UAL mechanics to again vote on wage concessions

Geoffrey White

Monday, Dec. 2, 2002 | 9:53 a.m.

CHICAGO -- The union representing 13,000 United Airlines mechanics announced today that it has scheduled a second membership ratification vote on United's recovery plan.

The vote will be held on Thursday.

The announcement by the International Association of Machinists and Aerospace Workers came after the union met with United officials late into the night as the carrier pressed for hundreds of millions of dollars in cost cuts it says are necessary to stave off bankruptcy.

The mechanics last week rejected a proposed package of steep wage and benefit cuts that nation's No. 2 airline says are necessary to land a $1.8 billion federal loan guarantee that would keep it out of Chapter 11 bankruptcy court proceedings.

The proposal that will be before the mechanics makes some changes in language from the one that was rejected by 57 percent of those voting last week, but the dollar figures were essentially the same, the announcement said. The package had included 7 percent wage cuts.

The meeting came a day after the airline's 24,000 flight attendants agreed to $412 million in wage concessions. However, that deal and other cost-cutting agreements accepted by United's pilots and other employee groups will expire Dec. 31 unless the mechanics sign on.

United is seeking $5.2 billion in companywide labor cuts over 5 1/2 years. The mechanics' proposed share is believed to be $600 million to $700 million.

The cash-strapped airline also must decide whether it can make a $375 million debt payment today, although under a grace period it could push that deadline back to Dec. 16. Its cash reserves are believed to be around $1 billion and on a pace to run out this winter.

A ruling is expected any day on its application for a $1.8 billion federal loan guarantee, which United says it must have to obtain $2 billion in private loans. Without the loan guarantee, United has said it would have no choice but to file for bankruptcy.

United has been struggling since the Sept. 11, 2001, terrorist attacks to reverse multimillion-dollar losses each day. It has reduced service and laid off 20,000 workers because of the weak economy and sharply reduced spending by business travelers. On Friday, speculation that United was headed into bankruptcy sent shares of UAL Corp., the airline's parent company, tumbling 31 percent.

A bankruptcy is likely to have no immediate effect on passengers, since United has said it would continue flying its normal schedule. But the prospect of such a filing has raised concerns among some of the other unions that represent United workers, which fear that a bankruptcy court would order even more severe concessions.

The president of the local representing ramp workers and public contact workers criticized the mechanics for not being more flexible, saying the alternative to working with United on cost cutting is "so undeniably worse I question the motives and judgment behind such a decision."

"Simply put, every benefit we currently enjoy can be lost at the stroke of a judge's pen," Randy Canale wrote in a letter to District 141 members Friday.