=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SF Gate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/chronicle/archive/2003/01= /30/BU227348.DTL ---------------------------------------------------------------------- Thursday, January 30, 2003 (SF Chronicle) AIRLINE IN CRISIS/2 airline unions furious at United/Reports of break-up pl= an, job cuts have pilots, flight attendants mad they've been cut out of tal= ks David Armstrong, Chronicle Staff Writer Two employee unions sharply criticized United Airlines on Wednesday for failing to include them in talks on a restructuring plan that could result in a 25 percent cutback in their ranks as well as another round of pay cuts. United's 8,000 pilots, who recently accepted pay cuts of 29 percent to help the ailing airline climb out of bankruptcy, issued a furious statement Wednesday after a published report said 2,000 pilots could lose their jobs and employees of United's planned low-fare carrier would get significantly lower pay than workers at the parent airline. United, striving to emerge from Chapter 11 bankruptcy protection, is reportedly ready to present its recovery plan to investors and unions today and Wednesday. RESTRUCTURING UAL -- Plan needs Bankruptcy Court approval in order to satisfy lenders that are advancing the airline $1.5 billion in debtor-in-possession financing. -- United's president and CEO, Glenn Tilton, will present details of the recovery plan today to the company's board of directors. -- Published reports allege that the airline is planning to reduce the number of pilots and flight attendants by 25 percent, implement a two-tier pay structure and launch a new discount carrier. The airline must persuade lenders, which have advanced $800 million of planned $1.5 billion debtor-in-possession financing, that it has a viable plan to reorganize its operations and return to profitability. UAL is still waiting for the $700 million balance. However, published reports of possible job cuts infuriated the Air Line Pilots Association, which has seen its United unit decline from 9,600 members a year ago to 8,000 now. That number would fall to 6,000 if the reports of job cuts prove to be correct. "Inexplicably, in the seven weeks since United filed for Chapter 11 bankruptcy protection, senior management has locked the pilots out of the process and refused to engage in any meaningful negotiations over our future," said Paul Whiteford, an ALPA spokesman. "Instead, they appear to be proposing a plan to break up United Airlines by giving routes, aircraft and other assets to another company with a whole set of new managers and employees. If so, United's management is now telling us to give up on United Airlines as we know it. "We will oppose management's break-up plan by every lawful means availab= le to us," Whiteford said, without elaboration. The Association of Flight Attendants, which represents 20,000 United flight attendants, was also upset about being left out. "To date, we still do not have the information we need to further our ability to reach a collaborative and consensual agreement that will enable United to successfully restructure," said Greg Davidowitch, the AFA's president. "Now it appears that management has begun presenting bits of a trendy strategy for our airline to the media," he said. "And their version of this trendy strategy could not be worse. "Any strategy that calls for the elimination of a large part of our airline -- United Airlines -- is not a strategy that will succeed." In a statement late Wednesday, United did not directly reply to the union charges but instead defended its plan to start a low-fare carrier. That low-fare airline would compete with the likes of Southwest and JetBlue, as well as Song, the new, low-fare airline Delta Air Lines is preparing. "The task before us is to transform United into a successful and aggressive competitor for the long term for all customers and across all markets," the statement said. "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." UAL, whose headquarters are in Elk Grove Township, Ill., has said it nee= ds $2.4 billion in cost savings annually, much of it in the form of reduced wages and benefits, to return to profitability. A report published in the Chicago Tribune, citing anonymous sources, suggested that United might close a maintenance facility in Indianapolis and consolidate its operations elsewhere, perhaps moving repair lines for its Boeing 737s to San Francisco, where the ailing airline already has a large maintenance plant. "There have been a lot of rumors flying around, but there's nothing concrete," said Michael McCarron, a spokesman for SFO. "We have not talked to United directly about this." SFO, a nonvoting member of the UAL creditors' committee, would welcome a= ny infusion of work, McCarron said. "If there are more jobs, that would be great," he said. Lufthansa German Airlines, which holds a seat on the UAL creditors' committee and is a partner of United in the Star Alliance, declined comment on the airline's business plan. "We value United. They're a very important partner for us," said Lufthan= sa spokeswoman Jennifer Urbaniak. "We have full confidence that they will resolve their problems." UAL has lost $4 billion since mid-2000. The airline has been hammered by the slumping economy, especially the collapse of the high-tech bubble, which had increased traffic at SFO, one of United's hubs, as well as the Sept. 11 terrorist attacks, in which two hijacked United aircraft were used. The company will announce its 2002 financial results on Friday. Airline industry analysts expect losses to be huge. Last week, American Airlines announced a 2002 loss of $3.5 billion, a record for the aviation industry. The company's pilots accepted 29 percent wage cuts, flight attendants agreed to lower wages 4 percent earlier this month, and the bankruptcy court imposed 14 percent pay cuts on employees represented by the machinists union. Those cuts are for an interim period while the company seeks to negotiate permanent pay, benefit and work-rule changes. United has been aiming to wrap up those talks by mid-March. UAL stock closed at $1.07 Wednesday on the New York Stock Exchange, down= 8 cents. In a related development, UAL Corp.'s lead bankruptcy law firm submitted= a bill for $2.39 million for three weeks' work, according to court papers. According to Bloomberg News, Kirkland & Ellis, a Chicago firm, filed the bill Monday for work done from UAL's Dec. 9 bankruptcy filing through Dec. 31. Work on labor contracts for UAL's United Airlines unit accounted for $471,000 of the total, at an average rate of $372 an hour, according to the fee request. E-mail David Armstrong at davidarmstrong@sfchronicle.com.=20 ---------------------------------------------------------------------- Copyright 2003 SF Chronicle