United’s Attendants OK Cost-Cutting Deal
United Airlines flight attendants ratified a cost-cutting deal with the nation’s No. 2 carrier Saturday, one day after the company’s stock tanked as analysts called bankruptcy nearly inevitable.
Assn. of Flight Attendants spokeswoman Dawn Deeks said 87% of the flight attendants who voted signed off on the deal. United’s 24,000 flight attendants had been widely expected to approve the $412 million in wage concessions.
But their OK means little as long as the airline’s mechanics continue to resist proposed reductions of $600 million in wages and benefits.
Wage-cutting agreements accepted by United’s pilots and other employee groups expire Dec. 31 unless mechanics sign on. United is asking for $5.2 billion in companywide labor cuts over 5 1/2 years.
The airline says its application for a $1.8-billion federal loan guarantee is imperiled if all unions cannot agree on wage concessions. A ruling is expected any day on the guarantee, which cash-poor United says it must have to obtain $2 billion in private loans.
Without the loan guarantee, United has said it would have no choice but to file for bankruptcy.
In a message to employees recorded after the mechanics’ vote and before the attendants’ approval, United Chief Executive Glenn Tilton warned that a bankruptcy filing could dramatically alter a “cooperative” negotiation process: “We all must then follow a prescribed course that is both unpredictable and potentially adversarial.”
A bankruptcy is likely to have no immediate effect on passengers. United said it will continue flying its normal schedule, as US Airways has been doing since its Chapter 11 filing in August.
United and the International Assn. of Machinists and Aerospace Workers were scheduled to meet today to discuss the mechanics’ rejection. Union spokesman Frank Tiberi said the flight attendants’ vote would have no effect on those negotiations.
Shares in United parent UAL Corp. plunged $1.12, or 31%, in holiday-shortened trading Friday to close at $2.51 on the New York Stock Exchange. That was the first trading day since the mechanics’ vote was announced.
The stock has lost 92% of its value since before last year’s terrorist attacks.
United has struggled since the attacks to reverse daily multimillion-dollar losses. It has reduced service and laid off 20,000 workers because of the weak economy and reduced spending by business travelers.
With hefty debt payments and other challenges looming, United has little time to find the financial backing it needs to avoid filing for bankruptcy-court protection.
