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

[UAL777flyer]

Chip,

In this case, I don't see how the MEC could get away with ratifying the T/A in lieu of a full membership vote. This proposal has serious implications for everyone and therefore I feel union members are entitled to vote on it.

However, my opinion is that the unions were simply unable to figure out what each group's contribution would be. I think that was the reason for the delays. So they threw their proposal at Senior Mgmt and figured negotiation would iron that part out. But as everyone knows, time is not on UA's side. Although I'll admit no details have come out yet, I'm becoming more pessimistic that this union coalition plan will fall within the framework of what is truly necessary to avoid a bankruptcy filing. However, I'll reserve final judgement until the details come out. There are rumors that the proposal will include another low-cost short-haul operation with pre-Contract 2K wage rates for all, to be flown throughout the domestic system to remain competitive.

Avek,

Considering the circumstances, I highly doubt the unions view their proposal as their final, take it or leave it offer. They are fully aware of all that they stand to lose should UA file for Chapter 11. Goodbye BOD seats, goodbye ESOP equity, goodbye thousands of jobs. The list goes on and on. I think it was unrealistic to expect them to come back with a proposal that exactly matched what the company wanted. While time is indeed short, you have to expect that there will be further negotiating to hammer out the final deal.

 

[chipmunn]

UAL777flyer:

UAL777flyer said: In this case, I don't see how the MEC could get away with ratifying the T/A in lieu of a full membership vote. This proposal has serious implications for everyone and therefore I feel union members are entitled to vote on it.

Chip comments: UAL777flyer, I agree with you on the reality of MEC or other labor group ratification. My point was that time is running short and there may not be time for membership ratification. In the case of the US restructuring agreements once inside of bankruptcy deadlines were missed, but the threat of bankruptcy due the inability of making debt payments did not exist. That's not the case at UA. If multiple ERP TA's cannot be reached fast enough my thought was to have the union leadership ratify the new accords to prevent a formal filing.

By the way, it was announced today that Rono Dutta is the Retirement Systems of Alabama's consultant on the now court approved US debtor-in-possession financing and emergence equity investment. I find that relationship between RSA, US, & Dutta to be interesting.

Chip

 

[The Ronin]

Considering the circumstances, I highly doubt the unions view their proposal as their final, take it or leave it offer. They are fully aware of all that they stand to lose should UA file for Chapter 11. Goodbye BOD seats, goodbye ESOP equity, goodbye thousands of jobs....

Anyone who thinks any of this is going to save thousands of jobs probably wants his pot plants back in Santa Cruz. Lets just hope Tilton's hit team will do to management what has been needed for decades...BTW, chapter 11 is inevitable....


Facts do not cease to exist because they are ignored.
Aldous Huxley (1894 - 1963), Proper Studies, 1927

 

[cltvff]

[blockquote]
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By the way, it was announced today that Rono Dutta is the Retirement Systems of Alabama's consultant on the now court approved US debtor-in-possession financing and emergence equity investment. I find that relationship between RSA, US, & Dutta to be interesting.

Chip

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[/blockquote]



That is VERY interesting...Chip, what do you make of this tidbit given Dutta's obvious insider knowledge of UAL?

Respectfully,

Dave

 

[whatkindoffreshhell]

This reminds me of when the department store announces with great fanfare 80% Off Sale ---- kinda makes you wonder if the original cost was inflated out the wazoo and who would've been stupid enough to buy that product at the old price???

The fat lady is a'hummin......

 

[insp89]

Hey Chip,, With all due respect, I don't see how you can suggest that United's unions should make decisions for the rank and file !! -Especially since ALPA over here at Usairways had their rank and file vote for themselves-I believe the workers at United are quite capable of deciding for themselves on what is or what is not acceptable to them..

 

[trollydolly]

I am with you UAL777. It is like selling your house, a car, or your personal items at a garage sale or even going to the markets in Cairo or Mexico. You always ask for more than you are expecting to get. It is called bargining.
And I am 100% behind your statement BATMAN
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.

In Addition, does anyone really think that AMR is that far ahead of UAL? Think again. They are just waiting to see what happens to UAL. What ever happens they (management) will go to their employees and say see, they love their airline, or see, we will be next if we don't get more than 25% from each group. My bet is that UAL is going to come through this downturn, and AMR might have bitten off more than they can chew. Did someone mention the purchase of TWA?

 

[UAL777flyer]

Chip,

Where did you read that Rono was RSA's consultant?

 

[kiowa]

this is not the article but it is rather amusing.

http://www.state.il.us/agency/idol/Book/dutta.htm

 

[UAL777flyer]

Wonder what his thoughts were on leadership.

 

[chipmunn]

UAL777flyer:

UAL777flyer asked: Where did you read that Rono was RSA's consultant?

Chip answers: Bloomberg News.

By the way, with RSA controlling the US BOD upon emergence and the pension fund having $24 billion in funds, why do you think RSA sought out Rono Dutta as an advisor? I understand Dutta said last November he would not sleep until he put US & UA together.

I wonder what Greg Taylor is working on these days and why he went back to UA?

Chip

 

[chipmunn]

Cltvff:

Chip said: By the way, it was announced today that Rono Dutta is the Retirement Systems of Alabama's consultant on the now court approved US debtor-in-possession financing and emergence equity investment. I find that relationship between RSA, US, & Dutta to be interesting.

Cltvff asked: That is VERY interesting...Chip, what do you make of this tidbit given Dutta's obvious insider knowledge of UAL?

