United Airlines dodges strike in approving tentative contract with mechanics; stock rises

<br>CHICAGO (AP) _ In a deal that averted a potentially crippling strike, United Airlines and the union representing its mechanics and aircraft cleaners reached a tentative contract agreement providing

Tuesday, February 19th 2002, 12:00 am

By: News On 6

CHICAGO (AP) _ In a deal that averted a potentially crippling strike, United Airlines and the union representing its mechanics and aircraft cleaners reached a tentative contract agreement providing industry-leading pay.

Approval by the 12,800 mechanics in a March 5 ratification vote, while not assured, would end a bitter two-year contract dispute and give them their first raise since 1994. If they were to reject it, United would again face the threat of a walkout.

Airline consultant Michael Boyd predicted that the mechanics ``will go along with this'' even though last Tuesday they turned down the same pay increase by a 2-to-1 margin. The key is United's removal of two key issues _ delay of retroactive pay for more than a year and insistence that mechanics agree to unspecified pay cuts as part of its recovery plan.

In trading Tuesday morning on the New York Stock Exchange, shares of United parent UAL Corp. rose 15.9 percent, or $1.80 a share, to $13.16.

The announcement came on the fourth day of urgent talks at a suburban Chicago hotel following the International Association of Machinists and Aerospace Workers' rejection of United's last contract offer, which was crafted by a presidential emergency board.

Although United, the world's second-biggest carrier, is still loaded down with the baggage of higher costs and lower revenues, the settlement was a breakthrough in efforts to end its protracted labor turmoil.

United chief executive Jack Creighton called the accord ``a critical milestone in developing a recovery plan that meets the needs of passengers, preserves jobs and puts the company on the road to financial stability.'' The Elk Grove Village, Ill.-based airline lost $2.1 billion last year.

Despite Creighton's repeated assurances that he was confident an agreement would be reached, United had acknowledged a decline in bookings for the coming days, reflecting public fears of a shutdown.

The mechanics had been preparing to strike starting at 12:01 a.m. EST Wednesday.

The tentative pact would grant mechanics 37 percent pay raises and make more of them eligible for top-scale pay, which is being bumped up from the current $25.60 an hour to $35.14, or about $73,000 a year.

It also would improve retirement benefits, the union said, and move up the payment of retroactive pay for work dating to July 2001 by 3 1/2 months. Back wages totaling several hundred million dollars would be paid in quarterly installments beginning Dec. 15 and lasting until Oct. 15, 2004, instead of from 2003 to 2005.

``This agreement fulfills the (union's) promise to negotiate an industry-leading contract,'' said chief union negotiator Scotty Ford. He said union negotiators _ who did not make a recommendation before last Tuesday's ``no'' vote, unanimously recommend approval.

Still to be resolved is another contract dispute between United and its 23,000 baggage handlers, customer service representatives and reservation agents. That stalemate is expected to be easier to resolve once the mechanics' contract is settled.