Continuing its painful downsizing, United Airlines announced Monday that it is permanently closing its heavy maintenance bases in Indianapolis and Oakland.þþSome work performed at those locations will be transferred to United's massive maintenance base in San Francisco.þþBut the bankrupt carrier also is changing the way it does business. As part of a new six-year contract with its 12,000 mechanics, United now has the flexibility to outsource all of its heavy maintenance work, which involves taking apart and rebuilding giant engines and airframes.þþThe Indianapolis closing seemed likely after United in March said it was temporarily closing the facility because of a falloff in traffic related to the Iraq war, union officials said.þþÿWe've been anticipating it,ÿ said Ben Nunnally, president of Local Lodge 2294 of the International Association of Machinists, which represents the 1,200 Indianapolis workers affected by the closing. ÿThey were unable to say it straight out. But they've been shipping United tools and parts since March, when they announced the temporary closing. The most we can do is keep our chins up and go forward and be successful in whatever we do.ÿþþOnly 300 Indianapolis mechanics chose to bid for rights to bump junior workers at other United bases, Nunnally said. And of those, only about 180 are moving to new jobs. Nunnally, who has spent 14 years at United, is out of a job.þþUnited said it hopes to slash its heavy maintenance costs by half, outsourcing the work to third-party contractors, a common practice among regional and discount carriers. Indianapolis, Oakland and San Francisco were all operating at 50 percent capacity on heavy maintenance, the airline said.þþÿWe had the highest costs in the industry, and the company had to significantly cut labor and non-labor costs immediately and for the long term to be competitive,ÿ said United spokesman Chris Brathwaite.þþUnited said the base closings and related layoffs will provide a ÿsignificantÿ chunk of the estimated $350 million in annual savings from the new mechanics contract.þþOn Friday, United filed a motion with the U.S. Bankruptcy Court in Chicago to reject its leases on the Indianapolis and Oakland facilities. The Indianapolis base officially will close Friday, although virtually everyone already is gone, Nunnally said. The Oakland facility, with 600 union workers and 300 salaried and management employees, is scheduled to close May 31.þþUnited is providing severance pay and continued medical and travel benefits to eligible workers. It also is paying relocation costs for those who bumped workers in other cities.þþThat's little comfort for Indiana and Indianapolis, which kicked in nearly $300 million in tax breaks and other incentives to help finance United's state-of-the-art facility in the early 1990s. The base, which covers 300 acres and cost more than $500 million, was intended to generate 7,500 high-paying jobs by 2004, but it never came close.þþÿNo one could have predicted Sept. 11 or SARS, and at the end of the day, we would like to see United emerge from bankruptcy,ÿ said Melina Maniatis Kennedy, director of economic development for Indianapolis. ÿBut we do feel it is a great disappointment that the original terms of the deal will not be met.ÿþþThe city is on the hook for $14 million a year in interest on bonds it issued to help finance the facility, Kennedy said.þþIndianapolis is aggressively looking for a new tenant for the base, which was designed to service narrow-body aircraft such as Boeing 737s. There is talk that one of the independent maintenance firms that United wants to use might be interested.þþIn early March, Indianapolis Mayor Bart Peterson traveled to United's Elk Grove Township headquarters to make the case for saving the Indianapolis base and sacrificing the one in San Francisco, a move city officials estimated would save United $36 million a year. The Indianapolis base was a newer and vastly superior facility, they argued, from its heated floors to its automated system for moving giant parts where they were needed.þþBut San Francisco had pluses that Indianapolis couldn't match, United said. The West Coast base does heavy maintenance on both engines and airframes. Because United has a major hub in San Francisco, planes fly there regularly and don't have to be ferried.þþSeparately, United said it has named John Tague, the former chief executive of American Trans Air, the nation's 10th-largest passenger carrier, to the newly created position of executive vice president-customer. Tague, who will report directly to United CEO Glenn Tilton, will be responsible for marketing, advertising, sales, reservations and worldwide alliances.þ
Source: Chicago Tribune