Chip comments: RSA will have the same governance agreed to in the TPG MOU. Five of the 13 US board seats would be held by the pension fund when the company emerges from bankruptcy. The remaining seats would be filled by the airline's CEO, two unsecured creditor representatives, one ALPA representative, one IAM representative, a representative designated by the other labor groups (AFA, CWA, & TWU) and two independent directors selected by Dave Siegel. RSA will also have veto control over US Board decisions, controls a whopping $24 billion in investment capital, and now Rono Dutta is the advisor to RSA, who post emergence controls the US BOD's.

Chip

 

[duke_buck]

Suckers...

Do you really think that this is a legitimate restructuring offer?!? While there is no evidence that it's a sham (yet), they left out such minor details as how to divide the $1B per year among the various unions! With an imminent AMFA filing, do you really see the IAM rep saying 'yes, Mr. ALPA big bucks pilot, you're right, we'll take 33% of that total. It's going to be an endless cycle of each union claiming the other should give more. Hell, the AFA has a presentation on their website claiming that the average wages and benefits of the pilots is over $300,000 per year and therefore they shouldn't cut as much!!!

And what's this about significant savings from management? Do they mean senior management, as in directors/VPs/etc? If so, there just aren't enough of them, even if you chop them in half. Or, as I suspect, they mean all non-union who are only management in name, better classified as staff. Last I checked, I didn't manage anyone but myself, and I'm only marginally performing on that count. Face it, you are NOT going to cut my pay or my colleagues' pay more than 10%, if that, or you'll just pay twice that much in turnover and recruiting costs. For all the nonsense about how unnecessary management is, try running this place if 10-30% of the financial analysts, accountants, route planners, pricing analysts, and other staff-level peons jump the ship before it hits the iceberg. Two people in my group of about 15 have already done this, and I had a job offer myself earlier this year. It can be done, and a lot easier than the unions, or some in senior management, think it can.

 

[duke_buck]

Interesting, that's the first of the probably two dozen stories that I've seen that claims some subdivision of the $5B has been made. The IAM spokeperson said no such division had been made, that it was up to further negotiations. They also threw in the tired (even if true to some extent) line that there has to be some recognition of what they already gave/did.

Hey, don't get me wrong, I hope that this plan is real and achievable AND sufficient. But hope is not a strategy.

 

[batman]

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On 9/27/2002 1222 AM duke_buck wrote:

Suckers...

Do you really think that this is a legitimate restructuring offer?!? While there is no evidence that it's a sham (yet), they left out such minor details as how to divide the $1B per year among the various unions! ......

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United unions agree to $5 billion in cuts
United Airlines union sends 'unprecedented' plan to chief executive
By David Kesmodel, Rocky Mountain News
September 26, 2002
United Airlines' union leaders, trying to keep the carrier out of bankruptcy court, handed management a plan Wednesday to cut labor costs by $5 billion over the next five years.
Labor leaders said in a letter to United Chief Executive Glenn Tilton that they are prepared to negotiate and implement their proposal, which would slash labor costs by $1 billion a year.
The coalition said that, when combined with other cost reductions and strategic initiatives at United, the cuts would allow the UAL unit to improve its profitability by $2 billion to $3 billion per year. The unions did not detail how the cuts would be achieved.
The unions' plan is aimed at helping United qualify for a crucial, $1.8 billion federal loan guarantee.
Chicago-based United, 55 percent owned by employees, last month asked its workers for $9 billion in labor cuts over six years. But union leaders blasted that proposal as excessive.
United has said that if it fails to win a loan guarantee, it might be unable to repay nearly $900 million in debt coming due this fall and might have to file for Chapter 11 bankruptcy protection.
The carrier said it welcomed the union coalition's framework and pledged to work with labor leaders in the days ahead to reach accords on concessions so it can file a revised loan-guarantee application. The federal panel weighing United's request has told the carrier that broader labor cuts are needed for it to qualify for a guarantee. The panel was created by Congress to bail out the airline industry after last year's terrorist attacks.
Given the very real deadline imposed by our financial situation, we appreciate (the unions') quick but thorough effort, United said in a statement.
Union officials did not release details to the media of how much money each union was willing to sacrifice as part of the proposal.
Pilots' spokesman Pat Palazzolo said figures for each of the five unions have been submitted to management.
The next step is for the company to negotiate with each union to get that dollar amount, he said. We'll say, 'Do you want it from pay, from vacation, etc.?'
United's flight attendants union said the coalition's plan also includes significant savings from management, but it did not give details.
The union leaders called their cost-cutting plan, which is designed to help United get financing even if it fails to win a loan guarantee, unprecedented in the industry.
I can't recall any situation where unions all unanimously agreed to a cost-savings proposal of this magnitude and brought it to the airline, Palazzolo said.
The Machinists, United's biggest union, said its negotiations with United will include several cost-savings proposals, including tapping (members) for ideas on how to save money.
United, the second-largest U.S. carrier and Denver International Airport's dominant airline, has piled up losses of nearly $3 billion in the past 18 months.
The carrier, which employs about 7,000 in Denver, must work quickly with labor to reach tentative agreements on concessions because it's running short of cash to repay debt coming due in the next few months.
The airline owes $300 million to banks - due Nov. 17 - and must pay $575 million in aircraft-backed loans by Dec. 2. It also must pay $400 million more to creditors early next year.
A union source said that, to avoid a bankruptcy filing, the carrier needs tentative pacts by mid-October to provide time for rank-and-file ratification votes. Those votes can take weeks.
Before extending credit to United, lenders and the government would demand ratified agreements. They're also waiting for United to win concessions from suppliers and aircraft lessors.
A Chapter 11 filing could have major repercussions for United workers. It could erase the equity of the pilots, machinists and other workers who took control of the company through a 1994 stock-ownership plan. Also, it could allow United to make changes to worker contracts, such as reducing pay and benefits - and it could put seats held by pilots and Machinists unions on UAL's board in jeopardy.