Dizel8
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By David Kesmodel, Rocky Mountain News
December 14, 2004
United Airlines pilots union announced to members Monday that negotiators had reached a tentative agreement on labor concessions. The airline also said that it will slash pay and benefits for its nonunion employees.
The Air Line Pilots Association told pilots that its negotiating committee tentatively agreed to cost cuts, but it didn't disclose details. It is the first union at the company to say it has reached a tentative agreement in the latest round of concessions at United. The move is significant because the carrier is pressing for reductions by mid-January as part its effort to exit bankruptcy protection next year.
The union's leadership said it will conduct a one-day meeting in Chicago on Thursday to review the pact. If it endorses the deal, it will ask pilots to vote on it.
United had told the pilots that it required $191 million in annual concessions from the group in some combination of wage and benefit cuts and work-rule changes.
The giant carrier said permanent pay cuts for nonunion workers will range from 4 percent to 11 percent. It said it will save about $112 million a year from the cutbacks, which affect U.S.-based salaried and management workers and expatriates.
The reductions are part of the $725 million in annual labor cost cuts United wants from its workers.
The cutbacks for nonunion employees, which take effect Jan. 1, have been expected because United has said it would trim wages across the company.
Denver's dominant carrier said salaried workers will take a permanent 4 percent pay cut plus a temporary reduction of 4 percent that will last until United emerges from Chapter 11 protection.
Management employees will take a permanent 6 percent pay cut. For officers, the cut will be 8 percent. For the eight members of United's executive council, including Chief Executive Glenn Tilton, the cut will be 11 percent. Managers, officers and the council also will take a temporary cut of 4 percent.
The airline previously said Tilton's annual salary would decline to $605,625 from $712,500 as part of the cost-cutting effort.
United, the operating unit of UAL Corp., said it also plans to revise benefits for salaried and management staffers. It is studying changes to medical and dental programs and holiday and vacation schedules.
Further savings will come from productivity improvements. The cuts affect about 8,500 workers, including about 800 in Denver.
"This is very difficult for all our employees," said Sara Fields, United's senior vice president for people. "But it is absolutely essential if we are to build a strong and healthy company."
Chicago-based United also has said it likely will end its deeply underfunded pension plans, including the one for nonunion employees, and replace them with less-generous 401(k)-style plans.
The carrier has said it thinks it can wring $2 billion in further annual cost savings through the pension terminations, the wage and benefit cuts and non-labor cost-reduction efforts. It previously cut annual operating expenses by about $5 billion.
United wants cutbacks with all of its unions in place by mid-January in part because it faces pressure on its liquidity amid high jet-fuel prices and depressed airfares. The carrier must maintain at least $750 million in unrestricted cash under terms of its bankruptcy loans.
If the unions don't agree to concessions, the carrier will ask a federal bankruptcy judge to let it void its contracts and impose new terms.
United filed for bankruptcy two years ago and has amassed more than $9 billion in net losses since the end of 2000. The airline says it will share profits with employees if it exits bankruptcy and starts making money again. It also says it hopes to give workers an ownership stake in the company after bankruptcy.
December 14, 2004
United Airlines pilots union announced to members Monday that negotiators had reached a tentative agreement on labor concessions. The airline also said that it will slash pay and benefits for its nonunion employees.
The Air Line Pilots Association told pilots that its negotiating committee tentatively agreed to cost cuts, but it didn't disclose details. It is the first union at the company to say it has reached a tentative agreement in the latest round of concessions at United. The move is significant because the carrier is pressing for reductions by mid-January as part its effort to exit bankruptcy protection next year.
The union's leadership said it will conduct a one-day meeting in Chicago on Thursday to review the pact. If it endorses the deal, it will ask pilots to vote on it.
United had told the pilots that it required $191 million in annual concessions from the group in some combination of wage and benefit cuts and work-rule changes.
The giant carrier said permanent pay cuts for nonunion workers will range from 4 percent to 11 percent. It said it will save about $112 million a year from the cutbacks, which affect U.S.-based salaried and management workers and expatriates.
The reductions are part of the $725 million in annual labor cost cuts United wants from its workers.
The cutbacks for nonunion employees, which take effect Jan. 1, have been expected because United has said it would trim wages across the company.
Denver's dominant carrier said salaried workers will take a permanent 4 percent pay cut plus a temporary reduction of 4 percent that will last until United emerges from Chapter 11 protection.
Management employees will take a permanent 6 percent pay cut. For officers, the cut will be 8 percent. For the eight members of United's executive council, including Chief Executive Glenn Tilton, the cut will be 11 percent. Managers, officers and the council also will take a temporary cut of 4 percent.
The airline previously said Tilton's annual salary would decline to $605,625 from $712,500 as part of the cost-cutting effort.
United, the operating unit of UAL Corp., said it also plans to revise benefits for salaried and management staffers. It is studying changes to medical and dental programs and holiday and vacation schedules.
Further savings will come from productivity improvements. The cuts affect about 8,500 workers, including about 800 in Denver.
"This is very difficult for all our employees," said Sara Fields, United's senior vice president for people. "But it is absolutely essential if we are to build a strong and healthy company."
Chicago-based United also has said it likely will end its deeply underfunded pension plans, including the one for nonunion employees, and replace them with less-generous 401(k)-style plans.
The carrier has said it thinks it can wring $2 billion in further annual cost savings through the pension terminations, the wage and benefit cuts and non-labor cost-reduction efforts. It previously cut annual operating expenses by about $5 billion.
United wants cutbacks with all of its unions in place by mid-January in part because it faces pressure on its liquidity amid high jet-fuel prices and depressed airfares. The carrier must maintain at least $750 million in unrestricted cash under terms of its bankruptcy loans.
If the unions don't agree to concessions, the carrier will ask a federal bankruptcy judge to let it void its contracts and impose new terms.
United filed for bankruptcy two years ago and has amassed more than $9 billion in net losses since the end of 2000. The airline says it will share profits with employees if it exits bankruptcy and starts making money again. It also says it hopes to give workers an ownership stake in the company after bankruptcy.
