SF Gate: Unions OK cuts to help save United/Airline seeks to save $2.5 billion over the next 6 years

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/12/BU11329.DTL

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Saturday, April 12, 2003 (SF Chronicle)
Unions OK cuts to help save United/Airline seeks to save $2.5 billion over =
the next 6 years
George Raine, Chronicle Staff Writer


   The last of United Airlines' unions on Friday tentatively agreed to a de=
ep
cut in compensation to give the nation's second-largest airline a fighting
chance to emerge from bankruptcy and survive.
   The International Association of Machinists' District 141-M, representing
United's 13,000 mechanics and based in South San Francisco, tentatively
agreed to pay and benefits cuts and work rule changes that will save the
carrier $349 million annually and $2.09 billion over six years.
   Also on Friday, the Air Line Pilots Association said United's pilots had
ratified a labor agreement that would give United annual labor savings of
$1.1 billion and $6.6 billion over six years.
   United is seeking to save $2.56 billion in labor costs annually and $15.4
billion over six years.
   United's chairman, president and chief executive, Glenn Tilton, said the
tentative agreements are "an extraordinary accomplishment for United,"
even though the airline, with the exception of a few low-cost success
stories, is flying through a devastating industry slump worsened by the
war in Iraq and the SARS virus.
   "Everyone involved in all of these negotiations came together with a
commitment to be honest and fair in tackling tough issues, with their
sights set on the long-term well-being of the people of United," said
Tilton.
   "With all of our labor groups aligned, I feel confident that United's
transformation into a more efficient, effective airline, able to compete
across markets and product lines, is on track to succeed."
   The mechanics agreed to a 13 percent reduction in hourly wage rates, a 20
percent copayment toward the cost of health insurance and modified work
rules. Current pensions, vacations and holidays were preserved.
   These same mechanics in November rejected a request from management for
$1. 5 billion in wage concessions as part of the airline's effort to stop
itself from sliding into bankruptcy. United filed for Chapter 11
bankruptcy protection two weeks later.
   "From the moment United Airlines declared bankruptcy on Dec. 9, a painful
restructuring was inevitable," said Scotty Ford, president of the IAM's
District 141-M. "Despite proposed changes to pay, benefits and working
conditions, this agreement preserves the essential value of a job at
United Airlines," he said.
   A ratification voted will take place April 29.
   The higher-paid pilots Friday ratified the contract proposal they had
tentatively approved March 27. They will take a 30 percent pay cut and
agreed to work rule revisions and increased productivity, saving $1.1
billion each year, according to the airline. The proposal was approved by
a vote of 5,205 (82.2 percent) to 1,125 (17.8 percent). Approximately 81.7
percent of eligible pilots voted.
   The chairman of the Air Lines Pilots Association's United unit, captain
Paul Whiteford, said, "The pilots of United Airlines have now stepped up
for their share of commitment necessary to save this company in the face
of the worst crisis in airline history. This agreement allows the company
to reorganize under Chapter 11 and emerge as a viable, competitive airline
against both low-cost carriers and other network carriers."
   If United did not have these two and four other union agreements in hand,
the airline's lawyers were prepared to go to bankruptcy court on Monday
and argue a motion to void the airline's existing labor contracts and get
the court to impose new wages and work rules.
   Three other unions -- the Association of Flight Attendants, the
Professional Airline Flight Control Association and IAM District 141,
representing ramp and warehouse workers, ticket agents and others -- have
also reached tentative agreements with United. United's meteorologists,
represented by the Transport Workers Union, ratified contract changes in
March.
   Of the mechanics' contract proposal, Steve Jones, a 19-year veteran at
United's maintenance facility at San Francisco International Airport,
said, "We thought it would be a lot worse. But you do not have too many
options at this point. The longer you can stay employed the better off you
are."
   E-mail George Raine at graine@xxxxxxxxxxxxxxxx=20
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Copyright 2003 SF Chronicle

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