United Case Pauses for Union Talks

A federal bankruptcy judge called a two-day recess Tuesday in United Airlines’ Bankruptcy Court trial, giving the carrier and its machinists’ union additional time to work out a new contract before he rules on imposing lower pay and benefits unilaterally.

The trial was pushed back as negotiations intensified between United, the main division of UAL Corp., and the International Assn. of Machinists and Aerospace Workers, the sole remaining employee group not to have agreed to a long-term contract after the mechanics’ union consented to a tentative five-year deal Monday night.

United successfully sought the postponement in testimony until Thursday, hoping to avert a divisive ruling that could trigger a threatened strike.

“We are engaged in meaningful conversations and exchange of proposals and remain committed to trying to reach a consensual agreement with the IAM,” company spokeswoman Jean Medina said.

Negotiators for United and the machinists’ union resumed face-to-face talks Monday night after the company reviewed the union’s latest contract offer. They remained in contact through the night and were back at the table again Tuesday, union spokesman Joseph Tiberi said.

Like United, the machinists’ union declined to discuss specifics of the talks or say whether an agreement appeared within reach Tuesday.

The company was seeking annual wage and benefit cuts totaling $176 million over five years from machinists as part of its push to reduce companywide labor costs by an additional $700 million before it emerges from bankruptcy protection.

Tiberi said the union acknowledged the need for additional cost savings but was working to “ensure that any additional sacrifice is fair and necessary to the restructuring of United Airlines.”

The union represents about 20,000 baggage handlers and reservation agents.

At a union hall near Chicago’s O’Hare International Airport, leaders of the machinists’ union distributed picket signs, gave out strike assignments and updated workers Tuesday on the talks as strike preparations went forward.

The union has threatened a strike if U.S. Bankruptcy Judge Eugene Wedoff orders the contract broken without its consent, which could come as soon as Friday -- the day the judge has now scheduled closing arguments.

“We still hope to get an agreement, but if the judge rules in United’s favor, we will walk,” Tiberi said.

Mechanics began voting Tuesday on the tentative deal agreed to by their negotiators. The ratification vote lasts until May 31.

The union, representing about 7,000 United mechanics, also has threatened a strike if the deal is rejected and the existing contract is terminated without its approval.

The agreement gives the carrier the $96 million in annual wage and benefit cuts it was seeking. Mechanics would take 3.9% pay cuts starting June 1, on top of 14% reductions two years ago. Reduced benefits, such as sick days and holidays, would account for the rest of the labor savings.

A defined-contribution pension plan is part of the mechanics’ tentative contract, replacing the defined-benefit plan that United eliminated last week.

The union also would get $40 million in convertible notes upon United’s exit from Chapter 11 bankruptcy protection.