Hoping to steer United Airlines away from a bankruptcy protection filing, the company's five unions presented executives with a long-awaited proposal last night, intended to save $1 billion a year in labor costs for five years.þþThe proposal was hammered out late yesterday afternoon by the leaders of the unions at a meeting in Chicago, the home city of UAL, the parent company of United. Executives had been waiting for the proposal for several weeks, ever since Glenn F. Tilton took over as chief executive of the airline. þþThe unions said they hoped that the savings would help United receive a $1.8 billion loan guarantee from the Air Transportation Stabilization Board, a federal agency, or get financing from capital markets. The carrier has said it desperately needs the financing to avoid filing for bankruptcy protection.þþÿThe coalition framework is without precedent for this or any other airline, and United has the most committed employees and strongest airline franchise in the world,ÿ the unions' leaders wrote yesterday in a letter to Mr. Tilton. ÿWe will not let it fail.ÿþþÿWe look forward,ÿ the letter continued, ÿto working with you to implement the coalition framework, to secure financing for the companyÿ through the federal loan guarantee program or a third party.þþUnited Airlines did not immediately address the amount of labor savings proposed by the unions.þþÿWe will study the framework very carefully, and we are committed to responding to the coalition and its members in the days ahead to finalize an updated business plan,ÿ the company said last night. ÿAt the same time, we are focused on ensuring that United remains a highly competitive business for the long term.ÿ þþUAL's board discussed the proposal at a meeting last night and will examine it further this morning.þþThe concessions offered by the unions are significantly less than what John W. Creighton Jr., Mr. Tilton's predecessor, had said was needed for United, the nation's second-largest airline, to get the loan guarantee. þþLast month, Mr. Creighton announced that the unions would have to give up $1.5 billion a year over six years. þþThe unions scoffed at that figure and immediately formed the coalition to come up with their own plan.þþIn the letter, the unions said that the reductions in labor costs, together with other cutbacks and initiatives, would increase the company's annual profits by $2 billion to $3 billion. The unions reached the $1-billion-a-year figure after consulting with their financial advisers, and after having several meetings with United's own advisers. þþThe company had hoped that a proposal would be presented last Friday, but the unions said they would have to work through the weekend.þþThe unions said they had not determined exactly how the cuts would be divided among the labor groups.þþÿOur discussions with United Airlines will include several cost savings proposals, including tapping United's best asset for ideas on how to save money — our members,ÿ said Randy Canale, president of District 141 of the International Association of Machinists and Aerospace Workers, which represents 35,000 United employees. þþÿAny discussion,ÿ Mr. Canale said, ÿmust also include recognition for the substantial sacrifices machinists' union members have already made to United's recovery efforts.ÿþþIn a statement, Mr. Canale pointed out that the machinists recently agreed to defer $500 million in retroactive pay owed to them as part of the latest contract agreement. þþThe first payment of that amount becomes due in December. The machinists have repeatedly said they regard this as a significant loan made to the airline.þþGreg Davidowitch, the president of the United chapter of the Association of Flight Attendants, said in a statement: ÿBeing a part of the solution that assists United in surviving its near-term financial crisis is central to our goal of ensuring that the flight attendants' long-term interests are represented.ÿþþMr. Davidowitch added that he hoped that ÿUnited can successfully amend its application for a loan guarantee from the Air Transportation Stabilization Board, get access to near-term financing, avoid bankruptcy and rebuild.ÿþþThe transportation board has been reviewing the loan guarantee application from United, which is intended to help the airline get $2 billion in private loans. Federal officials told United that it needed to get deeper concessions from its employees and suppliers to bolster the application's chances of success. þþSoon afterward, Mr. Creighton said United would need to get $2.5 billion in annual cost savings, with $1.5 billion of that coming from labor.þþAfter Mr. Tilton was named as chief executive early this month, he did not indicate exactly what amount he hoped to get from the unions, but he did not reject Mr. Creighton's number. He has personally met with union leaders in the last week to talk about the concessions.þþUnited lost a record $2.1 billion last year, and $341 million last quarter, leading many industry experts to say that it might have to declare bankruptcy.þþþ
Source: NY Times
