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1/9/2003

United attendants OK cuts

The Associated Press

CHICAGO — United Airlines’ flight attendants consented Wednesday to temporary 9 percent wage cuts aimed at helping United get out of bankruptcy, becoming the fourth of the carrier’s five unions to do so.

Their ratification of United’s emergency proposal leaves the Machinists’ union, whose leaders refused to put proposed pay cuts to a vote by its 37,000 members, as the lone holdout.

United’s pilots and two small unions, representing dispatchers and meteorologists, approved immediate double-digit pay reductions in voting that concluded a day earlier.

Flight attendants, like the pilots, voted overwhelmingly to accept the interim cuts. Ninety-four percent of those participating in weeklong voting that ended Wednesday voted in favor of the wage-cut agreement, the union said, although turnout among United’s 24,000 flight attendants was just 62 percent.

“This cut is very painful, especially since flight attendant compensation is so minimal to begin with,” said Greg Davidowitch, president of the United branch of the Association of Flight Attendants. “Flight attendants have once again shown that we are committed to seeing our airline successfully emerge from bankruptcy.”

Flight attendants’ pay before the cuts ranged from $17,000 to $44,000 a year.

Like the pilots, the flight attendants also assailed the company for being “less than forthcoming” with information about its overhaul plans.

“Recognizing the contributions of front-line employees is a key to this process because bankruptcy doesn’t end well when the workers and management are not on the same page,” Davidowitch said, alluding to the risk of liquidation if labor dissension erupts.

United CEO Glenn Tilton said he was grateful for the flight attendants’ decision and pledged that the company will continue to meet and work with its unions to reach consensual agreements.

The pay-cut agreements do not give an expiration date for the temporary wage reductions, which will last until a new contract is negotiated or imposed by the bankruptcy court this winter or spring.

Elk Grove Village, Ill.-based United, the dominant carrier at Denver International Airport, filed for Chapter 11 bankruptcy last month and has until Feb. 15 to cut costs or it could lose the rest of $1.5 billion in interim financing supplied by a group of banks. It estimates it can save $70 million a month through the temporary wage cuts, meeting its lenders’ strict financing requirements while gaining more time to negotiate permanent pay cuts and work-rule changes with the unions.

Pilots approved a 29 percent pay cut; the 180 controllers and 40 meteorologists will see wages slashed by 13 percent. The Machinists’ union, however, has objected to United’s proposal that its members take 13 percent reductions, saying the company has not provided sufficient evidence.

United filed a formal response to the machinists’ objections in federal bankruptcy court late Wednesday, noting it will default on its debtor-in-possession financing unless it achieves substantial labor cost reductions — including from its machinists — by mid-February.

Bankruptcy Judge Eugene Wedoff will rule today or Friday on whether to impose the pay reductions on the machinists — 13,000 mechanics and 24,000 ramp, customer service and gate workers. The other unions’ interim agreements expire Friday unless the machinists’ participation is assured by day’s end.

Without such a ruling, United will move in court to start having all labor contracts voided. It said in its court filing that it wants to avoid having to resort to those proceedings because they would “unnecessarily strain the negotiating process and jeopardize the company’s restructuring efforts.”

If the judge orders the pay cuts to be imposed, United said it will have enough financial breathing room to meet its lenders’ requirements until May 1, giving it valuable time to negotiate permanent contracts.

Negotiations continued Wednesday for a second day in Chicago between the airline and leaders of the International Association of Machinists and Aerospace Workers on long-term cost reductions. The union said no discussions on United’s proposal for interim cuts were taking place.

Shares in United parent UAL Corp. fell 7 cents to close at $1.42 on the New York Stock Exchange. They gained a nickel in extended trading.

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On the Net:
www.united.com