=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SF Gate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/c/a/2002/11/24/BU107672.D= TL ---------------------------------------------------------------------- Sunday, November 24, 2002 (SF Chronicle) Cabin pressure/United employees hope for the best and prepare for the worst= as the airline struggles to avoid bankruptcy David Armstrong, Julie N. Lynem, Chronicle Staff Writers When Rick Saber ended his career as a pilot for United Airlines in 1998, he had every reason to expect a comfortable retirement. United, then the world's largest airline, was enjoying handsome profits. Thanks to an employee stock ownership program, many workers saw their investments grow as shares in UAL Corp., United's parent company, were trading at $80. It seemed that employees like Saber, a veteran of 35 years in the air who commanded jumbo Boeing 747-400 jetliners, were truly flying the friendly skies. Today, United pales in comparison with those heady days. Buffeted by a turbulent economy and the Sept. 11 terrorist attacks, United has lost $4 billion in two years and seen its stock lingering near $3 a share, a drop of 97 percent from its all-time peak of $100.75. Since the attacks, UAL has reduced its workforce from 100,000 to 83,000 and said more cuts are on the way. Most industry analysts expect UAL to enter bankruptcy in the coming week= s. That would render UAL stock virtually worthless and could void contracts with five unions, all of which have agreed to steep wage concessions in recent weeks to help the ailing airline. The crisis at United has also taken a toll on its workforce as it threatens to fracture long-standing relationships. In the Bay Area, as elsewhere around the country, grown children have followed their parents to jobs at United. Couples in which both spouses work for United are not uncommon. Now, those ties are being severely tested by the disheartening turn of events. Anxiety and anger surface in conversations with United employees -- as well as steadfastness and hope that the company will return to prosperity. In the meantime, many workers fear for their jobs. Indeed, some are seriously considering career changes and moves to other, more affordable parts of the country. Retirees like Saber, who had much of his nest egg in UAL stock, are also paying a price. "Most of us have lost small fortunes in collapsed value," said Saber, 64, of San Rafael. "The effects on many will ring for years." 16,000 IN BAY AREA United, the dominant carrier at San Francisco International Airport with half of all flights and passengers, has 16,000 employees in the Bay Area. Derek and Christina Knox of San Francisco are both United employees, at least for now. Come Jan. 4, Christina Knox, a 13-year United employee, will lose her job as a reservations agent, along with 500 others, when United closes its San Francisco reservations office in a cost-cutting move. Christina, mother of three children, ages 9, 7 and 5, isn't entirely sure what she will do. She could transfer to a United reservations center in Honolulu, Chicago or near Washington, D.C., at Dulles Airport but probably won't because those locations are too far away. Another option is to stay with United in another capacity, say as a customer service representative in Las Vegas. Although she would probably have to take a pay cut from her salary of $23,000 a year, she would keep her United seniority and still have income. Plus, she could fly home to see husband Derek, a United ramp service worker, and their children, all of whom would stay in their Bernal Heights home. Derek Knox, a 12-year United employee, is a member of the International Association of Machinists and Aerospace Workers. His union reached a tentative agreement with UAL Corp. on Wednesday for $1.5 billion in wage concessions during the next 5 1/2 years. "I'm losing (Christina's) income and taking a pay cut, too," said Derek Knox. "I'm not a happy camper with that." "This company has squandered billions," he said, citing United's failed attempt to buy US Airways last year and the aborted launch of a private business jet unit called Avolar. "To me, it's mismanagement and bad business decisions. Employees are taking the brunt." Another pilot, Scott Price, 38, who joined United in 1992, flies Airbus A320s and makes $150,000 a year. Working for United is also a family affair for Price, whose late father was a United pilot in San Francisco for 29 years. Price, who hopes UAL can avoid bankruptcy, shrugged off predictions of doom by industry analysts, saying he believes UAL's chief executive officer, Glenn F. Tilton, is turning United in the right direction. Since assuming the post in September, Tilton has negotiated $5.4 billion in wage concessions from union and nonunion workers and directed United's pursuit of a $1.8 billion loan guarantee from the Air Transportation Stabilization Board. STARTING OVER Despite his faith in the steps Tilton has taken, Price, a Vacaville resident and father of two, is worried about his job security. Landing a job as a pilot at another airline would mean starting over at the bottom of its seniority list. Price said he's talking to his family about what could happen if he lost his job. "I'm preparing them for all the