Bryan D
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- May 30, 2004
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NEW YORK (Dow Jones)--Members of the union representing mechanics at UAL Corp. (UALAQ) rejected a contract proposal negotiated by airline managers and union leaders, and threatened to strike if a bankruptcy judge changes their current contract.
In a press release Friday, the Aircraft Mechanics Fraternal Association union said members "voted overwhelmingly" to reject the new contract, which would have cut wages and benefits. The company, which operates United Airlines, has said the labor cost cuts are necessary to exit bankruptcy.
"The employees have shown that they do not have faith in the company's ability to successfully return United Airlines to profitability. Management at United has been unsuccessful in past attempts to become profitable after employees agreed to concessions. Our members are tired of subsidizing mismanagement," said the union's national director, O.V. Delle-Femine, in a statement.
United officials weren't immediately available to comment on the mechanics' vote.
The Chicago airline has already pared $2.5 billion from its labor costs, but said late last year that it needs to wring another $725 million in annual cuts in order to strengthen the balance sheet during a search for financing to exit bankruptcy.
Because UAL is operating under bankruptcy-court protection, executives could ask the bankruptcy judge to impose cost cuts on the mechanics, and to terminate the mechanics' existing contract.
The union said in the press release its members have authorized a strike if the current contract is changed.
Already the bankruptcy judge has blocked the airline's attempt to cut labor costs by terminating employee defined-benefit pensions. The bankruptcy judge nixed a pilot contract that would have allowed the airline to dump the pilot pension, so long as other union groups agreed to have their pensions terminated as well.
Pilots are in the midst of voting on a new contract proposal. Voting ends Monday.
The downward spiral of the airline industry continues. It seems like every day there is more bad news. I'm seriously considering a career change.
In a press release Friday, the Aircraft Mechanics Fraternal Association union said members "voted overwhelmingly" to reject the new contract, which would have cut wages and benefits. The company, which operates United Airlines, has said the labor cost cuts are necessary to exit bankruptcy.
"The employees have shown that they do not have faith in the company's ability to successfully return United Airlines to profitability. Management at United has been unsuccessful in past attempts to become profitable after employees agreed to concessions. Our members are tired of subsidizing mismanagement," said the union's national director, O.V. Delle-Femine, in a statement.
United officials weren't immediately available to comment on the mechanics' vote.
The Chicago airline has already pared $2.5 billion from its labor costs, but said late last year that it needs to wring another $725 million in annual cuts in order to strengthen the balance sheet during a search for financing to exit bankruptcy.
Because UAL is operating under bankruptcy-court protection, executives could ask the bankruptcy judge to impose cost cuts on the mechanics, and to terminate the mechanics' existing contract.
The union said in the press release its members have authorized a strike if the current contract is changed.
Already the bankruptcy judge has blocked the airline's attempt to cut labor costs by terminating employee defined-benefit pensions. The bankruptcy judge nixed a pilot contract that would have allowed the airline to dump the pilot pension, so long as other union groups agreed to have their pensions terminated as well.
Pilots are in the midst of voting on a new contract proposal. Voting ends Monday.
The downward spiral of the airline industry continues. It seems like every day there is more bad news. I'm seriously considering a career change.
