Mechanics, United Reach Tentative Deal
United Airlines and its mechanics union reached a tentative contract Monday only two days before a threatened strike would have crippled United and badly disrupted U.S. air travel.
United, a unit of UAL Corp., and the International Assn. of Machinists said the 10,600 mechanics and 2,200 utility workers covered by the negotiations would vote March 5 on the pact, with “no disruption to service for United customers.”
Specific details of the five-year accord weren’t immediately available. But the IAM said it “includes improvements” over a contract proposed by an emergency board established by President Bush in December.
That proposal called for the mechanics--who haven’t had a pay raise since 1994--to get an immediate 37% wage increase, among other gains. That would have raised senior mechanics’ wages to $35.14 an hour, the top mechanics’ pay in the industry.
But the mechanics rejected that deal because of objections to deferring retroactive pay they’re due (their last contract technically ended July 2000) and to making unspecified wage concessions United is seeking from all its employees to survive.
In the new pact, the union said the retroactive pay issue is “enhanced” and that it won the right to let its members vote on whatever recovery plan United and UAL develop to stem the big airline’s massive losses.
“This agreement fulfills the IAM’s promise to negotiate an industry-leading contract,” said Scotty Ford, the IAM’s lead negotiator with United. UAL Chief Executive Jack Creighton said the tentative deal “is a critical milestone in developing a recovery plan” for United and UAL, which lost $2.1 billion last year, an industry record.
A strike would have wreaked havoc for United, which is 55% owned by the mechanics and other employees. The airline, battling a travel slump caused by the weak U.S. economy and the Sept. 11 attacks, is losing about $10 million a day. The mechanics’ dispute, and fears about United’s grounding, were prompting a growing number of travelers to make reservations with other carriers.
The tentative deal “had to happen or this airline was going to be destroyed,” said Terry Trippler, an industry consultant. “They have suffered a lot already.”
Bush established the emergency board to head off the mechanics’ original plan to strike Dec. 20. After the board’s deal was rejected Feb. 12, the workers were again free to strike Wednesday unless they could come to terms. Only Congress could have stopped the walkout with emergency legislation, but it’s in recess until Feb. 26.
The White House had no comment Monday; Bush is in Asia.
The IAM had warned Congress to stay out of the dispute, saying the two sides could reach a deal themselves. The agreement came with little time to spare; over the weekend mechanics began removing their tool boxes and personal belongings from United maintenance centers in preparation for a strike.
One of the airline’s largest such centers is in San Francisco, which, with Los Angeles, is among the major hubs for United, the nation’s second-largest airline behind AMR Corp.’s American Airlines. United operates about 1,650 flights a day worldwide, and it’s the biggest operator at Los Angeles International Airport.
Even if the mechanics ratify the new contract, United remains troubled. The carrier has one of the highest cost structures in the business, and must wrestle concessions from its entire work force if it hopes to endure the travel slump and return to profitability, analysts have said.
The mechanics had said they wouldn’t accept any concessions until they won an increase in their industry-lagging wages. Yet if the mechanics win the right to vote on future concessions, other unions might want to negotiate the same privilege. United’s pilots won a lucrative new contract in 2000.
United, like several other big airlines, also must find ways to lure more business travelers, who typically pay higher fares than leisure passengers and thus account for most of the carrier’s income.
Financial markets were closed Monday for Presidents Day. UAL’s stock closed Friday at $11.36 on the New York Stock Exchange.
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Times wire services were used in compiling this report.
