Union leaders at United pull together to cut costs
By Marilyn Adams, USA TODAY
United Airlines'' union leaders appear to have agreed Tuesday on a several-billion-dollar package of cost cuts designed to help keep the giant carrier out of bankruptcy protection.
United had sought $9 billion in labor cost cuts over six years to help it qualify for a $2 billion loan guaranteed by the federal government.
United parent UAL, which has lost about $3 billion since January 2001, faces nearly $900 million in debt payments this fall and warned in August it would have to seek Chapter 11 bankruptcy protection without the loan.
Although the labor cost cuts are not expected to total $9 billion, the extraordinary cooperation among the unions in reaching an agreement signaled the possibility that United might be able to restructure outside of bankruptcy court.
But it is too soon to know whether the airline will agree to the package, whether union members will vote to ratify it, and whether a Chapter 11 filing can be avoided.
The agreement, which is expected to go to the airline today, came after a Tuesday meeting in Washington of United''s union leaders and the No. 2 officer of the AFL-CIO, people familiar with the meeting said.
Leaders of United''s unions had sought the meeting with Rich Trumka, the AFL-CIO''s secretary-treasurer and a former United Mine Workers official. They wanted him to help finalize the size of the package and determine how best to divide it among the unions. Trumka could not be reached Tuesday.
It was a very good meeting, Jeff Zack, spokesman for the Association of Flight Attendants, said Tuesday. We expect to finish our work Wednesday. He declined to elaborate.
Union leaders have been under tremendous pressure to respond to UAL''s demand. United is 55% employee owned, and leaders of the pilots and mechanics unions sit on the board. In a bankruptcy, union leaders fear, their equity would be wiped out and their board seats lost.
Leaders of the pilots, flight attendants and mechanics unions and their financial consultants have been crunching numbers for weeks near United''s suburban Chicago headquarters.
In a recorded message to employees Monday, UAL CEO Glenn Tilton said the company was having an open and constructive dialogue with the unions.
But United has continued making plans for a possible bankruptcy filing in October or early November.
People familiar with the company''s plans say that to avoid filing, United needs tentative union agreements by the end of this month to allow time for ratification votes, which can take weeks.
Lenders and the government would require ratified agreements and other cost cuts before providing credit.
By Marilyn Adams, USA TODAY
United Airlines'' union leaders appear to have agreed Tuesday on a several-billion-dollar package of cost cuts designed to help keep the giant carrier out of bankruptcy protection.
United had sought $9 billion in labor cost cuts over six years to help it qualify for a $2 billion loan guaranteed by the federal government.
United parent UAL, which has lost about $3 billion since January 2001, faces nearly $900 million in debt payments this fall and warned in August it would have to seek Chapter 11 bankruptcy protection without the loan.
Although the labor cost cuts are not expected to total $9 billion, the extraordinary cooperation among the unions in reaching an agreement signaled the possibility that United might be able to restructure outside of bankruptcy court.
But it is too soon to know whether the airline will agree to the package, whether union members will vote to ratify it, and whether a Chapter 11 filing can be avoided.
The agreement, which is expected to go to the airline today, came after a Tuesday meeting in Washington of United''s union leaders and the No. 2 officer of the AFL-CIO, people familiar with the meeting said.
Leaders of United''s unions had sought the meeting with Rich Trumka, the AFL-CIO''s secretary-treasurer and a former United Mine Workers official. They wanted him to help finalize the size of the package and determine how best to divide it among the unions. Trumka could not be reached Tuesday.
It was a very good meeting, Jeff Zack, spokesman for the Association of Flight Attendants, said Tuesday. We expect to finish our work Wednesday. He declined to elaborate.
Union leaders have been under tremendous pressure to respond to UAL''s demand. United is 55% employee owned, and leaders of the pilots and mechanics unions sit on the board. In a bankruptcy, union leaders fear, their equity would be wiped out and their board seats lost.
Leaders of the pilots, flight attendants and mechanics unions and their financial consultants have been crunching numbers for weeks near United''s suburban Chicago headquarters.
In a recorded message to employees Monday, UAL CEO Glenn Tilton said the company was having an open and constructive dialogue with the unions.
But United has continued making plans for a possible bankruptcy filing in October or early November.
People familiar with the company''s plans say that to avoid filing, United needs tentative union agreements by the end of this month to allow time for ratification votes, which can take weeks.
Lenders and the government would require ratified agreements and other cost cuts before providing credit.
