CHICAGO, Sept. 26 (UPI) -- An offer of $5 billion in labor concessions over five years by unions at United Airlines seems generous but the proposed concessions are far less than the $9 billion UAL Corp. said it needs over six years to avoid filing bankruptcy.
The unions said in a letter to Glenn F. Tilton, UAL's new chairman and chief executive officer, "We stand ready to negotiate and implement" the proposal. The coalition representing five unions at United last week requested additional time to put together an alternative plan to keep the nation's second-largest airline flying without court supervision.
Late last month, United announced it needed $9 billion in wage concessions to qualify for a $1.8 billion federal loan guarantee that would help it avoid declaring Chapter 11 bankruptcy.
United was struggling before the Sept. 11, 2001, attacks in which two of its jetliners were hijacked and crashed, and lost a record $2.1 billion in 2001 and $851 million in the first half of 2002. The carrier faces $875 million in debt payments in the fourth quarter and is on pace to lose another $2 billion this year.
"In recognition of United's precarious financial condition and in accordance with our collective bargaining agreements, the IAM (International Association of Machinists) agreed to enter into discussions with the carrier in an attempt to avoid a United airlines bankruptcy," said Scott Ford, head of District 141-M, which represents 35,000 machinists, ramp service workers and reservations agents.
United said it would study the unions' proposal carefully as it finalizes an updated recovery plan to submit to the Air Transportation Stabilization Board, which administers a $15 billion industry bailout approved by Congress after the Sept. 11 attacks.
U.S. airlines lost a combined $7.2 billion last year.
"We welcome the framework from the union coalition, which as worked diligently to forge constructive recommendations for addressing some of United's most immediate financial needs," United said in a statement late Wednesday night. "Given the very real deadline imposed by our financial situation, we appreciate this quick but thorough effort."
The International Association of Machinists and Aerospace Workers approved agreements in March and May giving United a $500 million loan by deferring retroactive wages.
The United Air Line Pilots Association had tentatively approved a 10-percent pay cut for one year but balked at the larger concessions United sought Aug. 29. The Association of Flight Attendants, which represents 23,000 flight attendants, rejected any contract concessions.
The union coalition did not reveal any details on how much each union would give up but said the alternative business plan was structured to boost United's profitability and allow the airline to attract private sector loans if needed.
United employees own 55 percent of the airline though an employee stock ownership plan and the pilots and machinists have seats on the UAL board.