This article from NYTimes.com has been sent to you by psa188@juno.com. United to Meet With Machinists; Talk of a Bankruptcy Persists October 11, 2002 By EDWARD WONG United Airlines and the machinists' union said yesterday that they would begin negotiations over cost cuts next week. The announcement came as analysts tried to gauge how the need to have talks on concessions with each union would affect United's chances of avoiding a bankruptcy filing. For almost two months, United's five unions had been working together to present a concession package to the airline, which is trying to obtain financing before mid-November, when a large debt payment is due. On Sept. 25, the coalition offered Glenn F. Tilton, chief executive of UAL, United's parent company, $1 billion in annual concessions over five years. That fell short of the $1.5 billion a year over six years that Mr. Tilton's predecessor, John W. Creighton Jr., demanded in August. The unions had been awaiting Mr. Tilton's response. But on Wednesday night, it became apparent that the International Association of Machinists, which represents the largest labor group, wanted to conduct its own talks. The machinists issued a statement yesterday saying they "would directly engage United Airlines to discuss cost reductions in an effort to avoid a bankruptcy filing." In the statement, Robert Roach Jr., general vice president of the union, said: "United needs to reduce its labor costs, but cost reduction does not necessarily mean pay cuts. Giving back money every time there is a crisis does not fix the problem; it only hides it temporarily." The union said executives should recognize that the machinists had already made a significant concession by agreeing last spring to defer $500 million in retroactive pay. United, which is 55 percent-owned by employees, also issued a statement last night, saying: "The I.A.M. has said that it will continue to coordinate with the other labor groups at United while pursuing its specific discussions with United, which is important since the meaningful participation by all the unions is critical to success in this process." The four other unions - the pilots, flight attendants, flight dispatchers and meteorologists - said they would continue to work together, but would negotiate separately with United. They also urged the machinists to "participate and work alongside the rest of United's employees to preserve the company without a bankruptcy." The idea of United, the second-largest carrier, having to negotiate separately with the unions did not sit well with some analysts, even though the unions said late in September that United would have to talk to each about specific concessions. Philip Baggaley of Standard & Poor's said, "The apparent splintering of the union coalition lengthens the odds against United reaching agreement with labor in time to avoid a bankruptcy filing before large debt payments come due on Nov. 17 and Dec. 2." In trading yesterday, UAL shares fell 11 cents, to $1.76. United has said it hopes to obtain a $1.8 billion loan guarantee from the federal government to help secure $2 billion in private loans. But the government apparently wants to see deeper cost cuts from labor and suppliers. United soon needs to give the government a revised business plan showing the concessions it can realistically hope for. Darryl Jenkins, director of the Aviation Institute at George Washington University, said that whether United negotiates with the unions as a bloc or with each separately, "it's going to be very, very difficult." Each has something different at stake. For example, pilots, who own about a quarter of the airline, would find it hard to obtain comparable jobs elsewhere if United entered bankruptcy, while the machinists and flight attendants would have an easier time. The flight attendants are not part of the employee ownership plan. A bankruptcy filing would presumably wipe out the value of the stock, lead to a board reorganization and force changes in labor contracts. http://www.nytimes.com/2002/10/11/business/11AIR.html?ex=1035343225&ei=1&en=c3213e4690eaf349 HOW TO ADVERTISE --------------------------------- For information on advertising in e-mail newsletters or other creative advertising opportunities with The New York Times on the Web, please contact onlinesales@nytimes.com or visit our online media kit at http://www.nytimes.com/adinfo For general information about NYTimes.com, write to help@nytimes.com. Copyright 2002 The New York Times Company