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United, pilots move closer
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August 25, 2000: 1:58 p.m. ET
Carrier also backs away from forced OT by mechanics to improve those talks
By Staff Writer Chris Isidore
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NEW YORK (CNNfn) - United Airlines, plagued by contentious labor negotiations that have caused widespread flight cancellations and lowered earnings estimates, is making progress in talks with both the pilots and machinists unions, officials from all sides said Friday.
The talks between management and the Air Line Pilots Association, which represents about 10,500 pilots, are down to the contentious issues of pay and scope of work performed by union members, said Herb Hunter, a United captain and a spokesman for the union.
He said the union is hopeful of meeting a September 1 target date for conclusion of the first contract since the pilots became 25 percent owners of the airline in the 1994 employee buyout of the world's largest carrier.
 "It's doable by then (Sept. 1). Will it happen? I can't say," said Hunter. "We've had our hearts broken here before. These are volatile issues and things could blow-up. Honestly, this thing could be done today. Will it? I don't know."
The scope of work discussions concern which flights, including some foreign flights as well as commuter jets, must be flown by United pilots and which can be farmed out to lower-paid pilots not in the union.
Meanwhile, United has backed away from trying to impose forced overtime on mechanics at six airports, who are represented by the International Association of Machinists (IAM), the largest union at the carrier. While a spokesman said the carrier maintains the right to demand overtime to meet service needs, it said it agreed to drop an emergency order at the airports in an effort to keep separate negotiations with that union on track.
"We're committed to working cooperatively with the IAM," said Joe Hopkins, an airline spokesman. He said that the use of forced overtime was relatively limited even before the company and IAM officials reached an agreement. Much of it was centered in Los Angeles, where Hopkins said 31 mechanics had been placed on leave pending hearings for participating in a sick-out that cancelled flights during last week's Democratic National Convention.
Overtime issue clouding machinists talks
A spokesman for IAM agreed that the use of overtime had been limited, but said that the company's declaration of an emergency had been damaging to the atmosphere of the talks.
"The numbers (of mechanics working forced overtime) were small but the concerns were large it could increase," said Frank Larkin, spokesman for the union that represents close to 45,000 employees, including mechanics and ramp workers as well as ticket agents and customer service employees. "This was a major issue for members and these talks aren't held in a vacuum."
Hopkins said that the company's main focus is to conclude an agreement with the pilots, then turn its full attention to the machinists. Larkin said despite not being as close as the pilots to a new agreement, there has been progress in talks between the IAM and the company.
"I think both sides were anxious that progress that was already achieved not be risked by this (overtime issue) going further than it's already gone," said Larkin.
Neither set of negotiations is close to an impasse being declared, so there was no threat of a strike at the carrier. But the refusal by employees, especially pilots, to work extra days had forced United to cancel about 3 percent of its flight schedule in recent weeks.
Flight cancellations hurting profitability
Hunter said that many pilots stopped flying additional days in April partly because their take-home pay then increased, in turn because they no longer were giving up 16 percent of their salary in order to purchase stock in the company. He said the provision of allowing pilots to fly on their normal off-days for additional salary was put in the 1994 contract as a way of helping members make up for the lost take-home pay.
The cancellations of flights also forced United parent UAL Corp. (UAL: Research, Estimates) to warn investors a week ago it would not meet earlier earnings estimates. It said without the conclusion of labor agreements, it could not give new guidance for the second half.
"Although booking patterns remained strong through early August despite poor operating performance, booking levels have since fallen on the adverse publicity surrounding the cancellations that occurred in early August," said Jim Goodwin, the chairman and chief executive of the company at that time. "While our operating performance has improved somewhat, the reduced booking levels continue, and as a result, revenues are not as strong as we had previously anticipated."
Both labor agreements are also key to winning the unions' support of the proposed $4.3 billion acquisition of US Airways Group Inc. (U: Research, Estimates), the nation's sixth-largest carrier.
"We're not opposing it but we're not supporting it," said Larkin. " Even with the company's (no-layoff) assurance, our members are very anxious to see assurances in writing."
Since the pilots own a 25 percent stake in UAL, while machinist members own 16 percent, winning support of the unions is key to the approval of the deal. Management and salaried employees only own about 9.5 percent of the company, with the public owning the remainder of the stock.
Shares of UAL gained 1-9/16 to 49-3/4 in trading Friday. 
-- Click here to send e-mail to Chris Isidore
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