United facing strike threat

Deanna Bellandi

Wednesday, Feb. 13, 2002 | 11:28 a.m.

CHICAGO -- United Airlines mechanics rejected a contract offer that would have given them industry-leading pay, setting up a possible strike starting in a week at the nation's No. 2 carrier.

Hours after the late-night announcement of results, the two sides today scheduled new talks to begin Friday afternoon in Chicago. A walkout, which could begin as soon as next Wednesday without a settlement or congressional action, has the potential to cripple the financially ailing carrier.

"We are going to do everything humanly possible to avoid a strike," United spokesman Joe Hopkins said Wednesday.

Airline officials declined to say if a strike would fully shut down operations, expressing confidence a settlement can be reached that would avert any interruption of service.

Investors showed their concern at the latest labor setback, initially sending shares in UAL down 9 percent in trading on the New York Stock Exchange. By late morning, the stock had recovered somewhat but was still down 59 cents, or 4.8 percent, to $11.80 a share.

ABN Amro analyst Ray Neidl predicted United's management would quickly come up with a substantial new offer.

"United just cannot afford to strike," Neidl said. "That could be the thing that puts them into bankruptcy."

The International Association of Machinists and Aerospace Workers opposed a provision in the contract that would have required members to give back some of their raises to help the struggling airline recover.

The airline's offer, recommended by an emergency board President Bush appointed in December, called for immediate raises of as much as 37 percent. United mechanics haven't gotten a raise since 1994 and have been working under the terms of the old contract for 19 months.

Sixty-eight percent of members voted to reject the offer Tuesday. In a separate vote, 86 percent voted to authorize a strike. The union says nearly 90 percent of eligible members voted.

The five-year contract required a simple majority to pass, while the strike vote needed two-thirds support.

Congress could impose a settlement if Bush asks it to intervene. But that has never occurred in an airline labor dispute.

"Both parties have agreed to re-enter negotiations during which either an agreement will be reached or a new proposal advanced," UAL Chairman and Chief Executive Jack Creighton said in a statement. "If progress is made, and there is no reason to believe that it can't be, then we anticipate that another vote will occur by mid-March, without interruption of operations."

Tom Buffenbarger, international president of the machinists union, also was anxious to resume negotiations.

"We will travel anywhere, and meet around the clock if necessary for the next six days to reach an agreement," he said. "My advice to Congress and the President remains the same: Stay out of this and we will get it done."

A top United mechanic paid $25.60 an hour would have received a raise to $35.14 immediately and to $37.54 by mid-2004, surpassing the $34 received by American Airlines mechanics.

Scott Brown, a United mechanic for 17 years in Denver, said he voted for the contract proposal, in part because he is financially strapped as he tries to put his son through college.

"Right now finances are tight, I haven't had a raise since 1994 and I need the money," he said.

But several union lodges recommended a "no" vote because of looming wage givebacks and the fact that employees would not receive retroactive pay for work dating to July 2000 until April 2003.