More bad news for UA.


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From Yahoo News:
United Airlines Mechanics Reject Pay Cuts
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.

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 in a statement it would begin new talks with the mechanics immediately.

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."

If United were a book, we would have just reached the end of Chapter 10.

The annoying thing is, that earlier agreements with pilots, flight attendents, etc. are all contingent on every single union taking part in the sacrifices. So if the mechanics say no, the other agreements are gone as well...

Nice one UAL mechanics, what would you rather have, less money or no job?!?

Once again, it looks like the IAM will kill yet another major carrier. Anyone remember the IAM's stand at Eastern in 1989??? Sound familiar??? How good are those "industry leading wages" going to be in the unemployment line? Wake up IAM!!!!! The unions are as stupid as the airline's managment!

MxCtrlr  
Freight Dogs Anonymous - O.O.T.S.K.  

Once again, it looks like the IAM will kill yet another major carrier.

With all due respect, the IAM leadership completely and unequivocally reccomended that the membership vote YES on this concessions package. I think the blame lies with the rank-and-file employees here rather than with the union structure.

Here is the statement of United CEO Glenn Tilton on the issue :

"Clearly, we're disappointed that our mechanic and related employees represented by IAM District 141M did not approve the tentative agreement with United. Nevertheless, we remain fully committed to the goals of the United Airlines Union Coalition in achieving labor-cost savings that will enable us to secure federally backed loans. We will immediately begin talks with the IAM 141M leadership to ensure that a contract proposal consistent with the coalition's framework is brought before the membership as soon as possible."

Good luck guys!!
Before all you people condem these people think about usair
They voted yes and got screwed anyway. ual mechs did the only thing
that made sense.

B747-437B,

While it may be generalizing saying "the IAM will kill yet another airline", understand that while union leadership advised passage, IAM union members failed to follow their leaders' advice. Either way you slice it, it will be the IAM (either by leadership or membership) that looks like it will cause UAL to seek bankruptcy. With that said, I stand by my previous statement.

MxCtrlr  
Freight Dogs Anonymous - O.O.T.S.K.  

Guess they don't want a job with UA anymore as thats whats going to happen... NO MORE UA.

Hkgspotter1, I don't think that this necessarily means the end of UAL or that they will cease to exist. What will more likely happen is they will be forced to file for Chapter 11 Bankruptcy and reorganize. This will actually put more pressure on the IAM and ALPA.

Dc9fixer, yes, I agree that the USAir guys got screwed, and so did all of us at the original Pan Am in 1991 when we were told "ratify this contract or we'll go out of business". We did and they still went out of business (the very next day to be exact). What I do not agree with is that the IAM mechanics "did the only thing that made sense". What would have made sense for the IAM and ALPA was to not pressure UAL for ridiculously-high industry-leading wages that ultimately caused further financial problems at UAL. That statement in no way exonerates the piss-poor management that has plagued UAL from the days of "Alegiant" (or whatever their parent company was called back in the late 80's), when they tried to be everything travel-related - hotel, car rental, airline, etc. That began the spiral and Stephen Wolf just continued to bleed it.

What is truly sad is to see yet another venerable air carrier get into trouble financially because of stupid management blowing cash hand-over-fist with no regard to the company they are in charge of and idiot rank-and-file employees, asking for, and getting, pie-in-the-sky wages. To make $45/hour is great but what good is it when it causes your livelihood to disappear. Try making $45/hour at the few repair stations that will take these guys if they hit the streets - they'll be lucky to get $20/hour! What message does this send for the employees of an "employee-owned company" to break the bank! A sad day for both UAL mismanagement and people too blind to see the gravy train they are screwing over. Remember the adage "Don't bite the hand that feeds you!"

MxCtrlr  
Freight Dogs Anonymous - O.O.T.S.K.  
A former TWU Shop Steward - TWU Local 500

The leadership says YES and the rank-and-file says NO???? And this is called a UNION??? Huh????

