United Airlines reached a tentative agreement with its pilots' union yesterday, its most critical labor union. The six-year deal would allow United to proceed with plans for a separate low-fare airline, officials involved in the negotiations said.þþThe agreement, which United said is worth $1.1 billion a year, is the first deal it has reached with a major union. Industry analysts said the deal was a breakthrough in the often tempestuous talks between labor and management at United, which is based in Chicago.þþUnited, a unit of UAL, filed for Chapter 11 protection in December. It has been seeking a total of $2.56 billion in concessions from labor so that it can emerge from bankruptcy and keep flying.þþAnalysts said the agreement with the Air Line Pilots Association, which represents United's 8,800 pilots, was an initial victory for United's chief executive, Glenn F. Tilton. Mr. Tilton, who joined the airline last September, has insisted that United needs to start a carrier, apart from its main operations, to compete with more efficient airlines like Southwest and JetBlue.þþThe deal ÿgives us the guidance we needÿ to set the plan in motion, a United executive said yesterday. A spokesman for the pilots' union would not comment.þþUnited wants to shift 30 percent of its operations to the new airline with a working name of Starfish. Employees of the new airline would be paid lower wages, receive a smaller benefit package and work under less restrictive work rules. The airline would assume many of United's domestic routes from outlying cities to its hubs in Chicago, Denver and Los Angeles, flying Airbus jets. The venture would require approval from all of United's five big labor groups.þþUntil yesterday, United's pilots' union had bitterly opposed the idea, saying it was more important for United to concentrate on streamlining its traditional operations. But United held the upper hand in the discussions, said Gary Chaison, a professor of industrial relations at Clark University in Worcester, Mass.þþÿIt's a very dramatic change,ÿ Professor Chaison said. ÿYou could call it a momentous change, because airline unions have fought this tremendously. To give in on an economic issue and a symbolic issue shows the desperation of the unions to try to save their jobs.ÿ þþWord of the contract lifted some of the gloom surrounding the airline that had been worsened by the outbreak of the war. ÿIf this is ratified, there is no way United liquidates,ÿ a United banker said yesterday.þþLast week, United filed a motion in United States Bankruptcy Court in Chicago seeking to void its labor agreements and impose its own pay scales and rules, if it could not reach deals with its unions. A hearing on its motion is set for April 14. United has said it must put the concessions in place by May 1 to comply with covenants of $1.5 billion in debtor-in-possession financing.þþNeither United nor the union would give specific details of the agreement; voting on it is set to be concluded by April 11. But both referred to the low-fare carrier in statements issued after the tentative deal was struck. Mr. Tilton, in comments released by United, called the agreement ÿa huge stepÿ in helping the airline emerge from Chapter 11.þþÿThis breakthrough agreement is a significant step forward in making the hard changes necessary to reposition United to compete more effectively both immediately and over the long term,ÿ Mr. Tilton said.þþHe continued, ÿThis agreement helps provide the flexibility United needs to strengthen our business, compete where we choose, and become a resilient, profitable company that can offer stable jobs on a sustainable basis.ÿþþPaul Whiteford, a captain who is chairman of the master executive council for the pilots' union at United, said the agreement would make United a ÿmore effective competitorÿ against both traditional and low-fare carriers.þþMr. Whiteford said the company and the union ÿwill continue to work together to ensure that United's operations remain competitive in every market United serves, including markets served by the company's no-frills, low-fare competition.ÿ þþUnited is continuing talks with other unions, including flight attendants and mechanics. A spokeswoman for the flight attendants' union, Sara Dela Cruz, said yesterday that the union was committed to helping United successfully restructure.þþJoseph Tiberi, a spokesman for the International Association of Machinists and Aerospace Workers, which represents the mechanics, said his union would like to conclude talks quickly. ÿThere's no advantage to anyone in dragging this process out any further,ÿ Mr. Tiberi said. þþThe machinists' union, however, filed suit against United on Wednesday, seeking to block its plans to lay off 1,148 mechanics at its Indianapolis maintenance base. It contended United had used the war in Iraq as a pretext to shut the site, which is considered to be a technological showplace. But United said the layoffs were allowed under its contract, which provides for furloughs without pay in the event of an emergency, like war. The laid-off workers would keep benefits and seniority.þþUnited's creditors' committee, meanwhile, sent letters to Congressional leaders and the White House yesterday, supporting efforts for a federal bailout package to help the airlines. ÿFailure to offer immediate war-related relief to United and this industry as it restructures for a new era of global competition will jeopardize the future of commercial air travel,ÿ the committee's letter said. The 15-member committee includes 3 union representatives, as well as representatives from Airbus and United's lenders.þþProfessor Chaison said the efforts to win federal help put more pressure on United's unions to reach deals. ÿThey have to impress a bankruptcy court and the federal government that they're taking dramatic action for a turnaround,ÿ he said.þþþ
Source: NY Times
