United's unions to give back $5 billion

Airline wins concessions as it reports huge losses

October 19, 2002|By NEW YORK TIMES NEWS SERVICE

United Airlines and its unions said yesterday that they had agreed to try to save $5.8 billion in labor costs over 5 1/2 years. Meanwhile, UAL, United's parent company, reported one of its biggest quarterly losses.

That United and its unions have agreed on a figure signals progress in the company's effort to put together a business plan to obtain much-needed financing.

Some analysts said the talks were taking place too slowly and that United could be forced to file for bankruptcy protection by mid-November to avoid a large debt payment.

United also said yesterday that it would file its new business plan with the federal government next week to bolster an application for a $1.8 billion loan guarantee, which would help it get $2 billion in private loans.

Executives are meeting with union representatives to parcel the concessions.

UAL reported a net loss in the third quarter of $889 million, or $15.57 a share. In last year's quarter, UAL had a loss of $1.2 billion, or $21.43 a share. The company reported revenue of $3.7 billion, 9 percent less than in the third quarter last year.

Excluding special items such as a tax-valuation allowance, UAL had a third-quarter loss of $503 million, or $8.82 a share. This was worse than the analysts' consensus estimate of $7.42 a share, as surveyed by Thomson First Call.

Shares of UAL closed down 2 cents yesterday at $1.71.

UAL said it had a cash balance of $2 billion but was burning through it at a rate of $7 million a day by the end of the third quarter. About $344 million of the cash cannot be used.

"I think it's good news for the company that the unions seem to be moving closer to some sort of agreement," said Jim Corridore, an analyst at Standard & Poor's. But he noted that the company has debt due next month. "It's questionable how quickly the government can move on their application."

United executives have been talking regularly to the Air Transportation Stabilization Board, which administers the $10 billion loan-guarantee program set up by Congress after the terrorist attacks last year.

The pilots issued a statement yesterday saying that four of UAL's five unions had come up with the $5.8 billion number. They said the Machinists union, which recently started separate negotiations, had not agreed to that number. But the Machinists quickly said they supported the proposed figure.

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