United Airlines Pilots Shelve Pay-Cut Vote
United Airlines’ pilots union has shelved a vote on a proposed 10% pay cut as the troubled carrier pushes for even bigger cutbacks and cost savings in a bid to avoid a bankruptcy filing.
The 9,200 pilots had been scheduled to vote starting Tuesday on whether to approve a tentative deal calling for the wage reduction over three years, resulting in an estimated $520 million in savings.
UAL Corp.’s United, which has been unable to gain concessions from its other unions, cited the pilots’ commitment in its June application for a $1.8-billion federal loan guarantee it says is needed to help it recover from financial struggles. But officials in Washington have made it clear to the airline that the application will be rejected without broader, deeper and longer-term cost savings.
The Air Line Pilots Assn. opted to postpone the vote indefinitely while other proposals are reviewed, union spokesman Herb Hunter said. “It makes no sense to vote on something that’s not going to work,” he said.
Under the tentative agreement reached two months ago, pilots would have permitted United’s express carriers to continue planned growth of regional jet service. The pilots, who own 28% of the company, also would have received stock options in UAL.
Since the June 22 agreement, shares of Elk Grove Township, Ill.-based UAL have lost more than 70% of their value. They dropped 7 cents to $3.22 on the New York Stock Exchange on Tuesday.
Hunter declined to discuss what other proposals are under consideration and said it shouldn’t be assumed that the pilots union would agree to steeper cuts.
United spokesman Joe Hopkins had no comment on the vote postponement.
Executives of the nation’s No. 2 airline held meetings Tuesday with representatives of the carrier’s unions, sharing information about costs, revenue and projections. Hopkins said he wasn’t aware whether they presented formal cost-saving proposals that Chief Executive Jack Creighton said last week would be forthcoming.
Creighton warned Aug. 14 that United is preparing to file for Bankruptcy Court protection this fall unless it succeeds in lowering costs dramatically through a restructuring. He set a 30-day deadline to reach cost-saving agreements with unions, lessors and suppliers.
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