=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/chronicle/archive/2002/12= /17/BU31889.DTL ---------------------------------------------------------------------- Tuesday, December 17, 2002 (SF Chronicle) UNITED AIRLINES/Chapter 11/United workers asked to dig even deeper/Airline = says it needs even bigger wage, benefit cuts to stay aloft David Armstrong, Chronicle Staff Writer Bankrupt United Airlines shocked union leaders over the weekend by more than doubling the amount of wage and benefit concessions the company had previously said were needed to turn the ailing airline around. United's parent company, UAL Corp. of Elk Grove Township, Ill., told leaders of pilots, mechanics and flight attendants unions that they would have to come up with $2.4 billion in reduced wages in the next year. By contrast, UAL had secured union agreements for $1 billion annually in wage savings over the next 5 1/2 years before its Chapter 11 bankruptcy filing on Dec. 9. The additional wage cuts were requested Friday in meetings held in Chica= go between UAL executives and union leaders, who have secured three seats on the 13-member UAL unsecured creditors committee. United spokesman Chris Brathwaite on Monday confirmed that UAL has made new proposals to the company's employees, who own 55 percent of the sharply devalued company, but he declined to discuss specifics. "We're getting input from our unions, and have reached a common understanding on how to emerge from Chapter 11," he said. Reeling from the twin blows of the recession and Sept. 11 terrorist attacks, which used two hijacked United jetliners, the carrier has lost $4 billion since mid-2000. United, the world's second-largest airline and the dominant carrier at S= an Francisco International Airport, where it accounts for half of all passengers and flights, continues to fly at near-normal levels as it restructures. United employs 16,000 people in Northern California. The company intends to hold onto lucrative international routes and plans to start a low-cost service on the West Coast, UAL's president, chairman and chief executive officer, Glenn F. Tilton, said last week. United serves Shanghai, Beijing and Tokyo from SFO, routes that have suffered in the economic downturn of the past two years but that are considered prime routes in good times. The Association of Flight Attendants, which represents 24,000 United flight attendants, said in a posting on its Web site that UAL executives said the deep wage and benefit cuts were demanded by UAL's main creditors as a condition of debtor-in-possession financing. J.P. Morgan Chase, Bank One, CIT Group and Citibank have advanced UAL $1.5 billion. United drew down an initial $800 million last week to keep operating. It needs additional labor concessions to tap the remaining $700 million, the AFA posting said. "Those cost reductions must be secured by mid-February," the union posti= ng said. "Thus, things will happen very fast. "Our negotiating committee will work to minimize the cuts as much as possible within conditions set forth by the lenders," the union said in a statement to its members. "We want to keep as much control over this impossible situation as we can." United, which has some of the highest costs in the industry, is trying to reduce expenses to emerge from bankruptcy within 18 months. The timetable was set by Tilton, who assumed the top job in September. United's unions scrambled Monday to digest the company's new proposals a= nd formulate a response. "We were stunned and puzzled by the material we received from the company on Friday," said David Kelly, a spokesman for the Air Line Pilots Association, which represents 8,800 United pilots. "Having said that, we remain committed to working with the company on a rational economic plan," Kelly said. He declined to comment on details of the proposals or what share of the reported $2.4 billion would be picked up by the pilots, the airline's most highly paid employees. The International Association of Machinists and Aerospace Workers, which represents United machinists, mechanics and other workers, released some details of what UAL is reportedly asking for. The company is calling for a 13 percent wage cut for the union's members, nearly double the 7 percent that the United mechanics unit of the IAM rejected by a decisive margin before the Chapter 11 filing. United's proposal also calls on machinists to pay 20 percent of medical and dental benefit plans and change work rules that keep the company from contracting out work that might result in worker layoffs. United can ask the court to nullify labor contracts and impose new terms if it can't reach agreement with the workers. The unions would then have the option to strike, said Association of Flight Attendants spokesman Jeff Zack, who noted that the flight attendants union has no plans to launch a strike. "It's not an option that anybody really considers a good option," Zack told Bloomberg News. If United is unable to hammer out new concessions with its employees, the company could be forced to file for Chapter 7 liquidation. Chronicle news services contributed to this report. / E-mail David Armstrong at davidarmstrong@sfchronicle.com.=20 ---------------------------------------------------------------------- Copyright 2002 SF Chronicle