United, Union Resume Trial
Unable to negotiate an agreement on a new contract, United Airlines and its machinists union returned to a bankruptcy courtroom Thursday to resume arguing whether the union’s contract should be broken in the absence of a deal.
The failure to wrap up a contract agreement left hanging the issue of a possible strike by United workers, who have threatened to walk off their jobs if lower pay and benefits are imposed without a consensual deal.
Negotiators for both sides were racing to beat a new unofficial deadline of late morning today, when closing arguments in the case are scheduled and a ruling to break the contract could soon follow.
United, a unit of Elk Grove Village, Ill.-based UAL Corp., is seeking annual concessions totaling $176 million over five years from machinists to complete a targeted $700 million in labor cost reductions.
The International Assn. of Machinists and Aerospace Workers presented testimony from two witnesses at the court session in Chicago late Thursday afternoon to bolster its argument that United was asking for excessive concessions from its workers.
Tom Roth, the president of Alexandria, Va.-based Labor Bureau Inc. and a consultant for the union, said workers were being asked to shoulder an unfair share -- 25% -- of the cutbacks in part because United was undervaluing the concessions made by the group in previous contract changes.
In other airline news, Delta Air Lines Inc. said it would keep making contributions to employee pension plans as long as possible while seeking legislation that would let the company delay some payments.
Delta, the third-largest U.S. carrier, is working with the Air Line Pilots Assn. and Northwest Airlines Corp. to win passage of legislation that would let the company spread pension contributions over 25 years. Atlanta-based Delta has contributed $220 million of the $450 million due this year, Chief Executive Gerald Grinstein said.
“Congress, I think, is going to recognize that the government and the taxpayer aren’t any worse off; in fact they’re better off, because we will continue paying on them as long as we can,” he told shareholders at Delta’s annual meeting in Atlanta.
A third carrier, Hawaiian Airlines Inc., said it won court approval for its bankruptcy reorganization plan and expected to emerge from Chapter 11 on June 1, more than two years after seeking protection from creditors.
The unit of Hawaiian Holdings Inc. said creditors would receive 100% of the value of their claims, with the majority in cash, while stockholders would keep their shares. Stockholders often receive nothing in a bankruptcy.
Honolulu-based Hawaiian, whose destinations include San Diego, Los Angeles and San Francisco, also said it had negotiated new labor contracts with its employees.
Associated Press, Bloomberg News and Reuters were used in compiling this report.
