United closer to bankruptcy filing; stock plunges By Barbara De Lollis, USA TODAY United Airlines was pushed closer to seeking bankruptcy protection by its mechanics union, which voted down a wage-cut proposal despite warnings that rejection could lead to a Chapter 11 filing. The no vote, tallied early Thursday, is a potentially devastating blow for United, which has spent months negotiating concessions from its labor groups, lessors, lenders and suppliers in an effort to qualify for a $1.8 billion federal loan guarantee. United stock fell sharply Friday on investor fears that the labor setback has dashed its efforts to avoid a Chapter 11 filing. Unless all the unions approve wage-cut packages totaling $5.2 billion over five years, United is not expected to be able to qualify for the loan it says is essential to averting bankruptcy. Following the United mechanics' rejection, Standard & Poor's slashed its credit ratings Friday on UAL and said the company appears almost out of options to keep out of bankruptcy. United CEO Glenn Tilton said Thursday that he wants to start talks immediately with mechanics belonging to the International Association of Machinists on a new deal that could be voted on quickly. United was trying Friday to negotiate a modified agreement that could be put to a new vote, spokesman Jeff Green said. It would be at least five days before a new vote is held, because the Machinists' union is required to give its members that much notice, union spokesman Joseph Tiberi said. About 24,500 other United workers represented by the IAM voted by large margins to pass their part of the $1.5 billion plan. But the 13,000-member mechanics' unit voted it down by 57%, reflecting years of anger and resentment against both the company and their union. "A lot of people would rather see them actually file Chapter 11 than to give a pay cut, because we gave them a pay cut for all those years and got nothing in return," says Dennis Sanderson, a United mechanic who earns about $70,000 a year at Dulles International Airport near Washington. Sanderson refers to wage cuts three large labor groups traded in the 1990s for 55% of UAL's stock. Some mechanics may also have been influenced by a bitter battle between the IAM and the Aircraft Mechanics Fraternal Association, which seeks to represent United's mechanics. Others may have been swayed by US Airways' announcement Tuesday that it wants even more concessions from employees on top of what it already received while seeking a $900 million federal loan guarantee. "Look at US Airways. They took concessions and after 10 weeks, they're back for more," Sanderson says. The IAM acknowledged the division among mechanics. "Each employee measured the costs and benefits of participating in United's recovery plan," says Scotty Ford, president of the mechanics' unit. "In the end, some thought the risk was worth taking, and others felt they had sacrificed enough." The day before the vote, he urged members to think about United's dire position: "The survival of United may well be in your hands. Our anger at the management team at United should not discourage us from doing the right thing." But now, time is running out. The loan guarantee is considered crucial to how United will handle a $375 million debt payment coming due Monday. The carrier has a grace period of an undisclosed number of days, but it is unclear whether it has time to reach another agreement and put it to a vote before it has to decide to make the payment or file for bankruptcy protection. Contributing: The Associated Press The owner of Roger's Trinbago Site: Roj (Roger James) *************************************************** escape email mailto:ejames@escape.ca Trinbago site: http://www.tntisland.com CBC Website http://www.tntisland.com/caribbeanbrassconnection/ The Trinbago Site of the Week: (nalis) http://www.nalis.gov.tt (T&T National Library & Information System Authority) courtesy of Roj Trinbago Website & TnT Web Directory Roj's Trinbago Website: http://www.tntisland.com TnT Web Directory: http://search.co.tt *********************************************************