United Airlines to Impose Pay Cuts
United Airlines took a first step toward achieving the additional labor savings it seeks, imposing wage reductions on its 8,500 nonunion employees that include an 11% pay cut for Chief Executive Glenn Tilton and other top executives.
The airline, owned by UAL Corp., told employees on a company hotline Monday that the cuts would account for $112 million of the $725 million a year in labor savings it needs.
They do not include a 4% temporary reduction in salary that will take effect with the permanent cuts on Jan. 1 and remain in place until United emerges from bankruptcy protection. The carrier has not specified a target date for its exit from Chapter 11, but with the industry in financial turmoil, its emergence is now not expected until next fall.
“We believe that this is a fair and equitable way to achieve the immediate cost savings necessary to exit bankruptcy,” United spokeswoman Jean Medina said. “We are building a company that can succeed in a leaner, more competitive market and provide opportunity and value to our employees.”
Tilton’s salary will be $605,625 as of Jan. 1. He had reduced his $845,500 annual pay by 16% in August when United accelerated its push for labor cuts. Pay cuts also will be 11% for the seven top executives who report to Tilton, along with 8% for officers, 6% for management employees and 4% for salaried workers. The 4% temporary cuts will be applied to the lowered amounts.
The Elk Grove Village, Ill.-based airline also said it was devising new benefit plans for the nonunion employees that could affect medical and dental programs, vacation and holiday schedules and sick leave.
United said it would achieve the rest of its savings for salaried and management employees through productivity enhancements totaling at least $30 million annually. It did not specify the savings.
Management is in negotiations with its unions over the bulk of labor cuts, hoping it does not have to ask a bankruptcy judge to put them into effect next month in lieu of an agreement.
In other airline news, flight attendants at troubled US Airways Group Inc. authorized their union to strike should a federal court permit airline management to void their contract.
