This article from NYTimes.com has been sent to you by psa188@juno.com. Unions Bristle at United's Proposed Cuts December 17, 2002 By EDWARD WONG Union officials at United Airlines said yesterday that they were shocked and angered by the size of the concessions the company was demanding of them to meet cost-cutting stipulations set by lenders. The Association of Flight Attendants posted a message on its Web site over the weekend telling members that United wanted to cut $2.4 billion a year from labor costs and that the company needed to reach agreements with its unions by mid-February to continue to obtain financing. The $2.4 billion in annual cuts would be two and a half times what the unions tentatively agreed to in November. At the time, United sought the concessions to bolster its chances of obtaining a loan guarantee from the federal government. The unions agreed to $5.2 billion over five and a half years, but those agreements were voided when the government rejected the loan guarantee request on Dec. 4. Now that UAL, the parent company of United, is operating under bankruptcy protection, it is back at the table with its unions, which are indicating that the talks are not going well. "It's just staggering," Sara Dela Cruz, a spokeswoman for the flight attendants' union, said of United's proposed cuts. "We put our best foot forward to restructure outside of bankruptcy. Now this is two and a half times that." "We would certainly hope that we could argue successfully that the flight attendants' contribution doesn't have to change from before," she added. One union official said that United had not told the flight attendants exactly how much they would need to contribute toward the $2.4 billion goal but began the process by pointing out where savings could be extracted from the union contract. As part of the earlier proposal, flight attendants voted on Nov. 30 to allow the company to cut wages, benefits and work rules to come up with $412 million. The pilots' union was equally flustered by United's recent request. It declined to comment on details in the continuing talks but did nothing to hide its shock. "We were stunned and puzzled and disappointed about the material we received from the company on Friday," Lewis Goldberg, a spokesman for the pilots' union, said yesterday. "We're going to take time to see what this means." Although the flight attendants' union said the cost-cutting agreements needed to be worked out by the middle of February, Mr. Goldberg said the pilots were not working under a firm deadline. United faces pressure to cut costs drastically because of a timetable laid out by the four lenders who agreed to give the company $1.5 billion in debtor-in-possession financing. United has to meet certain cash flow projections each month to maintain access to the money. When United was trying to obtain the federal loan guarantee, the pilots' union gave the most support to cost cuts; being an owner of 25 percent of the airline, the pilots had the most to lose in a bankruptcy filing. Their union agreed to $2.2 billion in cuts. "We want to make it clear that we're not going to be penalized in this process by having had a leadership role in working with the company," Mr. Goldberg said. Rich Nelson, a spokesman for United Airlines, declined to comment on the concession talks. The machinists' union posted on its Web site the terms that United was seeking from its workers. The cuts are much deeper than the previous round of concessions United had proposed: an immediate 13 percent cut in hourly pay; an elimination of raises from June 1, 2003, to July 1, 2004, previously agreed to; a removal of some conditions that make it difficult for the company to contract out jobs; an allowance for an increase in the number of part-time ramp workers. A machinists' union spokesman did not return calls seeking comment yesterday. The union said on its Web site that it was reviewing the terms with its financial and legal advisers, and that no further meetings were scheduled with management. Neither the pilots nor the flight attendants met with management yesterday, either. The unions are aware that if they do not reach agreements with United, the company can ask the bankruptcy judge to nullify the union contracts. Despite the thorny negotiations, one lender continued to be optimistic that United would pull through. "Regardless of what happens in the business cycle, we're comfortable with the overall package here; with our exposure, with the overall collateral package, with the company's prospects for reorganization," said Mitch Drucker, senior vice president for business credit at the CIT Group, which agreed to provide $300 million of the $1.5 billion in financing. "We feel very good that this company will eventually make it out of bankruptcy." http://www.nytimes.com/2002/12/17/business/17AIR.html?ex=1041135360&ei=1&en=c4a58f2020c2b0d0 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