United Airlines, mechanics reach agreement

CHICAGO, April 11 (UPI) -- United Airlines and the union representing its 10,000 mechanics Friday reached agreement on concessions, possibly making it unnecessary for a bankruptcy court to abrogate any of the airline's union contracts.

A hearing was scheduled for Monday on the issue before U.S. Bankruptcy Judge Eugene Wedoff.

The agreement came as the Professional Airline Flight Controllers Association, which represents 181 controllers, and the Air Line Pilots Association, which agreed to $1.1 billion in concessions, voted on their tentative agreements.

The mechanics, represented by District 141-M of the International Association of Machinists and Aerospace Workers, was, perhaps, the toughest of United's unions. It was District 141-M that balked at concessions in advance of the airline's Dec. 9 bankruptcy filing and helped torpedo an effort to win federal loan guarantees.

United sought $5.6 billion in labor cost savings over the next six years. The savings were mandated by those providing the airline's debtor-in-possession financing.

"Achieving tentative agreements with all of our unions is an extraordinary accomplishment for United," said Glenn Tilton, chairman, president and chief executive officer. "The company and its labor groups share a common goal. Everyone involved in all of these negotiations came together with a commitment to be honest and fair in tackling tough issues, with their sights set on the long-term well-being of the people of United."

The mechanics agreed to $2.09 billion in concessions. Another $2.67 billion will come from IAM District 141 baggage handlers, gate agents and reservations clerks. The unions agreed to a 13 percent pay cut and a 20 percent co-payment toward the cost of health insurance. Work rules also were modified.

"From the moment United Airlines declared bankruptcy on Dec. 9, a painful restructuring was inevitable," said Scotty Ford, president of District 141-M. "Despite proposed changes to pay, benefits and working conditions, this agreement preserves the essential value of a job at United Airlines."

The Association of Flight Attendants agreed to a 9 percent pay cut, saving the airline more than $300 million annually.

The AFA and the two IAM locals will vote on the concessions April 29.

The Transport Workers Union, representing 18 meteorologists working at United's headquarters, already have ratified a concessions plan.

UAL Corp., United's parent, lost $3.2 billion in 2002 and more than $1 billion in the first two months of this year.

The No. 2 carrier said in a court filing last month it needs to reduce its labor costs by $5.6 billion over six years to avoid liquidation and compete with low-fare carriers like Southwest Airlines and JetBlue. United's reorganization plan includes creating a separate discount airline code-named "Starfish."