No more Layoffs?


Nov 26, 2002
Bankrupt UAL getting set to hire
Early retirements may deplete ranks this summer

May 05, 2003
By Paul Merrion

The new labor agreements at United Airlines are expected to generate thousands of early retirements by June 30, leading the beleaguered carrier to cautiously start hiring again after laying off almost a third of its workforce in the last year-and-a-half.

It isn''t known how many will retire early, or how many will be hired, but there are concerns that the carrier, which has been in bankruptcy proceedings since December, could suddenly find itself short-handed going into the peak summer travel season.


As a result, United is doing some proactive hiring and training to offset any reduction in force we might have due to retirements, confirms a spokesman for UAL Corp., United''s Elk Grove Township-based parent. We are keenly aware of making sure we have enough people.

Union sources say that several thousand employees are expected to retire by June 30, when sharply higher health insurance costs kick in for those who retire after that date. United currently has about 69,000 employees, down from about 100,000 before the Sept. 11, 2001, terrorist attacks threw the company into financial turmoil and led to the bankruptcy filing.

With contract concessions in hand, United expects to save $2.56 billion in annual labor costs through pay cuts and the elimination of jobs after the company outsources some operations and shifts to more productive work schedules. The new work rules will require fewer employees, but early retirements may largely offset the need for layoffs.

Out of roughly 1,500 mechanics eligible to retire, about 600 to 800 are expected to do so before July 1.

The company indicated that if they get that level of retirements in the short term, they don''t expect more layoffs, says Thomas Reardon, assistant general chairman in Chicago for the International Assn. of Machinists District 141-M (IAM).

However, the number who decide to retire early may be over and above what would otherwise be required under the new work rules, he adds.

A UAL spokesman said the number of employees expected to retire early is not known.

From a cost standpoint, reducing jobs through early retirement, rather than layoffs, works to United''s advantage. Instead of eliminating the most-junior, lowest-paid employees, the company will see the most-senior, highly paid workers leave the payroll, lowering its average labor cost per employee.

The company''s counting on it, adds a source close to the Assn. of Flight Attendants union. Under the new work rules, United will need 1,200 fewer flight attendants, and the company expects to reach it through attrition.

Individual circumstances vary, but one 59-year-old flight attendant based in Chicago says the cost of health coverage would be $30 per month for her and her husband if she retires under the old plan by June 30; after that date, the cost would be $212 per month. Also, under the old plan, cost increases are capped at 7% each year, while there would be no limits on cost increases under the new plan.

There''s an onslaught of people retiring now, says the flight attendant, who asked not to be named. It''s all people are talking about.

Even for highly paid pilots, the cost increase is causing concern among those close to mandatory retirement at age 60.

We do get a lot of calls on that issue, says a spokeswoman for the Air Line Pilots Assn. union. More than 200 pilots have taken early retirement since UAL filed for bankruptcy, and this is a business where we rarely have any early retirement at all, she adds.

Officials with IAM''s District 141, which represents baggage handlers and customer service representatives and is United''s largest union, could not be reached for comment.

I haven''t decided yet, says Glenn Taras, a customer service and sales representative in United''s cargo reservations center, which is represented by District 141. Who can afford to retire at (age) 56½?