UAL wants even more cuts!

[Cappy]

UAL is seeking more cuts via the bankruptcy court. It just seems like it's never going to end for them. Good luck to al UA employees.


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Associated Press
United Seeking $725M in Further Labor Cuts
Friday November 5, 12:35 pm ET
By Anna Johnson, Associated Press Writer United Airlines Seeking to Obtain Another $725 Million in Further Labor Cuts, Ditching Pensions

CHICAGO (AP) -- United Airlines is moving to obtain another $725 million in labor concessions and eliminate employees' traditional pensions as it seeks the financing to come out of bankruptcy.

A day after the troubled carrier formally informed employees that further steep reductions in pay and other benefits are coming, union leaders huddled to analyze the proposed cuts and decide how to respond. United's largest unions declined public comment until discussing the plan further.

The nation's second-largest airline has been threatening to terminate its pensions since August, and last month it said it would need to cut costs significantly more than anticipated because of the industry's deteriorating financial outlook.

Spokeswoman Jean Medina confirmed Friday that the carrier will ask a bankruptcy court judge to approve an extra $725 million in annual savings from workers, part of an effort to squeeze an additional $2 billion from the carrier's cost structure by next year.

"We recognize this is difficult for employees, but it's necessary considering the environment we are in. Fuel is at a record high and air fares are at a record low," she said.

The company was going to bankruptcy court later Friday to lay out a schedule for negotiations and deadlines. Medina said the new filing would not disclose specific details of the latest planned cuts.

United CEO Glenn Tilton disclosed the company's intentions in a recorded message to employees late Thursday.

"This is a challenge," he said. "It is a challenge that must be met. And, it must be equitable for all of our employees."

United also is widely expected to disclose additional job cuts when it reveals its new business plan later this month. Medina said the company does not yet have specifics on the number of job cuts it would make. It currently has about 62,000 employees, down from more than 100,000 before the 2001 terror attacks.

The Elk Grove Village-based carrier and its parent company UAL Corp. already have lopped $5 billion from annual expenditures since it filed for Chapter 11 bankruptcy in December 2002.

Facing $4.1 billion in obligations to its existing pension program over the next five years, United wants to terminate future pension plans and replace it with a 401(k)-style defined contribution program. United's plan -- which the company says is necessary to attract financing to leave bankruptcy -- has caused an uproar among employees.

The government-financed Pension Benefit Guaranty Corp. would be forced to assume United's huge obligations if the airline terminates the pensions. United's plan has also sparked worry in Washington over the potential cost to federal taxpayers.

Steve Derebey, a spokesman for the Air Line Pilots Association, said in a recorded message that United's proposal outlines "dramatic changes," including the replacement of pension plans. Another pilot spokesman declined further comment Friday. The union's governing body is scheduled to meet beginning Nov. 15 and will discuss United's proposal then.

United's machinist union -- the International Association of Machinists and Aerospace Workers -- also planned no public comment Friday on the contract proposal while its leaders and members were reviewing it, spokesman Joseph Tiberi said.

Similarly, spokeswoman Sara Nelson Dela Cruz said Friday that the Association of Flight Attendants would not comment on the contract proposal until later in the day after a meeting of its leaders. Along with labor concessions, United senior executives, including Tilton, also have agreed to a 15 percent wage reduction beginning Jan. 1, Medina said. Tilton earns $712,500 annually.

 

[michael707767]

United Airlines is moving to obtain another $725 million in labor concessions and eliminate employees' traditional pensions as it seeks the financing to come out of bankruptcy.

another 725 million and terminate the pensions. Ouch. Sadly, I expect we at Delta are only another two years away (at most) from the same thing.

 

[KingAirKiddo]

another 725 million and terminate the pensions. Ouch. Sadly, I expect we at Delta are only another two years away (at most) from the same thing.

It's sad to think what has happened to this industry in such a short time. I knew on September 11, 2001 that things were going to get ugly, but I never envisioned the magnitude of the changes.

 

[Boeingman]

I know I am going to catch flak for this, but I have been saying it for a long time. UAL has no real change in their business plan, no strategic plan to reorganize. They are continuing to use the shield of the bankruptcy court to wallow along hoping the industry goes into an economic turnaround. They are also using the courts as a tool to try to redefine and impose cuts on labor since it is obvious managements steps to date have been a fiscal failure. It is coming up on two years and what has fundamentally changed within the company aside from subsidizing marketing ploys upon the backs of labor?

I think they are fast reaching a point where the creditors and the courts are starting to realize the company is not fiscally sound in its present form. You can not keep losing hundreds of millions under court protection, keep telling your creditors and lenders you're planning to emerge next quarter (again and again) and retain the confidence of the financial community.

I believe we are going to see some big and ugly changes over there coming very soon. The current financial situation is unsustainable.

