United Airlines and the machinists' union said yesterday that they would begin negotiations over cost cuts next week. The announcement came as analysts tried to gauge how the need to have talks on concessions with each union would affect United's chances of avoiding a bankruptcy filing.þþFor almost two months, United's five unions had been working together to present a concession package to the airline, which is trying to obtain financing before mid-November, when a large debt payment is due. On Sept. 25, the coalition offered Glenn F. Tilton, chief executive of UAL, United's parent company, $1 billion in annual concessions over five years. That fell short of the $1.5 billion a year over six years that Mr. Tilton's predecessor, John W. Creighton Jr., demanded in August.þþThe unions had been awaiting Mr. Tilton's response. But on Wednesday night, it became apparent that the International Association of Machinists, which represents the largest labor group, wanted to conduct its own talks. The machinists issued a statement yesterday saying they ÿwould directly engage United Airlines to discuss cost reductions in an effort to avoid a bankruptcy filing.ÿþþIn the statement, Robert Roach Jr., general vice president of the union, said: ÿUnited needs to reduce its labor costs, but cost reduction does not necessarily mean pay cuts. Giving back money every time there is a crisis does not fix the problem; it only hides it temporarily.ÿþþThe union said executives should recognize that the machinists had already made a significant concession by agreeing last spring to defer $500 million in retroactive pay.þþUnited, which is 55 percent-owned by employees, also issued a statement last night, saying: ÿThe I.A.M. has said that it will continue to coordinate with the other labor groups at United while pursuing its specific discussions with United, which is important since the meaningful participation by all the unions is critical to success in this process.ÿþþThe four other unions — the pilots, flight attendants, flight dispatchers and meteorologists — said they would continue to work together, but would negotiate separately with United. They also urged the machinists to ÿparticipate and work alongside the rest of United's employees to preserve the company without a bankruptcy.ÿþþThe idea of United, the second-largest carrier, having to negotiate separately with the unions did not sit well with some analysts, even though the unions said late in September that United would have to talk to each about specific concessions.þþPhilip Baggaley of Standard & Poor's said, ÿThe apparent splintering of the union coalition lengthens the odds against United reaching agreement with labor in time to avoid a bankruptcy filing before large debt payments come due on Nov. 17 and Dec. 2.ÿ þþIn trading yesterday, UAL shares fell 11 cents, to $1.76.þþUnited has said it hopes to obtain a $1.8 billion loan guarantee from the federal government to help secure $2 billion in private loans. But the government apparently wants to see deeper cost cuts from labor and suppliers. United soon needs to give the government a revised business plan showing the concessions it can realistically hope for.þþDarryl Jenkins, director of the Aviation Institute at George Washington University, said that whether United negotiates with the unions as a bloc or with each separately, ÿit's going to be very, very difficult.ÿþþEach has something different at stake. For example, pilots, who own about a quarter of the airline, would find it hard to obtain comparable jobs elsewhere if United entered bankruptcy, while the machinists and flight attendants would have an easier time. The flight attendants are not part of the employee ownership plan. A bankruptcy filing would presumably wipe out the value of the stock, lead to a board reorganization and force changes in labor contracts.þþþ
Source: NY Times
