United pilots shelve vote on cuts; airline meets with unions

Wednesday, August 21, 2002

CHICAGO -- United Airlines' pilots union has shelved a vote on a proposed 10 percent pay cut as the troubled carrier pushes for even bigger cutbacks and cost savings in a bid to avoid bankruptcy.

The 9,200 pilots had been scheduled to vote starting Tuesday on whether to approve a tentative agreement calling for the wage reduction over three years, resulting in an estimated $520 million in savings.

United, which has been unable to gain concessions from its other unions, cited the pilots' commitment in its June application for a $1.8 billion federal loan guarantee it says is needed to help it recover from financial struggles. But officials in Washington have made it clear to the airline that the application will be rejected without broader, deeper and longer-term cost savings.

The Air Line Pilots Association opted to postpone the vote indefinitely while other proposals are reviewed, union spokesman Herb Hunter said Tuesday.

"It makes no sense to vote on something that's not going to work," he said.

Under the tentative agreement reached two months ago, pilots would have permitted United's express carriers to continue planned growth of regional jet service. The pilots, who own 28 percent of the company, also would have received stock options in United parent UAL Corp.

Since the June 22 agreement, UAL's stock has lost more than 70 percent of its fast-dwindling value, dropping from $11.95 to $3.22 after closing 7 cents lower on Tuesday.

Hunter declined to discuss what other proposals are under consideration and said it shouldn't be assumed the pilots union will agree to steeper cuts.

"We're going to try to be creative, think out of the box, come up with some win-win scenarios for our pilots," said Hunter, a United pilot, emphasizing that pilots will vote on any proposal. "It's apparent that all parties are going to have to do something or there won't be a loan."

United spokesman Joe Hopkins had no comment on the vote postponement.

Executives of the nation's No. 2 airline held several meetings Tuesday with representatives of the carrier's unions, sharing information about costs, revenues and projections. Hopkins said he wasn't aware whether they presented formal cost-savings proposals that CEO Jack Creighton said last week would be forthcoming.

Creighton warned Wednesday that United is preparing to file for bankruptcy court protection this fall unless it succeeds in lowering costs dramatically through a restructuring. He set a 30-day deadline to reach cost-savings agreements with unions, lessors and suppliers.

"We are clearly at a crossroads in our history," Creighton told employees in a message recorded Sunday. "We are hopeful that each of these stakeholders fully recognizes our collective future is at stake and will work closely and constructively with us to implement the cost cuts that we must make."

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