United Air scraps war-related extra pay cuts
CHICAGO, April 17 (Reuters) - Bankrupt United Airlines said on Thursday it sees no need to go through with temporary pay cuts it threatened last month amid war jitters because bookings have picked up slightly and federal aid is about to kick in.
United, which filed the largest U.S. airline bankruptcy in history in December along with parent UAL Corp. , warned in March that it would be forced to cut pay at least 9 percent temporarily for all workers if it did not find relief from an added drop in travel because of the war in Iraq.
Those reductions would have been on top of temporary pay cuts set in January to satisfy tight monthly financial requirements set by lenders who provided crucial money for United''s restructuring.
"This (government) relief measure, along with United''s ongoing cost reduction efforts in matching flight capacity to demand, has allowed the company to postpone the additional employee pay cuts in its Iraq war contingency plan," United said in a taped message to employees.
May schedule cuts and unpaid leaves announced on Tuesday remain in place, United said. Unpaid leave, or authorized no-pay status, is not planned beyond May, it said.
"The company also is targeting a 5 percent cost reduction among salaried and management employees through ... authorized no pay and management reduced scheduling," United said.
United has reached at least tentative long-term agreements with all of its union groups on wage and nonwage cuts under a plan to reduce labor costs by $2.56 billion per year.
Pilots, flight dispatchers and meteorologists have ratified long-term cost cuts with United. Mechanics, ramp and customer service workers, and flight attendants are expected to report ratification vote results on April 29.
United did not indicate how much cash it expects to receive from the $3.5 billion government aid package for airlines signed into law by President George W. Bush on Wednesday with funding for the war in Iraq.
The plan includes $2.4 billion in cash reimbursements for security costs, and suspension of passenger security fees from June 1 through Sept. 30 valued at $520 million. An extension of insurance coverage totals about $600 million.
United cut capacity by 8 percent and put a number of workers on unpaid leave for April. On Tuesday, United extended April capacity cuts through May, added nearly 4 percent to the total and planned more unpaid leaves because demand remains depressed because of the Iraq war and SARS, or Severe Acute Respiratory Syndrome.
Union leaders for United''s flight attendants have told members that the airline''s April cuts led to about 2,300 unpaid leaves and May cuts could add 1,875 more unpaid leaves.
04/17/03 18:01 ET