United Airlines on Monday took a first step toward achieving the additional labor savings it seeks in bankruptcy, imposing wage reductions on its 8,500 non-union employees that include an 11 percent pay cut for Chief Executive Glenn Tilton and other top executives.þþThe Elk Grove Township-based airline told employees on a company hot line that the cuts will account for $112 million of the $725 million a year in labor savings it needs. The carrier signaled the pay cuts last month but did not offer specific figures.þþThe cuts do not include an additional 4 percent temporary reduction in salary that will take effect with the permanent cuts on Jan. 1 and remain in place until United emerges from bankruptcy.þþUnited has not specified a target date for its exit from Chapter 11, but with the industry still in financial turmoil, that is now not expected until fall. The carrier filed for bankruptcy protection in December 2002.þþÿWe believe that this is a fair and equitable way to achieve the immediate cost savings necessary to exit bankruptcy,ÿ United spokeswoman Jean Medina said. ÿWe are building a company that can succeed in a leaner, more competitive market and provide opportunity and value to our employees.ÿþþTilton's salary will be $605,625 as of Jan. 1, Medina said. He previously reduced his $845,500 annual pay by 16 percent in August, when United accelerated its push for labor cuts.þþThe seven top executives who report to Tilton also will get 11 percent pay cuts. Officers' pay will be cut by 8 percent, management employees' pay by 6 percent and salaried workers' pay by 4 percent. The 4 percent temporary cuts will be applied to the lowered amounts.þþThe airline also said it is devising new benefit plans for non-union employees that could affect medical and dental programs, vacation and holiday schedules and sick leave.þþUnited said it will achieve the rest of its savings for salaried and management employees through productivity enhancements totaling at least $30 million annually. It did not specify the savings.þþManagement remains in difficult negotiations with its unions over the bulk of the labor cuts, hoping it does not have to ask a bankruptcy judge to put them into effect next month in lieu of an agreement.þþAnalysts say widespread dissension or work stoppages over the cuts, which follow last year's double-digit pay reductions, could cost United customers and risk putting it out of business.þþAlso Monday, United named David Wing its new controller. Wing is a former executive vice president and chief financial officer of ATA Airlines and also has worked at American Airlines.þ
Source: Chicago Tribune
