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5/1/2003

United mechanics, handlers ratify deal

The Associated Press

CHICAGO — United Airlines moved a step closer to its goal of cutting labor costs when mechanics and baggage handlers ratified contracts saving the bankrupt carrier about $4.7 billion over the next six years.

The vote early Wednesday followed flight attendants’ approval Tuesday afternoon of a contract that will save United $1.9 billion over the same time period.

Seventy percent of eligible mechanics and 83.2 percent of eligible baggage handlers voted to ratify the contract, said Joseph Tiberi, a spokesman for the International Association of Machinists and Aerospace Workers.

“The problems and solutions of the airline’s latest crisis go far beyond labor costs, but immediate action was needed to ensure the survival of this airline,” said Mechanics’ union President Scotty Ford.

Seventy-five percent of eligible flight attendants voted to ratify the contract, the Association of Flight Attendants announced. Turnout was 63 percent, suggesting that there was much reluctance about accepting the painful cuts.

Flight attendants’ union president Greg Davidowitch said the results were necessary but no cause for celebration.

“Today marks an immense step toward stability and security for our airline and our jobs,” he said. However, he added, the sacrifices made by employees “will have a harsh effect on our work lives and our families.”

Approval by all three groups, following earlier approval by pilots, flight dispatchers and meteorologists, sealed United’s quest to lower its annual labor tab by $2.56 billion through 2008, or $15.4 billion in total.

But unlike past labor dramas at United and the recent one at rival American Airlines, the outcomes — while important — wouldn’t make or break the carrier’s recovery effort.

If any group had voted down the tentative agreement, United planned to head to bankruptcy court on May 15 to get a judge to impose its preferred terms.

The airline called the flight attendants’ vote an important step in providing the cost improvements, productivity changes and operational flexibility it needs to emerge from bankruptcy and succeed long-term.

“We understand and appreciate the sacrifices the members of the AFA have to make,” United said in a statement. “Their difficult choices have given additional momentum to our collective efforts to transform United into a viable competitive airline and to build a more secure future for our employees.”

The 18,000 flight attendants, who voted from April 16 through midday Tuesday, accepted an agreement calling for 9 percent wage cuts, changes in work rules and fewer holidays. The pact would save United $314 million a year.

Two union groups from the International Association of Machinists and Aerospace Workers held one-day balloting.

Members of IAM District 141, representing 23,000 ramp, customer service and retail workers, were asked to approve 13 percent pay cuts, a 20 percent co-pay on health insurance and increased use of part-time help — a package that would save United $2.6 billion through 2008.

The 12,000 mechanics, members of District 141-M, voted on 13 percent wage cuts and an overhaul of work rules adding up to $2.09 billion in total savings through 2008.

United’s 8,000 pilots already have ratified the biggest chunk of the savings — a total of $6.6 billion, including 30 percent wage reductions and significant work-rule changes.

The world’s second-biggest carrier gained the leverage of bankruptcy court to impose cuts when it filed for Chapter 11 bankruptcy protection on Dec. 9, and already has used it to get temporary cuts that expire Wednesday.

Still, United needs to avoid labor dissension if it is to emerge successfully from Chapter 11 and become profitable again.

Airline analyst Ray Neidl said it was important for United to get consensus agreement from all its unions.

“It’s a service business, and if the employees do it voluntarily it bodes a little bit better for the reorganization than if they have to go to the court and have it mandated,” said Neidl, of Blaylock and Partners. “You can be a very low-cost airline, but if you don’t have employee cooperation you’re still not going to make it.”