If you want to blame any Union for this you have to look to AMFA. They have been whispering in the Mechanics ear that they can do better during this whole process. The Company and IAM 141M are dong to sit down and renegotiate again. But I think this was just about the most selfish stupid vote I have ever seen.

I can go and get another job. I have a good degree. I don't have to work for UA, I do because I want to, and I think the rewards in the end are better. But if the Mechanics of UA are worried about putting food on the table for thier kids, just remember there are not all that many airplane mechanics jobs out there. Your skills are a bit more specialized. And where ever you go you'd be starting from scratch.

Well said, UALPHLCS! As far as blaming AMFA, you cannot possibly expect me to believe that licensed A & P mechanics are too dumb to spot a sales pitch when its presented to them? Of course AMFA can tell them they could do better but guess what, ask them who they have done better for! The answer will most likely be hems and haws and no real answer at all! Remember that unions and company management are just two sides of the same coin, with the rank-and-file caught in the middle. Both the unions and the companies they oppose, are big businesses. Don't think so? Look at their International's bank account numbers. There are BIG BUCKS in "being the workers' friend"! The problem isn't AMFA, the IAM, or any other union per se, the problem is partly the employees pricing themselves out of the market. If they make $45/hour or pilots make $360K/year, where do they think that money is coming from - fares paid by passengers. Now, consider that when the pilots began their "Summer of Hell" campaign against UAL, they weren't hurting the company as much as they were hurting themselves. By playing all of the games they did, their customers left, many to not return again. Now, UAL is saddled with higher costs, due to the concessions made to ALPA, and fewer passengers to pay for those higher costs. In the end, the consumer pays for these little games and UA tried to raise fares to cover the additional cost and guess what? The few remaining business travelers they had also started to leave because they were complaining about the fares and lousy service, BEFORE the "Summer of Hell" began!

Wake up guys and smell the airline coffee! You've made yourselves too expensive for your employer and, more importantly, too expensive for your customers! Think about it!

MxCtrlr  
Freight Dogs Anonymous - O.O.T.S.K.  

Chapter 11 will see the UAL mechanics taking a much bigger paycut than they just turned down. It also sets the stage for a full blown reorganization of UAL from top to bottom through the bankruptcy courts. UAL will come out the other side of this as a much smaller and weaker carrier. Assets will be sold, layoffs will be extensive, retirement plans will be decimated, and everyone will point the finger at the mechanics.

MD88Captain,

In the interest of fairness, let's not only point the finger of blame at the mechanics, but at the pilots (before their "giveback") and UAL management since 1985 and their equally stupid practices. Remember that UAL's CEO in 2000 stuck his head in the sand for MONTHS before acknowledging that there was anything wrong at his airline. All the while, his on-time percentage was hovering around 20% and cancellations were running at 40-50%. Through all of that, the CEO kept up the mantra that "nothing is wrong". That's stupidity! Equal blame needs to be placed across the board (with the exception of the CSA's and F/A's).

MxCtrlr  
Freight Dogs Anonymous - O.O.T.S.K.  

On the football field the last guy to throw the punch usually draws the flag. If this rejection brings Chapter 11, then the mechanics will draw the blame forever. Is there plenty of blame for everyone? Sure. But it will be the mechanics that will be seen as pulling the rug out from under the efforts to avoid bankruptcy. And when the bankruptcy judge starts slashing salaries to USAir levels the other employees will blame the mechanics. And Tilton will tell everyone they could have saved it if only the mechanics had thrown in their ante with the rest of the troops. And when layoffs come... And when assets are sold off... And when UAL slips below CAL, NWA, and SWA in size and strength... The coming demise will be born squarely on the backs of the mechs.

I think that UAL is doing this in hopes of the government bailing them out with Ch. 11. If they don't file or something happens where the govt. won't help...they are pretty much screwed. United is going to be a very different airline. The problems this airline has didn't not just come from Sept. 11, it was there before. The company has been fouled up for a long time. They are using sept. 11 as a cop out for a lot of it.

Wow...so exactly which airline are these guys hoping to work for next?

Hope that if UA does go into Chapter 11, the bankruptcy judge shows no mercy towards the mechanics.

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