United employees to pay service charge on tickets

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United employees to pay service charge on tickets  =

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Monday December 23, 3:57 PM EST =


CHICAGO, Dec 23 (Reuters) - Bankrupt United Airlines said on Monday it wa=
s reinstating service charges for all employee tickets to help it achieve=
 $1.4 billion in non-labor cost savings.

The charges, which take effect Jan. 1, will cover the $32 million annual =
cost of providing employee travel benefits, the airline said in a recorde=
d message to employees.

United, a unit of Elk Grove Village, Illinois-based UAL Corp. (UAL), file=
d the largest bankruptcy in aviation history on Dec. 9.

The airline is under increasing pressure to slash costs in order to meet =
agreements with banks that have lent the carrier money to continue operat=
ing while in bankruptcy.

Previously, United employees did not pay service charges on coach or busi=
ness class tickets for domestic or international travel, UAL spokesman Je=
ff Green said. They paid government taxes and paid service charges only t=
o travel in first class, he said.

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The airline's workers will continue paying government transportation, sec=
urity and facility taxes on all tickets in addition to the service charge=
s. The new service charges also apply to United retirees, the airline sai=
d, but do not apply to employee tickets for United Express flights.

The carrier also said that employees on any paid or unpaid sick leave wil=
l now need supervisor permission to use their employee travel benefits.

In addition, United is changing the way it calculates fares for employee =
companions traveling on the airline.

As of March 1, employee companions will receive a 90-percent discount off=
 of full-fare economy-class tickets, Green said. Previously, companion fa=
res were determined by a formula based on miles flown.

The airline said it was sending letters to employees detailing the change=
s to their travel benefits.

In other news, United said on Monday that KLM Royal Dutch Airlines (KLM) =
(KLM) will cancel an agreement providing discounted fares to United emplo=
yees as of Dec. 31. KLM has decided it cannot honor current reduced rate =
agreements with United because of KLM's new automation and tax issues, UA=
L said.

KLM Chief Executive Leo van Wijk said in an interview published on Monday=
 that the Dutch carrier would have to cut costs to prevent another loss i=
n the fiscal year starting in April 2003.

All tickets issued before Dec. 31 will be valid for travel completed on K=
LM within 90 days. United said it was trying to negotiate a new arrangeme=
nt with KLM for discounted employee fares.

UAL shares were down 19 cents, or about 14 percent, at $1.11 on the New Y=
ork Stock Exchange on Monday afternoon. =



=A92002 Reuters Limited. =


Roger
EWROPS

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