This article from NYTimes.com has been sent to you by psa188@juno.com. Judge Orders Pay Cuts for Machinists at United January 10, 2003 By REUTERS Filed at 1:04 p.m. ET CHICAGO (Reuters) - A U.S. bankruptcy judge on Friday ordered temporary 13 percent pay cuts for United Airlines' unionized machinists, buying the airline more time to negotiate broad concessions from its entire unionized work force. United, a unit of UAL Corp. (UAL.N) 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. 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.'' United said in a statement it will now turn attention to getting longer-term solutions to emerge from bankruptcy. Meetings with unions about changing work rules and benefits have continued while the judge's decision was awaited. ``From the outset of this process, it has been United's objective to make the necessary changes in a collaborative way,'' said Chief Executive Glenn Tilton. He came on board the airline in early fall, inheriting thorny labor relations, particularly with the IAM. Its mechanics and other workers in 2002 received their first pay raises since 1994, only to have the airline turn around and ask for cuts. MUTED REACTION FROM UNION In a message to members, the IAM had little reaction to the order other than to say it would advise rank-and-file workers of additional developments. The IAM said the temporary pay cuts will remain in effect until either a broader concession package is negotiated and approved by the court or until the court rejects the current collective bargaining agreements altogether and United imposes new terms. ``The reductions will be applied to each factor that makes up total hourly pay, including base rates and all individual premiums,'' the IAM said. 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 retroactive 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, 2001, attacks on New York and Washington, and ultimately it was unable 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. United in a statement put its savings at about $70 million a month. The institutions that have loaned United a total of $1.5 billion to keep flying in bankruptcy are J.P. Morgan Chase (JPM.N), Citigroup (C.N), Bank One (ONE.N) and CIT Group (CIT.N). http://www.nytimes.com/reuters/business/business-airlines-united-machinists.html?ex=1043225803&ei=1&en=bec297eb1ea0f927 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