United will ask to throw out labor contracts By Marilyn Adams, USA TODAY Under a tight deadline to cut costs, United Airlines said Tuesday that it will take the first legal step next week toward voiding its labor contracts, by asking the bankruptcy court to let it throw out the contracts . The airline, which filed for bankruptcy protection last week, is seeking $2.4 billion a year in labor cost reductions through pay cuts and productivity improvements. That's double what unions had agreed to give up before United filed Chapter 11. Although United stressed that it still wants to get the cuts through negotiation, the announcement increased pressure on its labor unions. If a bankruptcy judge allowed United to throw out labor contracts, it could impose new pay and working conditions on employees. However, workers would have the right to strike. United spokesman Rich Nelson said filing for the right to reject the contracts doesn't mean the airline plans to do that. "If we don't file it, we lose the opportunity to use it later if we have to," he said. The airline said it needs to file the motion Dec. 26 because lenders of its $1.5 billion in bankruptcy financing require cost cuts to be in place Feb. 15. Although bankruptcy law allows a distressed company to ask the court's permission to reject labor contracts, few airlines have succeeded in persuading judges, bankruptcy experts say. A company has to demonstrate it has reached an impasse in talks with unions and might cease operations unless the contracts are undone. The bankruptcy law forces a company to meet more difficult conditions than apply to other contracts, says New York-based bankruptcy lawyer David LeMay. Paul Whiteford, head of United's pilots union, called the legal step "purely procedural," and United's largest union, the International Association of Machinists, said it wasn't surprised. But in a departure from his usually supportive tone, Whiteford sharply criticized United's approach to talks with the pilots, who are being asked for more givebacks than any other union. "The Air Line Pilots Association continues to ask for and has yet to receive critical information, most importantly a specific business plan that maps out the size, scope and shape of the company post-bankruptcy," Whiteford said. United's notice to the court came during a hearing on whether State Street Bank, which manages the company's employee stock ownership plan, could resume selling workers' shares in United parent UAL. Anticipating that UAL shares would be wiped out in a bankruptcy, State Street began selling shares in the fall. At United's request, the court last week ordered the sales halted. Tuesday, the judge left the temporary order in place until Dec. 30. Contributing: Dan Reed 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: (TnT News) http://www.tntmirror.com/ (TnT News) courtesy of Roj Trinbago Website & TnT Web Directory Roj's Trinbago Website: http://www.tntisland.com TnT Web Directory: http://search.co.tt *********************************************************