United gets OK from judge to cut workers' pay
By Marilyn Adams, USA TODAY
A bankruptcy judge Monday allowed United Airlines to impose an immediate temporary pay cut on its mechanics and approved negotiated cuts for pilots and flight attendants.
The ruling in Chicago by Judge Eugene Wedoff is expected to save the struggling airline $60 million a month, but complicate its already strained labor relations.
United's mechanics last week voted to reject a new round of pay cuts requested by the airline, and authorized a strike if United breaks their labor contract.
In a hearing Monday, United received permission to cut mechanics' pay 9.8%, effective today, for four months while it negotiates further with the union, or prepares court arguments to break the contract unilaterally.
United contends a strike by its mechanics would be illegal; the union's leadership disagrees.
The union would exercise its right to strike "if United changes our contract against the membership's will," said union spokesman Richard Turk. He added that Wedoff's ruling Monday won't trigger a strike.
United, which has been in bankruptcy reorganization for 26 months, has said it needs $725 million a year in additional labor cost cuts to satisfy its lenders and to attract loans to exit bankruptcy.
Meanwhile, the pilots and flight attendants unions Monday said their members have ratified new contract concessions. About 75% of pilots voting approved an 11.8% pay cut. Just 56% of flight attendants who voted agreed to a 9.5% pay cut.
Mark Bathurst, chairman of the Air Line Pilots Association, said pilots appreciate management's huge challenges in stemming losses, but expressed frustration. "We will be relentless and steadfast in holding management" accountable, he said in a taped message to pilots.
When it sought bankruptcy protection in December 2002, United, the No. 2 airline after American, hoped to exit in 18 months. But in 2003, United and other airlines with large international networks were severely hurt by the U.S. invasion of Iraq and the SARS epidemic, which frightened away many international travelers.
United's fuel bill last year ran more than $1 billion higher than planned, forcing the airline to cut costs again throughout the company.
Even if United reaches an amicable cost-cutting deal with its mechanics, it still faces the complex and emotionally charged issue of employee pensions. United says that to exit bankruptcy, it must terminate its existing pension plans and replace them with less costly ones. Airline officials hope to exit bankruptcy protection this fall.
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