United, mechanics agree on contract

Tuesday, February 19, 2002

CHICAGO -- United Airlines reached a tentative contract agreement Monday with the union representing its 12,800 mechanics and aircraft cleaners, averting by less than 36 hours a strike that could have grounded the world's second-biggest carrier.

If ratified by mechanics in a March 5 vote, the settlement would end a bitter two-year contract dispute, give the mechanics their first raise since 1994 and remove a substantial roadblock to the ailing carrier's recovery. The mechanics were preparing to strike starting at 11:01 p.m. tonight.

United CEO Jack Creighton called the accord "a critical milestone in developing a recovery plan that meets the needs of passengers, preserves jobs and puts the company on the road to financial stability."

But labor tranquillity, if achieved, would come at a considerable cost.

In addition to granting the same 37 percent raises voted down by mechanics last week, the tentative pact would, through the application of so-called license premiums, make more of them eligible for top-scale pay which is being bumped up from the current $25.60 an hour to $35.14, or about $73,000 a year.

It also would improve retirement benefits, the union said, and move up the payment of retroactive pay for work dating to July by 3 1/2 months. Retro wages totaling several hundred million dollars would be paid in quarterly installments beginning Dec. 15 and lasting until Oct. 15, 2004, instead of from 2003 to 2005.

Key to deal

Key to acceptance of the deal by the International Association of Machinists and Aerospace Workers was United's easing of a contract requirement that the mechanics agree to unspecified future concessions the airline seeks as part of its financial recovery plan. Like the pilots and other labor groups, the mechanics now will be able to vote separately on such concessions.

"This agreement fulfills the IAM's promise to negotiate an industry-leading contract," said chief union negotiator Scotty Ford, president of the union's 141-M. He said the union negotiators -- who did not make a recommendation before last Tuesday's "no" vote, unanimously recommend approval.

The midday announcement came on the fourth day of urgent talks at a suburban Chicago hotel following the mechanics' rejection of United's last contract offer, which was crafted by a presidential emergency board.

For the first time in 26 months of off-and-on talks, the two sides were working against a strike deadline with no apparent chance of intervention by Washington. Congress, which must act at President Bush's behest to block a strike, is in recess until next week. "This agreement shows that settlements can be reached without government interference," said Robert Roach Jr., a vice president of the machinists' union. "Not until a firm strike deadline was set and the prospect of further delay eliminated was this agreement possible."

Vote in doubt

Despite Creighton's repeated assurances that he was confident an agreement would be reached, United had acknowledged a decline in bookings for the coming days, reflecting public fears of a shutdown.

Mechanics over the weekend began removing their toolboxes and personal belongings from United maintenance centers in preparation for a strike that analysts said could have meant bankruptcy for the Elk Grove Village, Ill.-based airline, which lost $2.1 billion last year.

A "yes" vote on March 5 is not assured, with many mechanics still angry from years of labor strife at the majority employee-owned airline.

Relations were further soured by United's failed bid to merge with U.S. Airways and its launch last year of the Avolar business jet unit -- expensive moves that came while mechanics were awaiting a promised raise.

Airline consultant Michael Boyd called Monday's agreement an important step forward and predicted it will pass despite last week's vote against the previous offer by a more than 2-to-1 margin.

"It's a good day, going in the right direction, for United," said Boyd, president of the Boyd Group in Evergreen, Colo.

"The next challenge will be trying to get their revenues up."

Creighton, named to succeed the ousted James Goodwin in October, has said the merger was a mistake and put Avolar up for sale.

But with United losing $10 million a day as of recently, he has warned substantial wage givebacks and other concessions will be needed from its 80,000 employees to get back on the path to profitability.

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