=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/2003/02= /15/BU147214.DTL ---------------------------------------------------------------------- Saturday, February 15, 2003 (SF Chronicle) United increases goal for pay cuts/Lack of explanation angers labor unions George Raine, Chronicle Staff Writer United Airlines, struggling to exit from bankruptcy, has increased its labor cost savings target to $2.56 billion from $2.4 billion, two of the airline's unions said Friday. Both unions, one representing pilots and the other flight attendants, complained that the world's second-largest airline offered no explanation for the changing target. A United spokeswoman said that its revised plan for transformation will continue to evolve. "That evolution occurs as we gather input from all our constituents including our unions, the creditors' committee, (Bankruptcy Court), lenders and others who have a stake in our future," spokeswoman Chris Nardella said in a statement. News of the larger wage concessions came after United Chief Executive Officer Glenn Tilton said in San Francisco Friday that the company is seeking a collaborative overhaul of the company with employees to return to profitability. For their part, United's unions say they want to help make that happen, but they reacted quickly to the new figure. "We will not accept any reduction to the benefits of our collective bargaining agreement unless the company can provide economic justification for such actions," said David Kelly, a spokesman for United's 8,000 pilots in the Air Line Pilots Association. "This management proposal places the entire burden for the increased cuts on the backs of the lowest-paid employees at United," the Association of Flight Attendants said in a statement. "What we've been given to date is not a business plan. It is a marketing presentation, and it's going over like a ton of bricks with the employees who make up United Airlines," said Greg Davidowich, president of the United unit within the union. United filed for Chapter 11 protection on Dec. 9 and subsequently posted= a loss of $3.2 billion for 2002, following a loss of $2.1 billion in 2001. The carrier has said it needs major concessions if it is to return to profitability. In San Francisco, Tilton told Chronicle editorial writers and reporters, "If we can compete, we can grow. We can grow jobs, we can grow durability, we can grow sustainability, we can grow prosperity." Tilton is touring the airline's major hubs seeking support for a plan th= at is a work in progress. Its centerpiece is a yet-unnamed discount airline that would compete with Southwest and JetBlue, two airline industry success stories. United wants to reassign employees to the discount airline and pay them less than workers at the main airline, but Tilton did not answer the question of how those redeployed employees would be identified. "The complexity of our circumstances are to get our employees' hearts and minds captured behind the strategy. Because of the nature of our association with our employees, it requires collective bargaining," he said. "We have to now sit down with union leadership and spell out to them why it is in their best interests and come to a consensus view, for all of us, that this is the right thing for us to do," he said. Friday, the pilots union reiterated its opposition to a plan "that creat= es a separate corporation that incorporates a separate seniority list, separate employee group and separate contract." Paul Whiteford, head of the pilots union, added that while members are eager to help the carrier recover, United's request for take-backs is unreasonable. United's problem is that it cannot expect financing from the capital markets until it demonstrates it is following a clear path to profitability. But Tilton noted the airline has the highest labor costs in the business, and "it is the least productive, and that has happened over a period of years." He added, "It is going to have to change if we again are going to be a competitive enterprise." United's theory is that it can compete with discount carriers because it comes equipped with attractive United brand offerings, such as a frequent- flier program, but so do the others. Cutting costs is at the heart of United's survival, said Douglas Hacker, the airline's executive vice president for strategy. "Making sure (employees) understand this is necessary to be successful," he said. Tilton came to United in September after a career at Texaco, where he ro= se to serve as chairman and chief executive, and then as vice chairman at the merged ChevronTexaco Corp. Asked his impression of United during his oil and gas days, he said the airline industry as a whole long did what was expedient. Decisions were made to "simply perpetuate the entity, to simply continue to be," Tilton said. "The reason that happened was because occasion for dramatic change did n= ot present itself," Tilton said. "If we don't make change of this magnitude, we won't have the confidence of the capital markets. "The capital markets will once again come to the conclusion that we have once again been expedient, that we once again have been temporary, we have made a palatable change, and they won't invest in us. If they don't invest in us, we're not going to get out of Chapter 11. It's as simple as that. That is the discipline we need." E-mail George Raine at graine@sfchronicle.com.=20 ---------------------------------------------------------------------- Copyright 2003 SF Chronicle