Judge orders temporary pay cuts for UAL machinists

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Judge orders temporary pay cuts for UAL machinists=20


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Friday January 10, 9:58 AM EST=20

(Adds details from court order, background)
By Kathy Fieweger
CHICAGO, Jan 10 (Reuters) - A U.S. bankruptcy judge on Friday ordered
temporary 13 percent pay cuts for unionized machinists at United
Airlines, buying the airline more time to negotiate broad concessions at
its entire unionized work force.
United, a unit of UAL Corp. (UAL) and the world's second-largest
airline, filed for bankruptcy on Dec. 9.
Since then, four of the carrier's five unions had agreed to temporary
pay cuts to help the airline reorganize and meet specific financing
requirements by lenders.
But the International Association of Machinists, representing about
37,000 workers, argued to the judge that the airline had not shown why
the cuts were needed now.
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In his ruling issued on Friday morning, U.S. Bankruptcy Judge Eugene
Wedoff agreed with the airline that changes to the IAM's collective
bargaining agreements were "essential, at the present time, to continue
United Air Lines Inc.'s business and to avoid irreparable damage to its
estate."
Wedoff said to be fair to the other unions, which agreed to take pay
cuts effective Jan. 1, the IAM union members' pay will actually be cut
by 14 percent from Friday until May 1. That would be equivalent to the
13 percent reduction retroactively to Jan. 1 that the company was
seeking, he wrote.
Pilots' pay is being cut the most, at 29 percent, and flight attendants'
salaries are being trimmed by 9 percent.
Smaller unions representing flight dispatchers and meteorologists are
also taking 13 percent cuts.
United has about 80,000 employees, nearly 80 percent of whom are
represented by labor unions.
AIRLINE SAVING $80 MILLION A MONTH
The airline, based in Elk Grove Village, Illinois, had some of the
highest labor costs in the industry as it headed into bankruptcy.
Already hurt by a slowdown in lucrative business travel, United saw its
losses balloon after the Sept. 11 attacks on New York and Washington and
ultimately was not able to keep enough cash to pay various debt
obligations.
A source familiar with the matter told Reuters the magnitude of the pay
cuts now secured from the unions represents the total amount of what was
needed to meet requirements of loans known as debtor-in-possession
financing.
The labor savings represent about $80 million per month in cash, he
said. Now, the airline has until May to make sweeping changes to work
rules that unions follow, he said.
The institutions that have loaned United a total $1.5 billion to keep
flying in bankruptcy are J.P. Morgan Chase (JPM), Citigroup (C), Bank
One (ONE) and CIT Group (CIT).=20

=A92002 Reuters Limited.=20

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