Two of United Airlines' biggest unions expressed surprise Monday at the whopping $2.4 billion in annual wage concessions that the bankrupt carrier is said to be seeking from employees, but some observers suggested that the increased cuts shouldn't come as that much of a surprise.þþÿIt shouldn't have been a shock United needs moreÿ givebacks from its employees, said Morningstar Inc. analyst Nicolas Owens.þþObviously, he said, ÿthe concessions they had before weren't enough.ÿþþTo help the struggling company try to win crucial federal loan guarantees, leaders of United's unions last month tentatively agreed to concessions that would save the carrier nearly $1 billion annually over 5 1/2 years.þþBut on Dec. 4, the federal Air Transportation Stabilization Board rejected United's request for $1.8 billion in loan guarantees, saying the company's business plan was based on overly optimistic projections and didn't include a big enough reduction in operating costs. Five days later, United filed for Chapter 11 bankruptcy protection.þþIn a sense the bankruptcy has strengthened United's bargaining position: If the carrier and its unions can't agree to contract changes that yield satisfactory cost savings, the law permits the bankruptcy court to impose pay cuts unilaterally.þþSince the filing, UAL Chief Executive Glenn Tilton repeatedly has signaled publicly that the company will need to achieve much more dramatic savings than what it previously asked the unions to concede.þþNonetheless, some unions said they weren't expecting the big hit United is asking workers to take.þþWhen United briefed officials of the carrier's pilots union about its revised cost-cutting plan Friday, ÿWe were really stunned and puzzled by the material we received,ÿ said an Air Line Pilots Association spokesman.þþWhile declining to be specific about the size of the pay cuts the airline wants its pilots to accept, spokesman Lewis Goldberg said the carrier had presented ÿa very aggressive package.ÿþþThe Association of Flight Attendants, which represents about 23,000 United attendants, disclosed the $2.4 billion figure on its Web site Friday evening.þþTo get through the reorganization, the association told its members, United had to line up ÿdebtor in possessionÿ loans, which provide a company with desperately needed operating cash.þþBut ÿthe lenders are requiring the airline to reduce its costs by about $2.4 billion annually,ÿ the union said.þþUnited has access to $800 million of the $1.5 billion in debtor-in-possession financing immediately, the group said, but before it gets the remaining $700 million it must meet cash-flow targets that can be reached only if the company promptly slashes its expenses.þþÿWe worked really hardÿ to keep UAL from toppling into bankruptcy, said spokeswoman Sara Dela Cruz, ÿbecause we knew that management would be asking for moreÿ if United filed for Chapter 11.þþThe cuts the company has proposed are at this point ÿconceptual,ÿ Dela Cruz said, adding that the union remains ÿcommitted to working with the company on restructuring.ÿþþOfficials at United's machinists union couldn't be reached for comment, and a UAL spokesman declined to comment.þ
Source: Chicago Tribune
