NEW YORK (CNN/Money) -
Troubled United Airlines said Thursday that it would need significantly deeper concessions from its unions than it has previously sought, and one of its major unions -- the Air Lines Pilots Association -- was quick to reject the request.
The nation's No. 2 airline, which warned earlier this month that it would have to seek bankruptcy court protection without employee concessions and federal loan guarantees, issued a statement saying that it is now seeking $1.5 billion in annual labor related cost reductions, as part of an effort to cut costs by $2.5 billion annually.
ALPA, which was the only major union that had agreed to an earlier request for cost savings, told Reuters that it had immediately rejected the requested cuts.
"We told the company that their proposal was just totally and wholly unacceptable," union spokesman Steve Derebey told Reuters. Asked what specifically was objectionable, he said: "the scope and the magnitude."
The airline and ALPA had previously reached a tentative agreement on a 10 percent pay cut that had been estimated to save the airline $520 million over three years. But that agreement was never put to a rank and file vote. A need for deeper cuts became apparent as financial conditions worsened. Nonunion employees had a 5 percent pay cut imposed upon them.
The airline's statement did not indicate how deep the labor cost cuts would reduce pay and benefits, but the airline reported salaries and related labor costs of only $3.4 billion for the first six months of the year.
Analysts surveyed by earnings tracker First Call expect the company to lose about $28.11 a share this year excluding special items, which would come to about $1.6 billion.
The airline's other two major unions - the International Association of Machinists and the Association of Flight Attendants, have thus far refused to agree to any concessions. Thursday the IAM said the company was seeking cuts of between 9.5 and 10.4 percent.
The IAM members own about a 20 percent stake in employee-owned UAL Corp., United's parent company, while the pilots own about a 25 percent stake.
The federal government is demanding concessions before it agrees to guarantee $1.8 billion in loans. The company warned last month that it would not be able to meet its loan commitments in the fourth quarter without the guarantees, and that it would need to reach agreements with the unions and the government by mid-September if were to avoid seeking bankruptcy court protections.
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Shares of UAL (UAL: Research, Estimates) lost 23 cents, or 7 percent, to close Thursday trading at $3.05.
Reuters contributed to this report
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