UAL to Slash More Wages; Pilots OK Deal
United Airlines, stepping up the campaign to avoid a bankruptcy filing by getting a federal loan guarantee, Monday outlined wage cuts for nonunion workers as union pilots ratified 18% givebacks.
Pilots were the first major labor group to reach a deal with management on pay cuts. Monday, the 8,800-member Air Line Pilots Assn. approved its portion of concessions by a wide margin. The cuts, set to take effect Dec. 1, will rely on other labor groups taking part in an overall financial recovery plan.
As United Airlines’ fate hangs in the balance, flight attendants are voting on their portion of a $5.8-billion concession package submitted by a five-member union coalition. Machinists still have not reached a tentative deal, but are said to be close.
Shares of United parent UAL Corp. rose 55 cents to close at $3.50 on the New York Stock Exchange after the airline released news Sunday and Monday, including more details on efforts to win federal assistance.
The stock has more than doubled its lowest level of $1.42 a share in October, but is still off about 70% this year as the bankruptcy filing threat looms.
The No. 2 U.S. airline, based in Elk Grove Village, Ill., unveiled a number of details, including the fact that salaried and management workers will take pay cuts of 3% to 11% and forgo merit increases. That is part of an overall financial recovery plan that calls for those workers, excluding officers of the company, to contribute about $1.3 billion in wage cuts and productivity.
The airline said Sunday that it would cut 9,000 employees and trim flight capacity by 6%.
United outlined the nonunion pay cuts a day after it released details of an “updated business plan” submitted to the Air Transportation Stabilization Board. The agency, created after the Sept. 11 attacks, is weighing whether to grant United backing for $1.8 billion of a $2-billion loan.
Analysts said that at the end of the day, all that matters for United in the near term is the ATSB decision.
UAL lost a record $2.1 billion in 2001 and so far in 2002 has recorded $1.7 billion in losses. The airline is burning through $8 million to $10 million a day in cash.
Jamie Baker, airline analyst at J.P. Morgan Chase & Co., saw the news on various pay cuts and capacity shrinkage as more of a public relations gambit than a substantive change. Baker does not own shares in UAL.
