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United sues mechanics
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November 17, 2000: 4:51 p.m. ET
Largest airline seeks injunction, saying grounding of planes is bargaining tactic
By Staff Writer Chris Isidore
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NEW YORK (CNNfn) - United Airlines said it won a Federal court injunction against its unionized mechanics, who the world's largest airline charges were grounding planes as a way of gaining leverage at the bargaining table.
A spokesman for the International Association of Machinists and Aerospace Workers (IAM), which represents the 15,000 mechanics, denied it is leading any kind of organized activity at the airline, though, and said the planes being grounded are in need of maintenance work. The spokesman was not available for comment after United announced it had won the order.
IAM also represents nearly 30,000 ramp and customer service workers at the airline. Together, the 44,000 IAM members own about 20 percent of UAL, the world's largest employee-owned company.
The two sides are set to resume talks on a new contract for mechanics Monday after a two-week break, though the company said it would be willing to meet over the weekend.
 The talks broke off Nov. 7 with IAM asking government mediators to allow the mechanics to go on strike after a 30-day cooling-off period, but the federal mediators have not acted on that request. Talks have taken place this week for the customer service and ramp workers covered under a separate IAM contract.
The company's filing in U.S. District Court in Chicago charges the grounding of aircraft constitutes an illegal job action under the National Railway Labor Act, which governs labor relations in the airline industry as well, and prevents a strike or other job action unless an impasse is declared in talks.
"While we regret having to take this step, our goal with the temporary restraining order is to protect our customers from the impact of operational disruption," said a statement from Andy Studdert, executive vice president and chief operating officer at United.
The airline insists the large number of planes being grounded is no coincidence.
"Our goal is no more than 45 cancellations a day. This month we're averaging 98, and the increase is mostly because of maintenance operations," airline spokesman Joe Hopkins said.
But the mechanics are only doing their jobs to make sure the planes in the air are safe, insists Frank Larkin, spokesman for IAM.
"The company's goals are just that -- goals," Larkin said. "No professional is going to risk lives and his career to meet goals arbitrarily set by the company."
Second round of labor pains this year
The airline was hit with 200 to 300 flight-cancellations-a-day earlier this year, when its pilots refused to fly overtime during the Air Line Pilots Association's talks with the airline.
Those cancellations hit customer bookings, revenue and profits at the airline's parent, UAL Corp. (UAL: Research, Estimates). The airline eventually settled a relatively lucrative contract with the pilots, but the hit on revenue and the cost of the agreement resulted in the company posting a much larger than anticipated loss in the third quarter.
Hopkins would not comment on whether revenue and customer bookings are being affected enough to force the company to miss earnings estimates. Analysts surveyed by earnings tracker First Call estimate the company will lose $2.44 a share in the fourth quarter, compared with a $1.91-a-share profit a year ago. Revenue is expected to fall slightly from year-earlier levels.
First Call's forecasts also call for a 12-cents-a-share loss in the first quarter of 2001, compared with a $1.61-a-share profit in the first quarter this year.  But the earnings tracker projects the airline should return to profitability later next year with a $5.37-a-share profit for the full year.
"This is not [on the] magnitude [of] last summer, when it was 200-300 flights a day, but is it is an inconvenience to our customers," Hopkins said.
He also refused to comment on whether the lack of legal action against the pilots union during the previous flight disruptions encouraged the mechanics to take some action to gain leverage.
The mechanics are working under the terms of a contract reached in 1994, when the employee buyout of the airline was accomplished with wage concessions from IAM and ALPA in return for stock for members. The current IAM pay scales are about $23 an hour for mechanics and $18 to $19 an hour for customer-service and ramp employees, Larkin said. He said those pay scales are close to 1994 levels.
Larkin said the airline Thursday announced it would give all IAM members a two-week lump-sum payment as an advance against future back pay won in any contract settlement. The union spokesman said that is an appropriate offer but should be part of negotiations and not a unilateral action by management.
Shares of UAL closed up $1.38 to $37.88 in trading Friday.
Delta Air Lines, pilots ask for mediation
In other airline labor news, No. 3 airline Delta Air Lines (DAL: Research, Estimates) and the Air Line Pilots Association made a joint application for a federal mediator to enter their talks on a new contract Friday. The two sides said they would like mediation to start Dec. 1 and go for at least 90 days, although that could be extended by mutual consent.
The two sides have met 110 times since the start of talks Sept. 8, 1999. The current Delta pilots contract became amendable on May 2. That's similar to a contract expiration in other labor talks, although under the Railway Labor Acts contracts stay in force until a new agreement is reached or a job action is allowed by federal mediators.
Shares of Delta fell 31 cents to $48.19 in trading Friday. 
Click here to send mail to Chris Isidore
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United backs away from forced OT demand for mechanics - Aug. 25, 2000
United Airlines' 3Q loss soars past estimates - Oct. 19, 2000
United Airlines warns of losses in 3Q, 4Q, hurting airline stocks - Sep. 29, 2000
United, pilots reach accord - Aug. 26, 2000
United Airlines owner warns on 3Q profits - Aug. 17, 2000
United warning crashes air stocks despite strong 2Q - Jul. 19, 2000
United Airlines cancels thousands of flights - Jul. 7, 2000
Unfriendly skies grounds flights - May 15, 2000
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