Unions Under Deadline at United Airlines

From Reuters

United Airlines has set today as the deadline to complete permanent deals with its unions or it may ask the Bankruptcy Court to scrap existing labor pacts.

Leaders of United’s unions said last week that they did not expect to reach cost-saving deals with the company by today.

The No. 2 U.S. airline, which filed for bankruptcy protection in December, has said it hoped to emerge from Chapter 11 protection within 18 months. United parent UAL Corp. lost $3.2 billion in 2002.

United’s interim labor deals end April 30. The airline is under pressure to lock in long-term agreements that would help it meet lenders’ financial targets.


United, based in Elk Grove Village, Ill., has said it needs to trim labor costs by $2.56 billion a year to meet the terms of its debtor-in-possession loan package.

Even if deals were reached by today, union leaders said, they still expected UAL to take steps to void contracts because any deals would have to be ratified by members, a process that could take weeks.

After a UAL filing, U.S. Bankruptcy Judge Eugene Wedoff would hold a hearing on the issue within 21 days. He then would have an additional 30 days to rule, during which time UAL and its unions could continue working toward voluntary pacts.

US Airways Group, also under bankruptcy protection, filed a similar motion but was able to reach and ratify voluntary deals before having to void union contracts.