United May Reduce Work Force as Part of More Cost Cuts
NEW YORK -- UAL Corp.'s (UALAQ) United Airlines will likely have to reduce its work force, as the bankrupt airline must cut deeper to survive.
Executives and board members with the world's second-largest airline are discussing ways to cut costs further as the airline attempts to exit bankruptcy, and executives are warning the airline's 62,000 employees they'll have to tighten their belts even more.
"It's clear that the cost structure that we need will mean work-force reductions over time," said UAL spokeswoman Jean Medina.
The news comes as the airline executives face anger and lawsuits from several unions after UAL stopped making required payments to pension plans. The mechanics' union has sued three officers for breach of fiduciary duty and unfair treatment, and the flight attendants' union on Tuesday called for management to be replaced.
Further, the bankruptcy judge scolded United earlier this month for a breakdown in communications with its unions, and ordered the airline's executives to use the next month as a "test period" to see whether cooperation with the unions "can be reconstituted," The Wall Street Journal reported.
If that doesn't happen, U.S. Bankruptcy Court Judge Eugene Wedoff said he would share the belief of the unions that opening the bankruptcy exit process to competing reorganization plans may be unavoidable, the Journal reported.
UAL executives said Tuesday in a recorded message to employees that in order to compete with lower-cost airlines, United must cut deeper, and executives said they want to inspire an attitude of responsibility among employees for those cuts.
"Among other things, this means that we must revisit areas where we had previously thought that we had already squeezed out all of the savings available to us," Chief Executive Glenn Tilton said in the message.
Chief Operating Officer Pete McDonald listed six cost-cutting initiatives that should amount to $625 million in annual savings. Those initiatives include cuts to call center, maintenance, operations, fuel and distribution costs, Mr. McDonald said in the recorded message, but it won't be enough to keep the airline profitable.
"I know this is hard for all of us. Everyone has made sacrifices. And the truth is, it will probably become even more difficult as we go forward," Mr. McDonald said.
Mr. McDonald didn't give details of plans for more cuts, but said he has a six-year plan for division heads to trim their budgets. Further, he said he wants to inspire a new attitude of responsibility among employees for lowering costs.
The idea of giving employees responsibility for trimming costs is one that's gaining popularity among airline executives. AMR Corp. (AMR) in the past year has instituted various programs that allow employees to come up with ways to reduce costs and improve efficiency.
And on Wednesday, Continental Airlines Inc. (CAL) managers and pilot union representatives agreed to codify their new relationship of sharing information and ideas. That's different from the confrontational labor relations the airline once had, Continental said in a prepared statement.
Under the agreement, Continental and the pilots union committed to a relationship "based on mutual respect and trust," and agreed that each party will receive "a fair share of the financial and economic rewards."
As for United Airlines, relations with some work groups are far more confrontational than those at Continental.
On Tuesday, United flight attendants called for airline management to be replaced.
"United Airlines senior management has attacked our wages, benefits and work rules; they've attacked our retirees; and now they've attacked our pensions. Yet, they have failed to accomplish what employees have been working to achieve -- a successful exit from bankruptcy," flight attendant union boss Greg Davidowitch said in a prepared statement.
In response to the flight attendants, United said in a statement "all of us who are interested in United's future need to work together constructively to get the company in the best possible shape to compete for the long term."
**************
Now I have a question for AA'ers in the know . . . . just how many more people could UA get rid of and still be able to run the airline according to FAA/DOT rules and regs?
With this type of announcement looming, I really no longer feel like UA will be a force/problem that AA will have to deal with much longer. UA employees have had just about all they can take and I believe that many of them at this point feel like no job is better than a UA job. UA wants to run like McDonalds with McWages, then they're going to end up with McSkilled employees.
NEW YORK -- UAL Corp.'s (UALAQ) United Airlines will likely have to reduce its work force, as the bankrupt airline must cut deeper to survive.
Executives and board members with the world's second-largest airline are discussing ways to cut costs further as the airline attempts to exit bankruptcy, and executives are warning the airline's 62,000 employees they'll have to tighten their belts even more.
"It's clear that the cost structure that we need will mean work-force reductions over time," said UAL spokeswoman Jean Medina.
The news comes as the airline executives face anger and lawsuits from several unions after UAL stopped making required payments to pension plans. The mechanics' union has sued three officers for breach of fiduciary duty and unfair treatment, and the flight attendants' union on Tuesday called for management to be replaced.
Further, the bankruptcy judge scolded United earlier this month for a breakdown in communications with its unions, and ordered the airline's executives to use the next month as a "test period" to see whether cooperation with the unions "can be reconstituted," The Wall Street Journal reported.
If that doesn't happen, U.S. Bankruptcy Court Judge Eugene Wedoff said he would share the belief of the unions that opening the bankruptcy exit process to competing reorganization plans may be unavoidable, the Journal reported.
UAL executives said Tuesday in a recorded message to employees that in order to compete with lower-cost airlines, United must cut deeper, and executives said they want to inspire an attitude of responsibility among employees for those cuts.
"Among other things, this means that we must revisit areas where we had previously thought that we had already squeezed out all of the savings available to us," Chief Executive Glenn Tilton said in the message.
Chief Operating Officer Pete McDonald listed six cost-cutting initiatives that should amount to $625 million in annual savings. Those initiatives include cuts to call center, maintenance, operations, fuel and distribution costs, Mr. McDonald said in the recorded message, but it won't be enough to keep the airline profitable.
"I know this is hard for all of us. Everyone has made sacrifices. And the truth is, it will probably become even more difficult as we go forward," Mr. McDonald said.
Mr. McDonald didn't give details of plans for more cuts, but said he has a six-year plan for division heads to trim their budgets. Further, he said he wants to inspire a new attitude of responsibility among employees for lowering costs.
The idea of giving employees responsibility for trimming costs is one that's gaining popularity among airline executives. AMR Corp. (AMR) in the past year has instituted various programs that allow employees to come up with ways to reduce costs and improve efficiency.
And on Wednesday, Continental Airlines Inc. (CAL) managers and pilot union representatives agreed to codify their new relationship of sharing information and ideas. That's different from the confrontational labor relations the airline once had, Continental said in a prepared statement.
Under the agreement, Continental and the pilots union committed to a relationship "based on mutual respect and trust," and agreed that each party will receive "a fair share of the financial and economic rewards."
As for United Airlines, relations with some work groups are far more confrontational than those at Continental.
On Tuesday, United flight attendants called for airline management to be replaced.
"United Airlines senior management has attacked our wages, benefits and work rules; they've attacked our retirees; and now they've attacked our pensions. Yet, they have failed to accomplish what employees have been working to achieve -- a successful exit from bankruptcy," flight attendant union boss Greg Davidowitch said in a prepared statement.
In response to the flight attendants, United said in a statement "all of us who are interested in United's future need to work together constructively to get the company in the best possible shape to compete for the long term."
**************
Now I have a question for AA'ers in the know . . . . just how many more people could UA get rid of and still be able to run the airline according to FAA/DOT rules and regs?
With this type of announcement looming, I really no longer feel like UA will be a force/problem that AA will have to deal with much longer. UA employees have had just about all they can take and I believe that many of them at this point feel like no job is better than a UA job. UA wants to run like McDonalds with McWages, then they're going to end up with McSkilled employees.
