United Press International, fighting to assure profitability during Chapter 11 bankruptcy proceedings, said Tuesday that it has asked 900 union-covered employees to accept a six-month wage freeze and other contract concessions.
Company President Ray Wechsler said in a message to employees that they also will be asked to foot a greater share of their medical coverage, accept a 10-month suspension in company pension fund contributions, return to a 40-hour work week and accept severance pay cuts.
The Wire Service Guild, which received the proposals at a meeting in New York on Monday, called the wage and benefit cuts "drastic" and charged that the company is simultaneously "seeking huge raises for several top executives."
"The union will have appropriate responses for UPI," said Dan Carmichael, the Guild's secretary-treasurer.
The proposed wage freeze would leave UPI employees at 90% of their salary levels of August, 1984, before the company's financial crisis prompted an austerity drive that included a 25% pay cut.
Since then, 15% of original salaries have been restored in quarterly phases. Another 5% restoration is due July 1.
Company officials said that last fall, during the period of the deepest pay reduction, UPI recorded a monthly operating profit of $400,000. Since April 16, when salaries returned to 90% of previous levels, the monthly profit has shrunk to $100,000, they said.
"UPI could not be sure of maintaining profitability if salaries were to go above present levels at this time," Wechsler's message said.
He said that, with a six-month extension of wages at 90% of previous levels, "UPI's chances of successfully completing the reorganization and recapitalization will be greatly enhanced."
Since filing for Chapter 11 of the U.S. Bankruptcy Code on April 28 with liabilities exceeding $40 million, UPI has persuaded a number of newspaper and broadcast subscribers to accept a 9.9% rate hike.
Company Chairman Luis Nogales predicted in an interview last week that, with the rate increase and union concessions, the company would record an operating profit of more than $3 million for the Chapter 11 period ending Dec. 31.
Under six proposed contract amendments, employees would be asked to forego the scheduled 5% restoration July 1, a return to 1984 salary levels Oct. 1 and later raises of 3% and 2% prior to expiration of the contract on April 15, 1986.
Instead, the proposal calls for employees to receive their next 5% hike Jan. 1, returning them to $529.72 per week--still less than the 1984 top scale of $557.60 per week.