8,000 Employees Accept 10% Reduction for 6 Months : Pay Cuts Slated at Western Union

About 8,000 unionized Western Union Corp. employees nationwide have agreed to a six-month, 10% pay cut to help the financially troubled communications concern, officials said Monday.

The cuts, effective this weekend, will save the company $10 million over the six-month period ending July 28, when the workers’ current three-year contract expires, said Jerry Grim, secretary-treasurer of the United Telegraph Workers.

The agreement is critical for Western Union to maintain sufficient cash to make it through the first quarter, but the company will still require additional debt financing, said Glenn Pafumi, an analyst and first vice president at Dean Witter Reynolds Inc.

“It improves their operating market, but we don’t believe to any significant level of profitability if at all,” Pafumi said.

Warren Bechtel, a spokesman for Western Union, which is based here, said the 6,000 salaried employees also have agreed to take a 10% pay cut for the six-month period. He would not say how much that will save in operating costs.

United Telegraph Workers members voted 3,211 to 1,577 to accept the wage-cut agreement, which was reached Dec. 14, said Grim.

Members of another union representing Western Union workers, the Communications Workers of America, voted 376 to 36 in favor of the agreement.

Grim said the agreement also provides for a “share of the company” for the employees, with the specifics to be determined at a later time.

He said the union agreed to the wage concession because Western Union’s financial plight was “quite serious” and the company indicated that without the pay reduction it would have to “liquidate part of their holdings.”

Bechtel said Western Union employs 7,400 UTW and about 600 CWA members, who work as technicians, operators, satellite controllers and messengers. The balloting was completed Friday.

The company’s poor financial position has been attributed by analysts to the fast-changing telecommunications industry, high costs for a new electronic mail service, management problems and bad luck.

Western Union, which is based here, lost $59.1 million on revenue of $1 billion last year. Pafumi said it continues to lose about $7 million a month.

The results of the union vote came less than a week after announcement of a new financing agreement for the company, which has an outstanding bank debt that Bechtel put at more than $300 million.

Thirty-one lending banks agreed to defer about $15 million in interest payments on loans due and made an additional $12-million loan to the company’s subsidiary, Western Union Telegraph Co.

Company officials said the banks’ actions completed the first phase of a restructuring of debt, due March 28. The interest is due April 1.