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I guess a lot of union members whent "what have we done?" over the
weekend.
United Airlines says has new deal with mechanics
Monday December 2, 8:51 AM EST
(Adds details, background)
By Susan Kelly
CHICAGO, Dec 2 (Reuters) - United Airlines said on Monday it reached a
new agreement on wage cuts with its mechanics union, a crucial part of
its effort to stave off a bankruptcy filing.
The nation's second-largest airline reached a tentative pact with the
International Association of Machinists early Monday morning after
all-night negotiations, United spokesman Jeff Green said.
The union's rank-and-file members, who rejected a similar wage cut deal
last week, will vote on the pact on Thursday, Green said. He declined to
give details of the agreement.
United desperately needs the wage cuts from the mechanics in order to
convince the U.S. government to grant a $1.8 billion loan that could
help it avoid bankruptcy.
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39965526/site=excite.reuters/area=money.news/aamsz=336x280>
Machinists union members surprised the airline and Wall Street last week
by voting to reject a previous deal calling for $700 million in proposed
pay cuts.
Shares of UAL Corp. (UAL
<http://money.excite.com/jsp/qt/full.jsp?time=0&symbol_search_text=UAL>
), the parent of United Airlines, tumbled nearly 31 percent on Friday,
and the Standard & Poor's credit rating agency cut the long-term credit
ratings of UAL and United to its third-lowest "junk" grade on fears that
the airline was running out of options to avoid bankruptcy.
After news of the revised agreement with mechanics on Monday, UAL stock
moved up to $2.85 a share in pre-market trading from a close of $2.51 on
Friday.
United also must decide what to do about a debt repayment of $375
million due on Monday, but it has a grace period until Dec. 16 before it
could be declared in default.
BLEEDING MONEY
U.S. airlines have been struggling since the Sept. 11 attacks, and
United has been particularly hard hit because it has some of the highest
costs in the industry.
The airline is bleeding about $8 million in cash daily and has
repeatedly warned that it would be forced into bankruptcy if it could
not secure some $5.2 billion in wage concessions over 5-1/2 years.
Wage cut agreements were negotiated with five separate unions and the
givebacks were contingent on every union taking part in the sacrifices.
United's strategy in negotiating the wage cuts was to convince a
government panel, set up after Sept. 11 to aid the airlines, to grant
the loan the carrier needs to avoid bankruptcy. The panel has yet to
rule on United's request.
The union representing United pilots had previously approved the wage
cuts, and on Saturday, flight attendants also voted to approve some $412
million in givebacks.
But the surprise rejection by the mechanics put United's whole plan at
risk. The 13,000 members of the International Association of Machinists,
District 141M, on Thursday said the membership rejected by a 57 percent
margin their portion of a deal to cut a total of $1.5 billion in wages.
Some 24,000 other IAM members, including public service workers and
baggage handlers, who are part of a separate bargaining unit called
District 141, approved their portions of the cuts, or $800 million.
United has had a history of poor labor relations and its employees have
been reluctant to take wage cuts even though they own 55 percent of the
airline. Both pilots and machinists are represented on the board of
directors.
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