 

[ATR-DRIVR]

Sir, I believe those are very true words.

 

[michael707767]

I know I am going to catch flak for this, but I have been saying it for a long time. UAL has no real change in their business plan, no strategic plan to reorganize. They are continuing to use the shield of the bankruptcy court to wallow along hoping the industry goes into an economic turnaround. They are also using the courts as a tool to try to redefine and impose cuts on labor since it is obvious managements steps to date have been a fiscal failure. It is coming up on two years and what has fundamentally changed within the company aside from subsidizing marketing ploys upon the backs of labor?

I'm not going to give you flak, I agree. In fact, I think you could say the same about Delta management. What has changed here? Also, look at USAirways? Same thing, other than lower labor costs they really have not fundementally changed the way they operate their airline. I think all management teams just wanted to hold on till things got better. But the problem is, the industry had already started a fundemental shift before 9/11. Things were not and are not going to get back to where they were. I still don't think management fully realizes this.

 

[ATR-DRIVR]

But the problem is, the industry had already started a fundemental shift before 9/11. Things were not and are not going to get back to where they were. I still don't think management fully realizes this.

michael707767 has hit the nail on the head. There were things starting to go awry when 9/11 happend which only added more fuel to the growing fire. Maybe?
I believe that management in some if not all major carriers over used the 9/11 tragedy for excuse's for poor MANAGEMENT decisions, NOT pilot groups or other labor decisions.

 

[UALjan15]

I know I am going to catch flak for this, but I have been saying it for a long time. UAL has no real change in their business plan, no strategic plan to reorganize. They are continuing to use the shield of the bankruptcy court to wallow along hoping the industry goes into an economic turnaround. They are also using the courts as a tool to try to redefine and impose cuts on labor since it is obvious managements steps to date have been a fiscal failure. It is coming up on two years and what has fundamentally changed within the company aside from subsidizing marketing ploys upon the backs of labor?

I think they are fast reaching a point where the creditors and the courts are starting to realize the company is not fiscally sound in its present form. You can not keep losing hundreds of millions under court protection, keep telling your creditors and lenders you're planning to emerge next quarter (again and again) and retain the confidence of the financial community.

I believe we are going to see some big and ugly changes over there coming very soon. The current financial situation is unsustainable.

I know you aren't going to be happy until you have some flak, so here goes:
You say UAL doesn't have a new plan? I have to disagree! Mostly cynically, I imagined a worst case scenario management plan a couple of years back, and unfortunately, it is playing out by the numbers. First, they decided not to try to reinvent themselves as Southwest, Ted notwithstanding. They surmised that there would be room for one or two large, hubbed, international carriers in the new airline environment, and planned on being one of those. Strategy? Get their costs lower than AA, DL, NW, and CO. Do it on the backs of labor with an initial round of pay cuts and work rule changes (done), reorganization/termination of the pension plans for all employees (in process), and one final pay cut in order to leave bankruptcy (just announced). Throw in renegotiation of leases and other debt, and you have the basic jist of it. The key is to get out of BK with this plan complete, and then dominate the legacy carriers that still are working under their enormous cost structures.

What they didn't plan for was the price of jet fuel nearly doubling during BK (with no ability to hedge), and a revenue environment where domestic ticket prices have dropped 15% over the past year. Double-whammy pain. This environment will make it much easier to gut the pensions and get another round of concessions, however. On the other hand, it also makes it more likely that other legacy carriers will face BK and be able to institute the same basic plan.

As for UAL's creditors, I wouldn't worry too much. If they are able to accomplish this plan and re-imerge, wouldn't you want a piece of the action?

I agree with most of your predictions, especially the part about "big and ugly changes over there coming very soon," I just believe that those changes were part of the plan from the beginning, not just due to the failure of a turnaround business plan.

Your thoughts?
UAL Jan 15

 

[flyguppy]

This has got to stop.

With UAL latest proposal, they want our 5-6 year F/O's to settle for making about $70/hr. An absolute joke. Who would even want to get into this business? "Oh, flying jets for money is great. Why don't you just quit." Blah, blah, blah.............

In the last 3 years, this industry has gone right in the toilet. I said it 3 years ago, and I'll say it again. Since there are so many people out there that think $100K/yr for flying as Captain on jet equipment is so grand, all domestic flying will be done by "regionals" that feed the legacy carriers, who will only be doing international and some major markets. (Except for the LCO's)

The days of this being a well paying, prestigious job are long gone. We have no one to blame but ourselves.

 

[General Lee]

I don't think it is gone forever. Yes, the current climate doesn't promote huge pay scales. But, eventually the cycle will reverse and the pilots flying the larger equipment internationally will be better compensated. It will then be the objective to eventually fly the heavies on glamorous INTL flights, and the domestic stuff will be paid less.



Bye Bye--General Lee