Rottweiller
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- Nov 26, 2001
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CHICAGO (Reuters) - A pilots committee at United Airlines agreed late Friday to take up to $2.2 billion in wage cuts over five and a half years -- including an immediate 18 percent reduction -- and help the struggling carrier win federal backing of a big loan needed to avoid bankruptcy.
The pilots' master executive council will present the agreement to rank-and-file members for endorsement. The United branch of the Air Line Pilots Association has about 8,800 active members.
There was no indication of whether or not they would approve the agreement.
Captain Paul Whiteford, head of the council and a member of the UAL Corp. (NYSE UAL - News) board of directors, said in an interview that the 18-percent pay cut is scheduled to take effect December 1.
"We start with an 18 percent cut and then get some build-back in 2004," he said, returning to today's wages by the year 2008.
Details of the agreement were not released.
The Air Line Pilots Association is one of five labor groups negotiating with management at United, based in the Chicago suburb of Elk Grove Village, Illinois. Among the biggest unions, the machinists and flight attendants still have not reached their deals.
THE FIRST MAJOR DEAL
Recently, a coalition of the five unions agreed to $5.8 billion in wage cuts over five and a half years, but each union then began talking to management individually. Whiteford said the pilots' portion of the givebacks represents about 40 percent of total amount.
United had to obtain the wage cuts to win federal loan backing for 90 percent of a $2.0 billion loan. The No. 2 U.S. airline, which has some of the highest labor costs in the industry, applied for the assistance in late June but has not yet gotten approval from the Air Transportation Stabilization Board.
The company faces big fourth quarter debt payments, the first of which is scheduled for November 17.
The board was created to dole out up to $10 billion in guarantees to private sector loans after the Sept. 11, 2001, attacks threw the airline industry into a tailspin.
Without a federal loan guarantee, United is expected to file for Chapter 11 bankruptcy protection before the end of the year.
The airline is burning through more than $7 million daily as the demand for air travel remains below normal levels and fares stay low.
"We've taken a leadership role," Whiteford said. "If we don't get the loan, we'll be talking about an in-court restructuring.
The pilots' master executive council will present the agreement to rank-and-file members for endorsement. The United branch of the Air Line Pilots Association has about 8,800 active members.
There was no indication of whether or not they would approve the agreement.
Captain Paul Whiteford, head of the council and a member of the UAL Corp. (NYSE UAL - News) board of directors, said in an interview that the 18-percent pay cut is scheduled to take effect December 1.
"We start with an 18 percent cut and then get some build-back in 2004," he said, returning to today's wages by the year 2008.
Details of the agreement were not released.
The Air Line Pilots Association is one of five labor groups negotiating with management at United, based in the Chicago suburb of Elk Grove Village, Illinois. Among the biggest unions, the machinists and flight attendants still have not reached their deals.
THE FIRST MAJOR DEAL
Recently, a coalition of the five unions agreed to $5.8 billion in wage cuts over five and a half years, but each union then began talking to management individually. Whiteford said the pilots' portion of the givebacks represents about 40 percent of total amount.
United had to obtain the wage cuts to win federal loan backing for 90 percent of a $2.0 billion loan. The No. 2 U.S. airline, which has some of the highest labor costs in the industry, applied for the assistance in late June but has not yet gotten approval from the Air Transportation Stabilization Board.
The company faces big fourth quarter debt payments, the first of which is scheduled for November 17.
The board was created to dole out up to $10 billion in guarantees to private sector loans after the Sept. 11, 2001, attacks threw the airline industry into a tailspin.
Without a federal loan guarantee, United is expected to file for Chapter 11 bankruptcy protection before the end of the year.
The airline is burning through more than $7 million daily as the demand for air travel remains below normal levels and fares stay low.
"We've taken a leadership role," Whiteford said. "If we don't get the loan, we'll be talking about an in-court restructuring.
