CHICAGO, April 9 (UPI) -- United Airlines has reached a tentative six-year, cost-cutting deal with District 141 of the International Association of Machinists and Aerospace Workers, its largest union, that will save the bankrupt carrier $445 million a year.
The pact reached late Tuesday with the union representing 23,000 baggage handlers, customer service agents and security guards calls for 13 percent wage cuts and a 20 percent employee health insurance contribution.
With the tentative deal, United, which filed for Chapter 11 protection from creditors Dec. 9, has negotiated givebacks from five of its six major unions. United has until Monday to reach a concessions contract with 10,000 mechanics represented by IAM District 141-M.
"Nothing but the prospect of a liquidated United Airlines and permanent loss of more than 70,000 jobs can justify such sacrifices by employees," IAM negotiator Randy Canale said.
U.S. Bankruptcy Judge Eugene Wedoff has scheduled hearings on United's motion to abrogate its union contracts next week unless new agreements were reached.
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."
Pilots, machinists, baggage handlers, reservations and gate agents, and security guards agreed to temporary 13 percent wage cuts after United declared bankruptcy.
The Air Line Pilots Association tentatively agreed to $1.1 billion a year in givebacks in March and the Association of Flight Attendants reached tentative agreement on more than $300 million in pay cuts last week.
The deal with District 141 will save $2.6 billion over six years.
Leaders of IAM District 141 expect members to ratify the new pact by April 29. The agreement preserves existing pension plans, vacations and recall rights for workers called back from layoffs.
"These changes are essential to taking United from where we are today, to transforming the company to one that is capable of competing in the marketplace of the future," said chief executive officer Glenn F. Tilton in his weekly recorded telephone message to employees.
UAL Corp., United's parent, lost $3.2 billion in 2002.
United Tuesday matched sale fares offered by Delta and Northwest airlines to try to revive bookings slowed by the war in Iraq and the deadly severe acute respiratory syndrome virus. Tickets for one-way travel are as low as $44 for travel Tuesday through Thursday.