UA Files Section 1113(c) Motion

Cosmo

Veteran
Aug 20, 2002
840
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UA just announced the long-expected bankruptcy court filing made today to abrogate any union contract if no restructuring agreement is reached by May 1, 2003. Here is the [A href=http://biz.yahoo.com/prnews/030317/cgm084_1.html]press release[/A].
Most noteworthy is that the press release said that revenues had dropped off in March in anticipation of the war with Iraq. UA said that it might drop some flights and request an additional nine percent pay reduction from its workers for the duration of the war.
The press release also noted that a tentative agreement had been reached with the small meteorologists union (TWU) unit, with a ratification vote by March 21, 2003.
 
OP
Cosmo

Cosmo

Veteran
Aug 20, 2002
840
0
Here are the replies to UA's motion to abrogate the union contracts from [A href="http://biz.yahoo.com/bw/030317/175976_1.html"]ALPA[/A] and [A href="http://biz.yahoo.com/prnews/030317/dcm065_1.html"]AFA[/A].
 

wts54

Senior
Sep 16, 2002
374
0
www.usaviation.com
SPECIAL NEWSREAL

Please Post Promptly Monday, March 17, 2003
and keep posted
through 3/18

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United Files Motion Under Section 1113©;
Discussions Continue with Unions
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UAL Corp. today filed a motion under Section 1113©
of Chapter 11 of the U.S. Bankruptcy Code to reject
the company's collective bargaining agreements. The
company emphasized that its priority would be to
continue negotiating with its unions, but that it
had to file the motion today to ensure that the
necessary cost savings are in place by early May.
The cost savings are critical to United's ability to
meet the requirements of its debtor-in-possession
(DIP) financing. The company said that meeting
those requirements necessitates permanent wage
concessions as well as addressing issues such as
benefits, work rules, and "scope clauses" that
presently restrict the company's ability to compete
and pursue strategic initiatives.

Chairman, President and CEO Glenn Tilton said, "We
have a plan to fundamentally transform United's
business in a way that is durable and sustainable,
and we have made solid progress in reducing costs.
It strikes a balance in achieving our near-term goal
of successfully emerging from bankruptcy with our
longer-term commitment to create a resilient,
profitable enterprise that can be the industry
leader once again. Between now and May 1, we will
continue to negotiate around the clock in the belief
that we can reach consensual agreements with all of
our union groups and render a ruling from the court
unnecessary. However, all of us will have to accept
changes that are broad and deep, and those changes
require that we take an entirely new approach to
competing and succeeding in this changed industry."

Under the 1113 © motion filed today with the U.S.
Bankruptcy Court for the Northern District of
Illinois, United has requested court approval to
reject the company's collective bargaining
agreements and make permanent the interim wage
relief it received from its unionized employees in
early January. The company is also seeking to
implement modifications to benefits packages, work
rules, scope of work and job security provisions
that will maximize the company's strategic
flexibility and facilitate transformation to a
competitive and efficient airline.

The company's proposed collective bargaining
modifications have a targeted savings of 2.56
billion dollars annually on a cash basis compared to
the current contractual path. Examples of the types
of non-compensation issues that the company needs to
address include the establishment of common benefit
and pension plans, changes to scheduling rules for
flight crews, and modifications to scope-of-work
rules to permit, among other things, the outsourcing
of certain functions, expanded use of regional jets,
the establishment of a low-cost carrier and the
ability to expand code-share agreements.

United also said that it has reached a tentative
agreement with its unionized meteorologists
represented by the Transport Workers Union (TWU) on
contract modifications that would generate the level
of cost savings sought by the company. As a result,
the company will withdraw its 1113 © motion for
the TWU, subject to ratification of the tentative
agreement by the TWU membership. The TWU is
expected to vote on this agreement by March 21,
2003.

Additionally, the company said today that it has
experienced a recent significant drop-off in revenue
as bookings have declined in advance of a potential
war with Iraq and that the company must take
immediate steps to offset the negative financial
effects. United is actively engaged in an industry
effort led by the Air Transport Association seeking
war-time relief and financial assistance from the
U.S. government to mitigate the disproportionate
impact of any war on the airline industry and
United. United also intends to approach its
lenders.

In the event United is unable to gain sufficient
relief within the next 30 days, the company said
that it may need to seek additional temporary pay
reductions of at least nine percent across-the-board
for all employee groups. The company is working
with international locations to ensure that
international employees participate in a fair and
equitable manner in accordance with local laws.
If war occurs, United is prepared to reduce capacity
as may prove necessary under the circumstances as
they unfold, and may require additional wage relief
-- again, on a temporary basis.

Tilton continued: "While our revenue picture
stabilized in the initial three months after our
Chapter 11 filing, we have recently seen a
significant slowdown in travel and bookings in
advance of a possible war with Iraq. We will do
everything possible to avoid a temporary reduction
in wages."