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Court approves UAL mechanics' wage cuts
Mechanics threaten strike Friday if cuts approved; also approved
pilot, flight attendant wage cuts.
January 31, 2005: 7:14 PM EST
CHICAGO (Reuters) - A bankruptcy court on Monday granted UAL Corp's
request for temporary wage cuts for United Airlines' mechanics, who
last week rejected proposed cuts and voted to strike if the court
alters their contract.
The ruling clears the way for a four-month 9.8 percent salary cut
and 25 percent sick pay cut for the mechanics while negotiations
continue on a permanent contract.
On Friday, members of the Airline Mechanics Fraternal Association
(AMFA) voted to authorize a strike if the federal judge imposes
conditions requested by the airline.
Separately, the bankruptcy court approved wage cuts for United
Airlines' pilots and flight attendants worth $311 million annually,
clearing a hurdle in its bid to exit bankruptcy protection by the
year-end.
The rulings by United a step closer to achieving $725 million in
annual labor savings it says it needs to exit Chapter 11.
The deals cut the pilots' pay by 11.8 percent and the flight
attendants' pay by 9.5 percent.
"We are pleased that we have agreements with both unions that
provide a critical portion of the long-term savings that we need to
successfully complete our restructuring," UAL spokeswoman Jean
Medina said.
United now has tentative deals with four of the six unions from whom
it needs wage concessions and is negotiating with its other unions
for the remaining savings it needs. Labor groups have already
approved $2.56 billion in concessions.
The Elk Grove Village, Illinois-based carrier has been under Chapter
11 protection since December 2002. The airline industry in general
has been hammered by soaring fuel costs, weak revenues and
competition from low-cost carriers.
New deals
Earlier Monday UAL (Research) pilots ratified the proposed
concession package with a 75.46 percent majority of the voting
members, a spokesman for the Air Line Pilots Association said.
ALPA, which represents about 6,400 pilots, called on the company to
use the savings obtained "wisely."
The five-year deal guarantees that the pilots union will not object
to the elimination of its pension plans under certain conditions.
The new deal also promises $550 million in convertible notes to help
offset pension losses. The savings to UAL are about $180 million
annually, the union said.
Wedoff rejected a tentative deal earlier in January between the
pilots and UAL, saying it gave the pilots too much influence over
the carrier's restructuring.
Members of the Association of Flight Attendants Monday ratified
their labor pact -- worth about $131 million annually -- by a
smaller margin. Over 56 percent of eligible flight attendants who
voted backed the contract. The AFA represents about 20,000 active
and retired UAL flight attendants.
"The sacrifices borne by the flight attendants in contract changes
that include reduced hourly rates of pay to 1991 levels will have a
harsh affect on flight attendants and our families," said Greg
Davidowitch, president of the AFA executive council at United, in a
statement.
United and its labor groups are negotiating pension issues
separately. The carrier has said it must terminate and replace all
of its pension plans.
Labor woes
But United is no closer to bridging its differences with its
mechanics, who on Friday rejected proposed wage and benefit cuts and
voted to strike if the court alters their contract.
United is asking the court to temporarily cut mechanics salaries by
10.3 percent and their sick pay by 25 percent.
The proposed pay cut would start Feb. 1 and last up to four months.
If negotiations fail to produce permanent concessions, UAL may still
seek to terminate the existing contract.
"It takes the onus off AMFA for having to agree to any sort of
concession. They just have it imposed on them," said Robert Mann, an
airline industry analyst. "It gets the company some of what it
wanted."
Legal experts are split over whether an airline union can strike if
its contract is thrown out. Airline workers are governed by the
federal Railway Labor Act, which permits a walkout only after
mediation fails to resolve a collective bargaining dispute. But
labor unions believe the law does not apply once a contract is
terminated.
Mechanics threaten strike Friday if cuts approved; also approved
pilot, flight attendant wage cuts.
January 31, 2005: 7:14 PM EST
CHICAGO (Reuters) - A bankruptcy court on Monday granted UAL Corp's
request for temporary wage cuts for United Airlines' mechanics, who
last week rejected proposed cuts and voted to strike if the court
alters their contract.
The ruling clears the way for a four-month 9.8 percent salary cut
and 25 percent sick pay cut for the mechanics while negotiations
continue on a permanent contract.
On Friday, members of the Airline Mechanics Fraternal Association
(AMFA) voted to authorize a strike if the federal judge imposes
conditions requested by the airline.
Separately, the bankruptcy court approved wage cuts for United
Airlines' pilots and flight attendants worth $311 million annually,
clearing a hurdle in its bid to exit bankruptcy protection by the
year-end.
The rulings by United a step closer to achieving $725 million in
annual labor savings it says it needs to exit Chapter 11.
The deals cut the pilots' pay by 11.8 percent and the flight
attendants' pay by 9.5 percent.
"We are pleased that we have agreements with both unions that
provide a critical portion of the long-term savings that we need to
successfully complete our restructuring," UAL spokeswoman Jean
Medina said.
United now has tentative deals with four of the six unions from whom
it needs wage concessions and is negotiating with its other unions
for the remaining savings it needs. Labor groups have already
approved $2.56 billion in concessions.
The Elk Grove Village, Illinois-based carrier has been under Chapter
11 protection since December 2002. The airline industry in general
has been hammered by soaring fuel costs, weak revenues and
competition from low-cost carriers.
New deals
Earlier Monday UAL (Research) pilots ratified the proposed
concession package with a 75.46 percent majority of the voting
members, a spokesman for the Air Line Pilots Association said.
ALPA, which represents about 6,400 pilots, called on the company to
use the savings obtained "wisely."
The five-year deal guarantees that the pilots union will not object
to the elimination of its pension plans under certain conditions.
The new deal also promises $550 million in convertible notes to help
offset pension losses. The savings to UAL are about $180 million
annually, the union said.
Wedoff rejected a tentative deal earlier in January between the
pilots and UAL, saying it gave the pilots too much influence over
the carrier's restructuring.
Members of the Association of Flight Attendants Monday ratified
their labor pact -- worth about $131 million annually -- by a
smaller margin. Over 56 percent of eligible flight attendants who
voted backed the contract. The AFA represents about 20,000 active
and retired UAL flight attendants.
"The sacrifices borne by the flight attendants in contract changes
that include reduced hourly rates of pay to 1991 levels will have a
harsh affect on flight attendants and our families," said Greg
Davidowitch, president of the AFA executive council at United, in a
statement.
United and its labor groups are negotiating pension issues
separately. The carrier has said it must terminate and replace all
of its pension plans.
Labor woes
But United is no closer to bridging its differences with its
mechanics, who on Friday rejected proposed wage and benefit cuts and
voted to strike if the court alters their contract.
United is asking the court to temporarily cut mechanics salaries by
10.3 percent and their sick pay by 25 percent.
The proposed pay cut would start Feb. 1 and last up to four months.
If negotiations fail to produce permanent concessions, UAL may still
seek to terminate the existing contract.
"It takes the onus off AMFA for having to agree to any sort of
concession. They just have it imposed on them," said Robert Mann, an
airline industry analyst. "It gets the company some of what it
wanted."
Legal experts are split over whether an airline union can strike if
its contract is thrown out. Airline workers are governed by the
federal Railway Labor Act, which permits a walkout only after
mediation fails to resolve a collective bargaining dispute. But
labor unions believe the law does not apply once a contract is
terminated.
