UAL attendants vow no givebacks

Pilots willing to talk `labor cost relief' with money-losing carrier

April 27, 2002|By BLOOMBERG NEWS

CHICAGO - United Airlines flight attendants said yesterday that they won't consider contract concessions that parent UAL Corp. wants from unions as part of a plan to recover from record losses. The pilots said they're willing to work with the carrier on the plan.

The responses follow a meeting yesterday between John Creighton, chief executive of the world's No. 2 airline, and unions for the flight attendants, pilots and flight dispatchers.

UAL had a record loss of $2.1 billion last year as sales fell 17 percent, and expects a loss this year as well. The Chicago-based company, which is 55 percent-owned by its employees, has said a turnaround will require unions to help reduce labor costs, its biggest expense.

"We take exception to the company's characterization that our costs are the reason for United's financial woes," said Linda Farrow, president of the Association of Flight Attendants at United, which represents about 26,000 workers. "Our contract ensures that United's flight attendant costs are similar to the average flight attendant costs of United's major competitors."

United's Air Line Pilots Association said in a statement that it hired financial and legal advisers to help with a recovery plan. The pilots union "will discuss labor cost relief in the context of an overall program that includes equitable contributions from all United stakeholders," said Capt. Paul Whiteford, chairman of the 10,000-member United unit.

Separately, United Thursday night reached a tentative contract agreement with the Machinists union covering 25,000 baggage handlers, reservations agents and other airport workers.

The flight attendants' contract calls for an annual review to ensure that United's costs for the workers are competitive with the average of major rivals, the union said. Because of the provision, which no other United union has, the attendants didn't get a wage increase last year while new contracts with other groups provided industry-leading pay, the AFA said.

The pilots as a group own about 25 percent of UAL. The pilots in October 2000 approved a four-year contract that included what their union said then was the best pay in the industry.

The flight-attendant union, which wasn't among the employee groups that took ownership stakes in the company in 1994, is positioning itself for talks with the airline, said Merrill Lynch & Co. analyst Michael Linenberg. The AFA statement probably doesn't signal that United faces a particularly difficult battle with its unions, he said.

"It's always a negotiation," Linenberg said. "It is something that will have to be worked through. That's always the case when management comes and asks for concessions."

Creighton and Chief Financial Officer Jake Brace reviewed the airline's financial position in the meeting yesterday and didn't discuss concessions, Farrow said. Creighton told the labor representatives he would meet individually with the unions and "their plan would be spelled out in more details," she said.

United needs a recovery plan if it wants to apply for a federal loan guarantee that would be used to secure a private loan. The deadline to apply for a guarantee is June 28.

The Machinists union, which represents more United workers than any other union, didn't participate in the meeting because of its ongoing talks.

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