This article from NYTimes.com has been sent to you by psa188@juno.com. Two Unions Say United Plans to Create Low-Cost Airline January 30, 2003 By EDWARD WONG The pilots' and flight attendants' unions at United Airlines lashed out yesterday against the company's plan to create a low-cost carrier, accusing executives of dismantling United. The unions said they were vehemently opposed to the proposal, under which the new carrier would operate with separate pay scales, work rules and seniority lists. In a letter to the union membership, Paul Whiteford, chairman of the United chapter of the Air Line Pilots Association, said that even though United had not made any announcements about its new carrier, it had told the union of its plans. The letter said executives had proposed "giving away some of our most modern narrow-bodies to another company and allowing that company to operate a large part of the United network with non-United employees." In an interview, Mr. Whiteford said that "if this is what they want to do, it's a nonstarter," and that the creation of such a low-cost carrier would "lead to the death of United Airlines." The Association of Flight Attendants largely echoed the hostility of the pilots to the plan. It added in its statement that United was proposing to shift 20 percent to 40 percent of its flights and workers to the new carrier. Mr. Whiteford said that the pilots were not wholly opposed to competing with low-cost carriers like Southwest Airlines, but that they did not want United to operate a separate company. Since the airline, a unit of the UAL Corporation, filed for Chapter 11 bankruptcy protection on Dec. 9, United's chief executive, Glenn F. Tilton, has said he wants to create a low-cost carrier to recapture market share lost to airlines like Southwest, JetBlue Airways and Frontier Airlines. United has not publicly given out detailed information on its plans for that low-cost carrier, but it is expected to present a reorganization plan to its board today that would further explain the operation. "We believe that a low-cost carrier, fully integrated into a global hub-and-spoke network for the first time, will be a critical and dynamic element in United's future strength," the company said yesterday in a written statement issued in response to Mr. Whiteford's criticisms. That implies that the new carrier will connect into United's hubs, like Chicago and San Francisco. United once tried running a low-cost carrier - Shuttle by United - to compete with Southwest in California. It eventually shut down the operation because it could never get the costs low enough. Mr. Tilton has said that United's second try would use a different business model. Mr. Whiteford's statements came one day after Delta Air Lines said that service would begin April 15 on its own second attempt at a low-cost carrier, Song. Delta said Song's pilots would work under the same pay scale and labor agreement as the pilots in Delta's main operation but would work more productive hours each day. Its first attempt, Delta Express, will shut down when Song starts up. Robert W. Mann Jr., an airline consultant based in Port Washington, N.Y., said that the hostility from United's pilots seriously endangered the company's chances of successfully emerging from its Chapter 11 bankruptcy reorganization. The pilots voted on Jan. 7 to accept a 29 percent pay cut until May 1 as part of $70 million a month in concessions from all the labor groups. United is now negotiating with its five unions to get $2.4 billion a year in concessions over five years. "It increases the probability that the thing goes to a meltdown in Chapter 7 if you have public insurrection in the ranks," Mr. Mann said, referring to United's chances of having to liquidate its assets instead of reorganizing. "The issue from Day 1 has been ensuring that employee morale does not deteriorate." But Mr. Whiteford, in his letter to members, pointed out yet another morale deflator. United, he said, is trying to cut back the pilots' pension plans and fold them into a universal plan covering all the labor groups. He said United wanted to eliminate a tax-deferred trust fund set up solely for the pilots that had swelled to $2.2 billion at the end of 2001, the last year for which public data are available. Joe Hopkins, a United spokesman, said the company had no comment on the pension issue. http://www.nytimes.com/2003/01/30/business/30UNIT.html?ex=1044936075&ei=1&en=18bc8f3890278398 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