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Posted on 11/28/2002 2:02:46 PM PST by Rome2000
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1 hour, 42 minutes ago
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By Kathy Fieweger
CHICAGO (Reuters) - Mechanics at United Airlines said on Thursday they rejected their portion of $1.5 billion in proposed pay cuts over 5-1/2 years, potentially leading to an imminent bankruptcy filing unless the No. 2 U.S. airline can hammer out a new deal with the union workers quickly.
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The International Association of Machinists, District 141M, said its 13,000 members rejected the deal by a 57 percent margin. Some 24,000 other IAM members, including public service workers and baggage handlers, part of a separate bargaining unit called District 141, approved their portions of the cuts.
Elk Grove Village, Illinois-based United, a unit of UAL Corp. (NYSE:UAL - news), said it would immediately begin new talks with the mechanics.
"We intend to achieve the full labor cost savings included in our business plan," the company said in a statement on Thursday afternoon. "Reaching our $5.2 billion target is essential if we are to secure federally backed loans and avoid a Chapter 11 filing."
The mechanics' rejection jeopardizes pay-cut agreements achieved by sister unions, including those for pilots and flight attendants, which all said the givebacks were contingent on every single union taking part in the sacrifices.
United posted massive financial losses in 2001 after the Sept. 11 attacks and again this year as revenues remained weak.
The airline recently secured $5.2 billion in wage cuts from its employees, including five separate unions, as part of a financial recovery plan put before the Air Transportation Stabilization board. That is a new federal agency created after the Sept. 11 attacks and charged with doling out up to $10 billion in loan guarantees.
United has asked the agency to back $1.8 billion of a $2 billion loan. It has met with staffers every week recently after the board said more labor wage concessions were needed than what the airline originally outlined.
Industry experts say a decision from the ATSB will determine the near-term fate of United as it tries to avoid restructuring through the courts.
Pressure on United to present a government agency with a broad package of labor concessions has intensified in recent weeks. The airline faces a big debt repayment of $375 million on Monday for which it needs new capital.
The ATSB has been a tough sell for many airlines -- some have had their financial plans approved, but others, like National Airlines, have been rejected and stopped flying after they ran out of money.
The powerful IAM represents a variety of workers at United from mechanics and customer service agents to baggage handlers and reservation agents. A committee of leaders agreed to the pay cuts only after months of intensive negotiations, having won their first pay raises since 1994 earlier this year.
BANKRUPTCY MAY COME SOON
United faces an imminent bankruptcy filing unless it can persuade the government to grant the loan guarantees very soon as part of the landmark aviation bailout package passed last year. The government wants broad labor cost reductions and a viable business plan.
Mechanics, distrustful of management they say has misguided the company in the past, apparently disagreed with the need to cut costs.
"Each employee measured the costs and benefits of participating in United's recovery plan," said Scotty Ford, District 141-M president, in a statement. "In the end, some thought the risk was worth taking, and others felt they had sacrificed enough. We respect both decisions and this organization will aggressively represent their common interests as this extraordinary situation unfolds."
United and the rest of the airline industry is headed for collapse and nationalization.
If these unions think Washington is going to bail them out with anymore of the taxpayers money they are mistaken.
The people that voted against a pay cut just fired themselves.
Oh well. They can take that unemployment check to the bank and tell the bank teller "But we held the line, by God!"
I won't subject myself and my family to any searches by federal TSA morons unless it is absolutely necessary.
I'm going to restrict my flying to taking the seaplane out to Bimini, and will drive everywhere else.
The entire airline industry is headed for bankruptcy, and will be taken over by the government.
.
Unions are affiliated with the Socialist Internationale and are not compatible with free enterprise.
The GOP had better not hand over any more of our money to these leeches.
These guys are so greedy. The want to be as overpaid and underworked as the pilots but they aren't as important as the pilots.
My bet is that management desperately wanted one union to reject a reasonable proposal. I would have thought the stewardesses would have rejected but the mechanics would have been close behind. Now, management is free to seek bankruptcy while being able to shrug and say, "Geez, we tried everything but the mechanics pee'd in the pool." In bankruptcy, management will be able to disown every labor agreement and impose its own terms. The unions that have agreed will get trimmed a little more than they've agreed but the IAM will go to at least half pay the day after bankruptcy.
Then the IAM will whine to Washington but, to little avail. The horse they backed came in last.
Really? What do you know about the situation? Any idea what those "greedy union members" have given back to date to this lousy excuse for a management of an airline? It wouldn't matter if they worked for free. UA, et al, made some really stupid decisions when cash was easy and business was good and now they want scape goats. Lots of scape goats.
Absolute imbeciles were pulling down 75G's a year and did NOTHING.
The union didn't cooperate, and their went Pan Am and my job.
I worked as a Taxi Driver in NYC after that and had to join a union there too.
It is a Mafia front, giant pension fund except no one gets a pension.
Even the meat cutters have a union in NYC.
You pay dues or you don't cut beef.
Unions are criminal enterprises subsidized by high tax rates.
The Unions have dug their grave, because many more employees are going to be fired after Bankruptcy than would have been laid off after reorganization.
United will be forced to legally cancel every Union contract, and renegotiate from a much stronger position.
"Oh, you dont like what we want to pay you? .....NEXT!!
What I hate, is that the first thing to go is going to be BUSINESS CLASS. More cheap seats, fewer expensive seats. All the airlines are going to have to emulate Southwest and Jet Blue to stay afloat.
But, there will NOT be nationalization, just because a few communists want it. The market will decide.
For really bad management the only real solution is Chapter 7 bankruptcy. In Chapter 7 the court orders them cease operation and shell the planes and the fixtures to the hightest bidder. The creditors would be paid what ever that brings. That would let a new airline start up in its place with new owners and new employees to man the gates and routes.
But, there will NOT be nationalization, just because a few communists want it. The market will decide.
You've got it. The old airline business model created in a rate regulated government controlled environment is dead.
New companies will be created to meet the demand and the current successful ones will expand as the obsolete ones die a screaming death.
United and a lot of others will go belly up. Companies are not guaranteed to last forever. Corporations are defined as legally created persons. And like real people they are born, grow, get old, sick, and die.
There are going to be a lot of airline mechanics changing plugs at the Chevie Dealers for about 1/4 the pay wondering what the hell happened.
Thats right, and whats worse is that the main result will be that BOEING is going to have MASSIVE layoffs, as the surviving airlines consolodate their services around a single aircraft to cut costs.
You and me will be flying coast to coast in cramped 737's and the bigger jets will be reserved for inter-continental travel. Damn the customer, because he will only be flying if he HAS to, and no longer for pleasure, so the airlines will cram us in like cattle headed for slaughter.
I expect charter jet service to explode, along with private plane ownership.
Those former airline mechanics will be selling those big houses paid for with overtime pay, and moving into those cramped downtown apartments with their moms.
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