Freight Dog
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CHICAGO (Dec. 27) - In an effort to protect its $1.5 billion in interim financing, bankrupt United Airlines is heading to court to target its labor contracts.
United has until Feb. 15 to cut costs or it could lose the loans it has received to keep it flying. So it plans to file a motion Friday in U.S. Bankruptcy Court, asking a judge to begin the process of voiding contracts with its unions.
Both United and the six unions view the filing as a procedural move.
If the request is granted, United would have 51 days to negotiate an agreement with unions to cut wages by $2.4 billion. Otherwise, a federal judge could have the final say on labor contracts.
United - the world's second biggest airline - says its labor costs are the highest in the industry. So far, the company has not outlined anything specific about its latest cost-cutting proposals.
Spokesman Joe Hopkins said the carrier had no comment beyond a one-sentence news release announcing its plan.
Shares in United parent UAL Corp. rose 13 cents to $1.42 each in early trading Friday on the New York Stock Exchange.
Union representatives have criticized Elk Grove Village, Ill.-based United for giving them a list of proposed givebacks instead of a complete business plan. Labor groups want to see such a plan before agreeing to cost cuts, Air Line Pilots Association spokesman Dave Kelly said Thursday.
''Until we get that information, it's really hard for us to determine what the company is asking for and how we can work with the company to reach that rational business plan,'' Kelly said.
The union representing United flight attendants called the company's filing a ''positive development.'' Union officials said they'll keep working with United to help the airline recover.
In a posting on its Web site, the union representing United ground workers advised its members late Thursday that the group was ''not presently engaged in negotiations with United Airlines'' and that the union did not ask the carrier to delay its motion.
United's statement said it was delaying the filing in response to ongoing negotiations and labor union requests.
United needs to slash its labor costs by $2.4 billion annually to satisfy its lenders, according to the flight attendants' union. The unions already have agreed on about $1 billion in yearly cuts as part of United's failed try for a government loan guarantee.
The airline warned in its Chapter 11 bankruptcy filing on Dec. 10 that cuts were coming that would go well beyond its previous financial recovery plan, which called for $5.2 billion in labor cutbacks by 2008.
AP-NY-12-27-02 1108EST
United has until Feb. 15 to cut costs or it could lose the loans it has received to keep it flying. So it plans to file a motion Friday in U.S. Bankruptcy Court, asking a judge to begin the process of voiding contracts with its unions.
Both United and the six unions view the filing as a procedural move.
If the request is granted, United would have 51 days to negotiate an agreement with unions to cut wages by $2.4 billion. Otherwise, a federal judge could have the final say on labor contracts.
United - the world's second biggest airline - says its labor costs are the highest in the industry. So far, the company has not outlined anything specific about its latest cost-cutting proposals.
Spokesman Joe Hopkins said the carrier had no comment beyond a one-sentence news release announcing its plan.
Shares in United parent UAL Corp. rose 13 cents to $1.42 each in early trading Friday on the New York Stock Exchange.
Union representatives have criticized Elk Grove Village, Ill.-based United for giving them a list of proposed givebacks instead of a complete business plan. Labor groups want to see such a plan before agreeing to cost cuts, Air Line Pilots Association spokesman Dave Kelly said Thursday.
''Until we get that information, it's really hard for us to determine what the company is asking for and how we can work with the company to reach that rational business plan,'' Kelly said.
The union representing United flight attendants called the company's filing a ''positive development.'' Union officials said they'll keep working with United to help the airline recover.
In a posting on its Web site, the union representing United ground workers advised its members late Thursday that the group was ''not presently engaged in negotiations with United Airlines'' and that the union did not ask the carrier to delay its motion.
United's statement said it was delaying the filing in response to ongoing negotiations and labor union requests.
United needs to slash its labor costs by $2.4 billion annually to satisfy its lenders, according to the flight attendants' union. The unions already have agreed on about $1 billion in yearly cuts as part of United's failed try for a government loan guarantee.
The airline warned in its Chapter 11 bankruptcy filing on Dec. 10 that cuts were coming that would go well beyond its previous financial recovery plan, which called for $5.2 billion in labor cutbacks by 2008.
AP-NY-12-27-02 1108EST
