CHICAGO -- United Airlines mechanics agreed Monday to hold another vote on $700 million in wage-and-benefit concessions the airline says it needs to stave off bankruptcy. The airline also said it would defer nearly $1 billion in impending debt payments.
The mechanics will vote Thursday on the same proposed pay cuts of 6 percent to 7 percent they rejected last week. The terms of benefit concessions were revised slightly in hopes of winning approval.
Union leaders have urged the rank and file to ratify the concessions, which failed last week 57 percent to 43 percent.
United, which is losing millions of dollars daily, is trying to slash labor costs by $5.2 billion over 5 1/2 years to win approval of a $1.8 billion federal loan guarantee. The guarantee is considered key to avoiding bankruptcy.
The mechanics' vote is key: Wage concessions already agreed to by United's pilots, flight attendants and other employees expire Dec. 31 unless all groups sign on.
Deferring loan payment
Also Monday, United said it was deferring a $375 million payment on loans that formally was due Monday but can be put off as late as Dec. 16, and will use similar grace periods for another $500 million due last month. It said it already is in the grace period for another $45 million in various debt obligations.
United has pledged to keep flying if it files for bankruptcy, but its stock would probably be worthless and it would lose control of its finances. The nation's No. 2 airline is 55 percent owned by its employees.
The Machinists' union, which represents the airline's 13,000 mechanics and other employees, said the new concessions package addresses concerns over vacation days, shift scheduling and employee input.
"United still faces a difficult task in avoiding bankruptcy, but the second mechanics' vote provides the airline with a glimmer of hope," Standard & Poor's analyst Philip Baggaley said in a research note.
Major airlines have been suffering heavy losses because of the weak economy and the downturn in travel after the Sept. 11 attacks.