 20, 2002
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Relax, Avek. It's called negotiating. Don't you think there's a slight chance the company highballed the unions with their concession demands? And don't you think it's possible the union coalition lowballed the numbers of their proposal? The proposal is there. Now they negotiate and get it finalized. Keep in mind that this coalition has been in constant contact with Glenn Tilton and Jake Brace throughout the last few weeks. You can bet the company won't be surprised by the unions numbers. Some of the explicit details and initiatives might be a bit surprising, but the basic numbers I'm sure won't. They can get it done if both sides are 110% committed to doing everything in their power to avoid bankruptcy. Let's not go running to the courthouse steps just yet. Let's at least see what the proposal includes and the company's reaction to it.
 
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avek00

Senior
Aug 28, 2002
391
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UAL777flyer:

IMHO, 55% is NOT a starting point at this late stage of the game. The workgroups needed to offer at least 65-70% of the requested amount to make continued non-BK discussions worthwhile.

And given UAL's recent labor track record, I highly doubt that they see this as a starting point, but rather as their honest-to-God final offer.
 

wings396

Veteran
Aug 20, 2002
3,672
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I hope that UA will be more open to your offer than our gang was over at U. Our boys didn't want to hear much less than their orginal demands..we came in at 85% of thier target numbers..of course when we started all of the talks we were not yet in CH-11 and thought that there would be more room to bargain....but we all know how that worked out..pretty much they told us what their final offer was and we could take it or let the court decide...I wish all at UA the best...
 

gatemech

Senior
Aug 24, 2002
356
5
www.usaviation.com
From Reuters By Kathy Fieweger.

Just the second paragraph.

But the group had not decided how to divide up the sacrifices among the individual unions -- a critical element -- and the amount was below what United originally asked the unions to provide--$1.5 billion per year for six years.
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I wonder how it will be divided? Each group probably think they should give less. What I want to know is if the IAM gave up our retro. I haven't heard anything about it yet. I know. ALPA gives 100% and the rest of us give moral support. Just kidding. I'm also surprised that AFA is in this. The question is how deep they are in it. Does the fact that the Unions haven't decided how to divide it up mean that we won't see anything yet?
 

Rhino

Senior
Aug 20, 2002
308
0
The union offer is a non-starter. No official is going to allow himself to be cast in the light of 'selling out to the company.'

UAL will go Ch 11. Who's kidding who?

BTW, this Avek charachter has proven himself to be a waste of gravity.
 
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chipmunn

Guest
Just one more thing...there is reason to believe to obtain the loan guarantee the ESOP control and governance must be eliminated. I wonder if this is a discussion item or a non-starter?

Chip
 
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chipmunn

Guest
UA and presumably the ATSB asked the unions for $9 billion & the unions offered $5 billion in cuts. The proposal is generic and 55 percent of what could be required to obtain the federal loan guarantee, but another $6 billion in cuts must be obtained from creditors, vendors, and aircraft lessors to obtain the federally backed financing before November.

The most troubling part of the union response is the group has not decided how to divide up the sacrifices among the individual unions. Another major problem could be the union demand for significant savings from management.

From our experience at US, I encourage all UA employees to find out the bottom line number of what is required to obtain the loan guarantee and empower your union leadership to make a decision to meet this number, without rank-and-file ratification.

Time is too short and the outside pressures could tank this effort before it starts. The pending war with Iraq, rising fuel prices, security costs, war-risk insurance, and the dramatic falloff in revenue are dramatically accelerating financial losses. Bankruptcy is uncertain at best and although our company has a strong reorganization plan, I can assure you the employees of UA do not want anything to do with a formal reorganization.

Chip
 

G4G5

Advanced
Aug 21, 2002
164
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A waste of gravity?

While I may not always agree with avek, if he started the post he obviously has believes that their is something more to it. Let's face the facts both side are over 4 billion apart. Wars have been fought for less.

As far as the BK, I don't see things getting better unless UAL can get that $900 million dollar monkey(payment) of it's back
 

ua767fo

Senior
Aug 30, 2002
252
3
1) Dont believe everything the press says. It took quite a while to come up with a plan as the unions were probably negotiating with themselves as how to split the pie.

2) Membership ratification is the way to go. Anything else is unacceptable, not to mention a violation of ALPA's by laws. Somehow Chip, you dont seem to believe that mature adults can vote and come to a collective decision.

3) I believe that financing will be available outside of ATSB guaranteed loans, and that the ESOP governance will be preserved.

4) Your right about one thing Chip, we dont want to end up in BK.

Denver, CO
 
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chipmunn

Guest
Ua767fo:

Ua767fo said: Membership ratification is the way to go. Anything else is unacceptable, not to mention a violation of ALPA's by laws.

Chip answers: This is not correct as illustrated by the UAL MEC ratifying the scope clause change for the US-UA alliance. The ALPA MEC has the authority to ratify a tentative agreement, which has been done many times in the past. In fact, recently at PSA Airlines the membership voted down their restructuring agreement with US and their MEC overturned the rank-and-file decision.

The problem I see is timing. There will need to be negotiations, give and take, a TA, and membership ratification. It took US six months to go through this process and some of the unions missed many deadlines including the bankruptcy threat deadline.

The biggest US employee issue came down to the IAM not recommending the restructuring agreement because of the AMFA threat. I suspect the same issue will affect UA and could force a filing, unless the rank-and-file of both IAM units demand a change.

Time is very, very short...

Chip
 

GGpillow

Advanced
Aug 19, 2002
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www.usaviation.com
I think saying 55% was offered is over simplifying the case. The company asked for 1.5b for 6yrs. We offered 1.0b for 5 years. The true value of this plan will lie in the details, which noone yet knows. Labor giving back 1billion dollars a year to their employer is a substantial amount of money, and, I think it is fair to give the coalition SOME measure of credit. Will 5billion buy us 1.8? Who knows. Myself, I think I will reserve judgement on this plan untill the details come out.
 

batman

Member
Aug 20, 2002
43
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One billion in union labor cost reduction is not mere.

United's overall labor cost is slightly higher than AMR and DAL. As a matter of fact Delta pilots contract is higher than United.
Add to the reduction, the Salary and Managment (SAM) group, and the annual savings is well over 1 billion.
The company request for 1.5 billion for 6 years (included SAM, btw), used the most pessimistic forecast for revenue and passenger growth. Not to mention it was formulated by the outgoing President and COO.
THE NUMBERS WERE NOT FROM ATSB.

To think that the economy and revenues will stay depressed for the next 6 years, is absurd. If thats the case, then airline reregulation is on the way.

BTW, Usair only got less than 85% from pilots and F/As and less than 65% from IAM, compared to their initial proposal. Yet they got conditional ATSB approval. What caused Usair to go CH11 was their outrageous lease terms and all the parked aircraft they were paying for.

Coalition plan also includes lots of other competitive goodies that will increase the topline by over 2 billion. The outgoing managment team did not take any of that into consideration since they were not going to be around. ;)

Bottom line, United will have a very competitive cost structure and it will have no problem paying 800 million in debt, when it has over 2 billion in cash and over 1 billion in annual labor cost savings. Period.

United will not go the Bankruptcy route, you can take that to the bank.