possibilities." United, which has furloughed or otherwise shed 17,000 workers since the terrorist attacks and has said it will shed 9,000 more through attrition in 2003 and 2004, isn't the only airline struggling. In fact, among the eight biggest carriers, only low-fare specialist Southwest turned a profit this year, and even Southwest has made little money. US Airways is in Chapter 11 bankruptcy protection. All the major carriers, except for Southwest, have laid off workers in the bleak business environment. All told, some 80,000 fewer people work for U.S. carriers now than on Sept. 11, 2001, according to the Air Transport Association, the Washington, D.C., airline trade group. United executives say significant staff reductions and wage concessions, while painful for employees, are needed to save the company. United held job fairs in six cities to help former U.S.-based United workers find new employment. In October and November 2001, United held job fairs in San Francisco, coached former employees on job-hunting skills such as interviewing and resume writing, and set up a temporary counseling center for displaced workers in a Ramada Inn near SFO. "Our goal is to be as helpful as we can be during this extremely painful process for all of our current and former employees," said Bill Hobgood, United's senior vice president of human resources. Additionally, some furloughed employees, especially those with ample seniority, have recall rights and could go back to their old jobs when business improves, United has said. PROFIT PLAN FOR 2004 UAL expects to make a profit in 2004, according to a revised business pl= an it filed last Sunday with the Air Transportation Stabilization Board, which was formed to help the damaged airline industry after the Sept. 11 attacks. Cash-strapped United hopes to land the $1.8 billion federal loan guarant= ee by Dec. 2, when it must repay a $375 million loan. Analysts disagree over whether the loan would be enough to keep United out of Chapter 11 and whether the board will grant the guarantee. In the meantime, as United scrambles to downsize and cut costs, some of its employees are hustling to keep their jobs and anticipate the next change in the company's flight plan. Consider flight attendant Diane Libardi, who was involuntarily furloughed after the Sept. 11 terrorist attacks hammered the airline industry. She was recalled in April. Now, with United saying it will furlough 2,700 flight attendants starting Jan. 31, Libardi is laying plans to land on her feet. Libardi, 25, said she may apply for a voluntary furlough, which would gi= ve her recall rights. That way, she said, she can finish her college degree and keep her seniority at United. "You need to have a backup plan," said Libardi, who moved from her native Florida to California for the flight attendant job. BACK-UP PLANS If Libardi gets the furlough, she and her husband, Marc Zehr, also a United flight attendant, may move to Washington state. It's just too expensive to live in the Bay Area on one flight attendant's salary, said Libardi, who earns $23,000 a year and rents a room in South San Francisco. Zehr, who is based in Tokyo, earns $35,000. Given United's free-fall, workers are well advised not to depend on the once-high-flying airline as the sole source of their livelihood, say some employees. "We've been under the strain for so long," said mechanic Robert Briggs, who has worked for United since 1989. Briggs, who is single and owns a home in Millbrae, said he keeps a careful eye on his expenses and takes in other work to supplement his $67,500 a year from United. Despite the present problems, some United veterans remain hopeful that n= ew CEO Tilton can help restore the lost luster at United, a proud company incorporated in 1931 that has an extensive worldwide route network and a famous name. "I say give Tilton clearance to land the puppy," said Saber, the retired pilot, who said United has a chance to avoid Chapter 11. "Glenn has the necessary backing of the unions for success. "If he succeeds in turnaround without bankruptcy . . . his win on Wall Street will be akin to an 8,000-mile hop to Asia with 400 passengers and a lovely, safe touchdown in crosswinds, heavy rain and low ceilings." UNITED AIRLINES -- Headquarters: Elk Grove Village, Ill. -- Workforce: 83,000 -- Number of Bay Area employees: 16,000 -- The problem: Has lost $4 billion since mid-2000 and is trying to avoid filing for bankruptcy. Needs desperately to cut costs and meet a $375 million debt payment on Dec. 2. -- What steps it has taken: Persuaded employee unions and salaried nonunion staff to agree to $5.8 billion in wage and labor concessions. Delayed delivery of new aircraft and restructured some debts. -- What it needs to do: Persuade the Federal Air Transportation Stabilization Board to approve a $1.8 billion federal loan guarantee to get cash for its operations. Follow through with its recently released business plan to cut an additional 9,000 employees, reduce capital spending by $850 million in 2003 and 2004 and reduce its operations 23 percent below its Sept. 11, 2001, level. E-mail the writers at davidarmstrong@sfchronicle.com and jlynem@sfchronicle.com.=20 ---------------------------------------------------------------------- Copyright 2002 SF Chronicle