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UAL union rejects concessions
No. 2 airline's mechanics say they have made enough sacrifice; US Air pilots OK pact saving $465M.
July 9, 2002: 5:32 PM EDT

NEW YORK (CNN/Money) - Negotiators for the International Association of Machinists, the largest union at United Airlines, have rejected any wage concessions for the struggling employee-owned airline, a union spokesman confirmed Tuesday.

In a message to members, the union leadership said they rejected the notion that the company's request for a 10 percent pay cut was equitable with sacrifices made by other United employees, given that the union agreed to defer $498 million in retroactive pay won in a contract earlier this year. It said it would work with management to find cost savings but not through pay cuts.

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A spokesman for the airline said the union's statement is not a surprise, but it is a disappointment.

"The IAM has been saying for some time that they aren't interested in concessions," company spokesman Joe Hopkins said. "We think all employees should participate."

The Air Line Pilots Association, which represents about 9,000 United flight crew members, agreed to a 10 percent wage cut. Rank and file members are voting on that proposal now. Nonunion employees and management had a 5 percent pay cut set by the company. Those two pay cuts are expected to save the airline about $950 million a year.

United lost a record $1.8 billion, or $33.23 a share excluding special items, in 2001, and another $487 million, or $8.81 a share on the same basis, in the first quarter. Analysts surveyed by earnings tracker First Call expect a full-year loss of $23.37 a share this year.

The Association of Flight Attendants, which does not participate in the employee stock ownership plan that owns a majority of United parent UAL Corp., also has refused to hold concession talks.

UAL (UAL: Research, Estimates) stock finished sharply lower in New York Stock Exchange trading on Tuesday, dropping 8 percent to end at $8.93, the lowest level since August 1986, according to Reuters.

The airline is seeking federal guarantees on $1.8 billion in loans under the federal airline bailout approved in the wake of the Sept. 11 terrorist attack. Labor concessions are one of the issues considered by the government panel weighing an airline's request for assistance.

Pilots OK concessions at US Air

US Airways, the other major carrier that is seeking loan guarantees, also reached a tentative agreement late Monday with ALPA on a new wage package that the union said will save the money- losing airline 85 percent of what it is seeking.

The union said the new package, saves the nation's No. 7 airline $465 million a year for six-and-a-half years. It said the company originally sought to save $595 million a year for seven-and-a-half years, and more recently reduced its request to $545 million a year in savings.

The contract includes some protections for the pilots in case the airline files for bankruptcy protection later this year, saying it would not seek further changes in the contract in bankruptcy court.

US Airways lost $1.17 billion, or $17.35 a share excluding unusual items, in 2001, and $286 million, or $4.22 a share, in the first quarter. Analysts surveyed by earnings tracker First Call expect full-year losses in 2002 to be $12.28 a share.

The union said the two sides still are discussing some issues, including a protection against further furloughs and a minimum fleet size for the airline, and possible stock for the pilots and additional compensation if revenue exceeds predicted levels.

US Airways also reached an agreement last Wednesday with the Transport Workers Union, which represents about 160 dispatchers and assistant dispatchers at the airline. But it has had trouble reaching agreements with other unions.

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Shares of US Air (U: up $0.23 to $3.52, Research, Estimates) closed nearly 7 percent higher on Tuesday.  Top of page