Pilot's criticize United plan to cut labor costs with labor-related reductions

CHICAGO (AP) _ Pilots said they weren't happy with United Airlines' proposal to lop $9 billion off its labor costs over the next six years. <br><br>The world's No. 2 carrier says the labor-related

Friday, August 30th 2002, 12:00 am

By: News On 6

CHICAGO (AP) _ Pilots said they weren't happy with United Airlines' proposal to lop $9 billion off its labor costs over the next six years.

The world's No. 2 carrier says the labor-related reductions _ $1.5 billion a year in wage and benefit cuts, canceled raises and other changes _ would account for most of $2.5 billion in annual savings to help the company stay out of debt and out of bankruptcy.

But representatives of the pilots, who control more than half of employees' majority stake in the airline, criticized the new terms late Thursday as unacceptable and unrealistic.

Union spokesman Herb Hunter said the cuts go far beyond what the pilots' union tentatively agreed to this summer. He suggested it's too much to pay for United to achieve its immediate goal: a $1.8 billion federal loan guarantee from the Air Transportation Stabilization Board, which wants severe cutbacks.

``We feel like we're being slapped in the face,'' said Hunter, a United pilot and spokesman for the Air Line Pilots Association. ``What is the goal of the ATSB here? Are we trying to help the airlines get through a tough financial time or are we trying to rewrite, with a panel of three people, all of the contracts in the airline industry?''

Stuck in the industry's worst downturn in years, United has lost well over $3 billion since mid-2000. Labor accounts for about 40 percent of its costs, which have risen as the carrier gave most of its workers industry-leading contracts.

Getting employees to overturn raises and take double-digit pay cuts will be difficult if not impossible given long-sour labor relations at the company, especially in only three weeks.

Interim CEO John Creighton has set a Sept. 16 deadline to set deep cuts or face the possibility of Chapter 11 bankruptcy when $900 million in debt bills come due by early December.

A day after presenting its proposals to the unions, United said in a brief statement Thursday that the $2.5 billion target ``will better align costs with anticipated future revenues and increase the likelihood that the company will qualify for $1.8 billion in loan guarantees.''

The Elk Grove Village, Ill.-based carrier did not specify how the $1.5 billion in labor reductions would be divided up. But the machinists union said it has been asked for $450 million in annual givebacks from its employees.

The International Association of Machinists and Aerospace Workers posted the company's new terms on union Web sites while its leaders reviewed them. Spokesman Joe Tiberi said no response was likely before the weekend.

The proposal to the machinists union calls for mechanics, ramp workers and other IAM-represented workers to take immediate pay cuts and forgo raises negotiated earlier this year for 2003 and 2004, to be replaced by annual 1.5 percent pay increases, union officials said.

The other big union at United, representing flight attendants, is being asked to give up a total of $100 million, according to a source familiar with the proposal who spoke on condition of anonymity.

The Association of Flight Attendants declined to comment.

In a related cost-saving move, United said it is tightening rules on upgrades and fare discounts and increasing to $20 the fee for issuing paper tickets.

It said it will enforce fare rules and minimum and maximum stay requirements strictly, and will do away with additional reductions on already-discounted fares when negotiating contracts with corporate customers.