Re: United sees bookings decline as strike looms

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This could be a good thing.  That means when/if the strike is averted, we
will see a mega-sale to fill up the planes, like AA did a couple years ago
when their FA's almost walked out.

Jim


On Fri, 15 Feb 2002, W Wilson wrote:

> By Kathy Fieweger
>
> ELK GROVE VILLAGE, Ill., Feb 15 (Reuters) - United Airlines on Friday said
> passengers began looking elsewhere for flights in anticipation of a strike
> set for next week after 13,000 mechanics and cleaners rejected a contract
> offer.
>
> With a strike deadline looming in five days at the No. 2 U.S. carrier, talks
> resumed Friday afternoon. Earlier this week, mechanics rejected an offer
> from United that included a 37 percent pay increase for the most senior
> workers, but also sought unspecified future wage concessions and deferred
> retroactive pay, among other provisions.
>
> "We clearly intend to avoid a strike," Chief Financial Officer Jake Brace
> told Reuters in an interview at United's headquarters in Elk Grove Village,
> a suburb of Chicago. "We are seeing a lower share of bookings than we have
> been seeing."
>
>
> Brace, a United Airlines veteran, is part of the negotiating team trying to
> hammer out an agreement after members of the International Association of
> Mechanics and Aerospace Workers District Lodge 141-M on Tuesday rejected the
> first contract offer from United, a unit of UAL Corp. (UAL), since
> negotiations began two years ago.
>
> The union was unhappy with the recommendation of a presidential emergency
> board that mechanics defer retroactive pay. The machinists said the contract
> contained no job security provisions and they rejected a proposed blueprint
> for possible wage concessions.
>
> Brace declined to speculate on various analysts' comments that a mechanics
> strike could force the airline into filing for bankruptcy protection. United
> posted a net loss of $2.1 billion in 2001, an industry record.
>
> "We still have access to the capital markets, we still have a lot of
> collateral in both aircraft and non-aircraft," said Brace, who conceded
> morale at the airline is not high. "It's (morale) OK. I think that they
> understand that the situation we're in is difficult."
>
> The raises would have been the workers' first base-pay hikes in eight years.
>
> Sen. Richard Durbin, an Illinois Democrat, late Friday told Reuters he was
> getting a good sense from both the union and UAL Chief Executive Jack
> Creighton that an agreement could be reached. "I'm getting positive feelings
> from both sides," Durbin said in a phone interview. "The threat of a strike
> has taken its toll on United." He made an offer to both parties in writing
> this week to personally help broker a deal.
>
> REASSURING PASSENGERS
>
> A separate bargaining unit of the IAM representing ground workers, including
> passenger service, ramp and store employees, is also negotiating on a
> contract under the direction of the National Mediation Board.
>
> In 1994, machinist union members, like pilots, gave pay cuts in return for a
> stake in the airline through an employee stock ownership plan. The IAM is
> unhappy that the airline's latest offer includes future wage concessions
> from all employee groups to help restore financial stability.
>
> The mechanics last struck United in 1979. During the summer 2000, pilots
> staged a work-to-rule slowdown that forced flight cancellations and left
> United with a sullied reputation among travelers. Subsequently, pilots
> represented by the Air Line Pilots Association won an industry-leading
> contract.
>
> Meanwhile, United is seeking to reassure passengers, sending electronic mail
> this week to frequent flyers, saying it was "doing everything we can to
> reach an agreement and avoid a strike."
>
> Mechanics had authorized a strike in December, but the Bush administration
> blocked it before the busy holiday travel season by appointing a special
> board.
>
> The board recommended pay raises even though United said it could not afford
> them in the wake of the Sept. 11 attacks that crushed airline travel.
>
> UNION SAYS DEADLINE REAL
>
> Brace said the retroactive pay portion of new contracts would require about
> $400 million in cash for both units of the IAM to be paid. The airline's
> cash balance at the end of 2001 was $2.6 billion.
>
> Both the union and United have said if progress was made in talks, another
> contract vote could be scheduled for mid-March.
>
> But union spokesman Frank Larkin called the strike deadline of Wednesday,
> 12:01 a.m. EST (0501 GMT) very real.
>
> "There are five days remaining, and in airline negotiations that constitutes
> an eternity," Larkin said. "Everyone recognizes that the (special) board did
> serve some purpose in providing a place for the negotiations to take off
> from."
>
> The White House can no longer intervene, but Congress could pass a law to
> extend the deadline or impose a settlement. Labor has warned Washington in
> plain terms not to get involved. Before recessing until Feb. 25, lawmakers
> acknowledged the delicacy of the talks and urged both sides to settle.
>
> "My hope is that the parties can work out any differences and not seek
> congressional action," said Sen. Ernest Hollings, a South Carolina Democrat
> and chairman of the Senate Commerce Committee. "No one wants a strike or a
> shutdown, but Congress is not the place to settle this dispute right now."
>
> At the very least, Congress would wait until after its recess before
> considering intervening in any strike. United also hopes to avoid further
> government involvement.
>
> UAL shares were trading near lows set immediately after the Sept. 11
> attacks, when two of their jets were hijacked and crashed. The stock added
> 28 cents to $11.36 on Friday on the New York Stock Exchange.
>

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