United sets May 1 deadline to scrap labor contracts

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United sets May 1 deadline to scrap labor contracts

CHICAGO (AP) =97 United Airlines has dramatically raised the stakes in its=
=20
bid to slash the airline industry's highest labor costs. Stalled in its=20
urgent effort to negotiate new long-term contracts, the bankrupt carrier=20
asked a bankruptcy judge Monday to scrap all of the union pacts unless new=
=20
agreements can be worked out by May 1. While that gives all sides more than=
=20
six weeks to work out deals, United's move provoked immediate criticism=20
from some of its biggest unions. The pilots' and flight attendants' unions=
=20
said the company was using the bankruptcy process to seek far deeper cuts=20
than are needed to make it successful again. If agreements aren't in place=
=20
by the May 1 deadline, the requested ruling by Judge Eugene Wedoff would=20
enable United to impose its own, stricter terms, helping it stay on its=20
lenders' timetable to show progress in bankruptcy or lose its financing.=20
That would send ripples through the beleaguered airline industry, where=20
other troubled carriers are closely watching United's efforts to lower=20
costs in hopes of making their own severe labor cost reductions.

It also would effectively wipe out decades' worth of negotiated contract=20
provisions at United, the world's second-largest airline. Nullifying=20
contracts is generally avoided in the industry, in part because of the=20
danger of alienating employees at a time when labor turmoil can doom a=20
struggling carrier. United also said the recent slowdown in travel and=20
bookings because of Iraqi war fears will force it to further reduce=20
employees' interim wages by 9% or more within a month if it doesn't get=20
"sufficient relief" from either the government or its lenders. The airline=
=20
has warned since January, when it secured interim wage cuts worth $70=20
million a month in savings, that it would begin the contract-scrapping=20
process if unions didn't agree to concessions by mid-March. But the talks=20
with unions remain bogged down over both the size of United's requested=20
labor cuts =97 31%, or $2.56 billion annually, through 2008 =97 and its plan=
 to=20
start a low-fare carrier, which would entail a lower wage scale and=20
separate work rules. United emphasized in an announcement that its priority=
=20
remains on negotiated contracts but that it had to file the motion Monday=20
to ensure that the necessary cost savings are in place by May.

"Between now and May 1st, we will continue to negotiate around the clock in=
=20
the belief that we can reach consensual agreements with all of our union=20
groups and render a ruling from the court unnecessary," said chief=20
executive Glenn Tilton. "However, all of us will have to accept changes=20
that are broad and deep, and those changes require that we take an entirely=
=20
new approach to competing and succeeding in this changed industry." All=20
three main unions said they would work to reach negotiated contract=20
settlements. A top Machinists' union official said in a posting to members=
=20
that time remains for consensual agreements with United and a successful=20
restructuring. Randy Canale, chairman of District 141 representing baggage=
=20
handlers and public contact workers, said negotiations "will continue=20
throughout this period in a nonstop effort to make action on today's court=
=20
application unnecessary. We trust you share our strong belief that this=20
great airline should not be destroyed in order to save it."

But pilots' union leader Paul Whiteford said he was "extremely dismayed"=20
and called United's proposal an "overreach" in terms of the cuts it=20
envisions. "Our contract is the product of 52 years of good-faith=20
collective bargaining conducted under federal labor law," he said. "To seek=
=20
to wipe out this contract by the stroke of a judge's pen is disheartening."=
=20
The Association of Flight Attendants was similarly critical. "United's=20
motion goes far beyond what's needed to successfully restructure in an=20
attempt to gut our contract, and places an inordinate burden on the flight=
=20
attendants," said union president Greg Davidowitch. In January, United's=20
pilots agreed to take temporary 29% pay cuts, flight attendants to 9% wage=
=20
reductions and dispatchers and meteorologists to 13%. Wedoff imposed=20
temporary 13% pay cuts on the machinists after they rejected the carrier's=
=20
proposal for emergency reductions. Elk Grove Village, Ill.-based United=20
filed the industry's largest bankruptcy on Dec. 9 after sustaining heavy=20
losses since 2000. It posted a record $3.2 billion loss for 2002.


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