United Unions Offer $1B Cost Cuts
Sep. 26, 2002
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CHICAGO (AP) _ United Airlines' union leaders said Wednesday they are ready to allow the financially struggling company to cut labor costs by $5 billion over five years, but would not agree to $9 billion over six years as the carrier had sought.
One union official said the employee proposal includes ``significant savings from management'' but he did not offer specifics.
The proposal by United's five employee unions came in response to a United recovery plan announced last month that included $1.5 billion in annual labor cost savings. The unions said their recovery plan will allow the carrier to improve its annual profitability by $2 billion or $3 billion.
A coalition of United unions delivered the proposal late Wednesday to Glenn Tilton, chairman of United's parent, UAL Corp. The group did not release its plan.
Machinists' union spokesman Joseph Tiberi said details would emerge once the unions had discussions with United.
``We feel this is a significant contribution,'' Tiberi said. ``It will help United Airlines avoid bankruptcy and obtain the financing it needs to recover from its current financial situation.''
In a statement, United said it appreciated employees' effort to address the company's financial needs.
``We welcome the framework from the union coalition, which has worked diligently to forge constructive recommendations for addressing some of United's most immediate financial needs,'' the airline said.
United has said it needs major concessions to secure a $1.8 billion federal loan guarantee and avoid bankruptcy. The Air Transportation Stabilization Board has demanded cost cuts before it would agree to back a loan, United has said.
The Elk Grove Village-based company has posted losses of nearly $3 billion over the past 18 months. United's financial woes have left it unable to secure private capital financing.
Tilton has not said publicly how much in labor cost savings he is seeking. His predecessor, Jack Creighton, wanted about $1.5 billion in annual labor concessions _ reportedly including about $700 million from pilots, $450 million from machinists and $100 million from flight attendants _ over six years.
One analyst said he was skeptical the unions were being sufficiently generous.
``The management said they needed the full amount of cost cutting,'' said Ray Neidl, an airline analyst at Blaylock & Partners. ``I'm a little doubtful that there's room for much maneuvering.''
Greg Davidowitch, president of the United branch of the Association of Flight Attendants, said in a statement that it was in his members' interest to be ``part of the solution that assists United in surviving its near-term financial crisis.'' Davidowitch said the union's recovery plan includes savings from management but he did not offer specifics.
In its letter to Tilton, the coalition said United has ``the most committed employees and strongest airline franchise in the world.'' United's employees own 55 percent of the company's stock.
``We will not let it fail,'' the unions said.
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