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Judge approves United labour agreements
By Caroline Daniel in Chicago
Published: January 31 2005 23:59 | Last updated: January 31 2005 23:59
http://news.ft.com/cms/s/b636354a-73e0-11d...oo1&segid=03058
United on Monday afternoon gained approval from the bankruptcy judge for its labour agreements with four groups, including the flight attendants and pilots unions.
The judge also agreed to United's request to impose interim wage cuts on the mechanics, as they take more time to negotiate a deal. They will see a 9.8 per cent pay cut from Tuesday and a 25 per cent cut in sick pay. The interim relief will last until the end of May.
United has been facing mixed progress on its efforts to get new labour agreements after its pilots and flight attendants voted in favour of proposed cuts, while its mechanics on Friday voted against cuts, and threatened strike action if the contract is imposed by the courts.
The flight attendants voted by 56 per cent in favour of approving the new contract, which provides $131m in cost savings over the next five years, while United's pilots approved a deal generating $181m in savings. Three quarters of the pilots backed the new contracts.
On Friday, members of AMFA, the mechanics union, overwhelmingly authorised their national director to call a strike.
The flight attendants had previously been the more belligerent union. Members had threatened strike action at both US Airways and United if they moved to ask the bankruptcy court to impose labour cuts as part of the section 1113 process.
Instead, the union backed down and agreed consensual deals, averting an imposed deal. Notably the flight attendant's latest contract includes no changes to work rules or healthcare benefits but involves reducing hourly pay levels to 1991 levels.
The concessions underscore the fact that unions have been more willing to give up pay that they hope to get back in future pay agreements rather than amend work rules, which are seen to have a deeper impact on quality of life and can often facilitate job cuts. Although the approval on wage cuts from the two unions was welcomed by United, it faces tough negotiations over its plans to terminate pensions.
While the pilots have secured $550m in convertible equity, in concessions for ending pensions, the flight attendants yesterday demanded: "an exit strategy from bankruptcy that does not destroy the hard-earned pensions promised to us for retirement security that would be one sacrifice too many."
It comes as US Airways, which has also used the threat of imposing deals under section 1113 to secure $1.1bn in labour concessions, on Monday announced net losses of $236m for the fourth quarter 2004, compared with a $98m net loss for the same period in 2003. It is targeting an exit from bankruptcy later this summer.
By Caroline Daniel in Chicago
Published: January 31 2005 23:59 | Last updated: January 31 2005 23:59
http://news.ft.com/cms/s/b636354a-73e0-11d...oo1&segid=03058
United on Monday afternoon gained approval from the bankruptcy judge for its labour agreements with four groups, including the flight attendants and pilots unions.
The judge also agreed to United's request to impose interim wage cuts on the mechanics, as they take more time to negotiate a deal. They will see a 9.8 per cent pay cut from Tuesday and a 25 per cent cut in sick pay. The interim relief will last until the end of May.
United has been facing mixed progress on its efforts to get new labour agreements after its pilots and flight attendants voted in favour of proposed cuts, while its mechanics on Friday voted against cuts, and threatened strike action if the contract is imposed by the courts.
The flight attendants voted by 56 per cent in favour of approving the new contract, which provides $131m in cost savings over the next five years, while United's pilots approved a deal generating $181m in savings. Three quarters of the pilots backed the new contracts.
On Friday, members of AMFA, the mechanics union, overwhelmingly authorised their national director to call a strike.
The flight attendants had previously been the more belligerent union. Members had threatened strike action at both US Airways and United if they moved to ask the bankruptcy court to impose labour cuts as part of the section 1113 process.
Instead, the union backed down and agreed consensual deals, averting an imposed deal. Notably the flight attendant's latest contract includes no changes to work rules or healthcare benefits but involves reducing hourly pay levels to 1991 levels.
The concessions underscore the fact that unions have been more willing to give up pay that they hope to get back in future pay agreements rather than amend work rules, which are seen to have a deeper impact on quality of life and can often facilitate job cuts. Although the approval on wage cuts from the two unions was welcomed by United, it faces tough negotiations over its plans to terminate pensions.
While the pilots have secured $550m in convertible equity, in concessions for ending pensions, the flight attendants yesterday demanded: "an exit strategy from bankruptcy that does not destroy the hard-earned pensions promised to us for retirement security that would be one sacrifice too many."
It comes as US Airways, which has also used the threat of imposing deals under section 1113 to secure $1.1bn in labour concessions, on Monday announced net losses of $236m for the fourth quarter 2004, compared with a $98m net loss for the same period in 2003. It is targeting an exit from bankruptcy later this summer.
