Machinists' union split on United wage concessions as airline tries to avoid bankruptcy

CHICAGO (AP) _ A key faction of the United Airlines machinists union rejected wage concessions that were part of the company's effort to stay out of bankruptcy. <br><br>United mechanics rejected the

Thursday, November 28th 2002, 12:00 am

By: News On 6

CHICAGO (AP) _ A key faction of the United Airlines machinists union rejected wage concessions that were part of the company's effort to stay out of bankruptcy.

United mechanics rejected the proposal that was to contribute $1.5 billion in cost reductions to the airline. In separate votes Wednesday night, two other factions of the union approved the proposal.

But the vote by the 13,000 mechanics and related employees could jeopardize United's restructuring plan. United hopes to slash $5.2 billion in labor costs over 5 1/2 years _ the linchpin of its $14.1 billion financial recovery package.

``Each employee measured the costs and benefits of participating in United's recovery,'' said Scotty Ford, president of the mechanics' unit of the International Association of Machinists and Aerospace Workers. ``In the end, some thought the risk was worth taking, and others felt they had sacrificed enough.''

United chairman, president and CEO Glenn Tilton issued a statement early Thursday saying the company remains committed to winning labor cost savings that will enable it to secure federally backed loans.

``Clearly, we're disappointed that our mechanic and related employees ... did not approve the tentative agreement with United,'' he said.

Nearly 80 percent of the public contact employees, which includes customer service, reservation agents and other various airport workers approved the wage give-backs. Sixty-three percent of the ramp and stores, food service and security guards ratified the agreement. Those two factions make up about 24,500 United employees.

Of the 13,000 mechanics and related employees, 57 percent voted against the measure.

The proposal called for pay reductions of 6 percent to 7 percent.

United is seeking a loan guarantee from the federal Air Transportation Stabilization Board, which is expected to rule any day on its application.

United has been losing money at the rate of $7 million a day this fall and is thought to be on a pace to run out of cash early next year. It faces a Monday deadline for paying off $375 million in debt, although that carries a grace period of 10 business days which expires Dec. 16.

Tilton said the company plans to ``immediately begin talks,'' with the machinists' union leadership to bring another proposal to their members.

United's 8,800 pilots already have ratified $2.2 billion in cutbacks, and its flight attendants are voting on a tentative agreement for $412 million in wage reductions, with results to be announced Saturday.

The union for Chicago-area flight dispatchers ratified an agreement Wednesday for $2 million in cutbacks. Salaried and management employees will contribute another $1.3 billion in labor savings.