United Airlines' mechanics ratify deal - East Valley Tribune: Business

United Airlines' mechanics ratify deal

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Posted: Tuesday, May 31, 2005 11:53 am | Updated: 8:32 am, Fri Oct 7, 2011.

CHICAGO - United Airlines' mechanics union ratified a five-year contract Tuesday, removing one strike threat from the carrier as another labor group negotiated down to the deadline.

Members of the Aircraft Mechanics Fraternal Association voted 59 percent to 41 percent to accept a five-year pact entailing $96 million in annual reductions and 3.9 percent pay cuts, among other conditions.

The 7,000 mechanics, like other United employee groups, have expressed anger about a second round of reductions during the airline's 2 1/2-year-old bankruptcy but knew they ran the risk of putting United out of business with a vote rejection and strike. About 81 percent of members voted, union spokesman Richard Turk said.

The agreement still left the machinists' union, representing 20,000 ramp and public-contact workers, without a contract deal as a judge's afternoon deadline neared for ruling on whether to break their contract.

Face-to-face negotiations with the International Association of Machinists and Aerospace Workers resumed at midmorning. IAM spokesman Joseph Tiberi said the union was "encouraged by the progress that's been made" in a session that lasted until early in the morning.

The mechanics' union had authorized a strike if the vote had failed, and its members voted down a previous contract agreement in January. But the union's leadership told them a "No" vote this time could produce worse terms than the ones negotiated.

"This vote signifies ratification but not acceptance," said AMFA Local 9 president Joseph Prisco, whose unit represents 52 percent of United mechanics - based in San Francisco and Hawaii.

"During the last several months this membership universally experienced a deep sense of anger provoked by the policies and actions of United management," he said. "Any trust in senior management going forward must now be earned by the actions of senior management for UAL to operate as a successful company."

The company released a statement saying it appreciated the approval vote. "This is an important and necessary step in providing the cost savings United needs to finish its restructuring successfully," the airline said.

The new pay cuts, effective immediately, will come on top of 14 percent reductions made two years ago. Reduced benefits, such as sick days and holidays, would account for the rest of the labor savings.

A 5 percent defined-contribution pension plan is part of the new contract, replacing the former defined-benefits plan. The mechanics' union also will get $40 million in convertible notes upon United's exit from Chapter 11 bankruptcy.

A replacement pension plan for the defined-benefits plan that United is terminating was believed to be the biggest sticking point in the talks with the machinists' union as they came down to the wire. The company wants the money put into an investment-based 401(k) savings plan, while the union says it should be placed in its own defined-benefits fund - the IAM's National Pension Plan.

Absent an agreement, Bankruptcy Judge Eugene Wedoff has said he would rule Tuesday afternoon on whether United can break the union's contract unilaterally in order to impose lower wages and benefits. The IAM contends such an action would give it the right to strike, and union leaders served notice again Monday that the workers are poised to walk off their jobs if necessary.

United spokeswoman Jean Medina said talks were ongoing and the company remained hopeful of a settlement.

United, a unit of Elk Grove Village, Ill.-based UAL Corp., was seeking $175 million in annual concessions from the IAM to complete a companywide package of $700 million in yearly labor savings.

Interim contracts for both the machinists and the mechanics expire Tuesday.

Separately, United said it has to return four of its Boeing 767s to leasing companies because of an inability to reach a deal on new rental terms. Four other disputed aircraft also are at risk and might have to be returned if ongoing lease negotiations fail, Medina said.

The repossession is the result of a court ruling in early May by the U.S. 7th Circuit Court of Appeals, reversing a November order by Wedoff that barred lessors from taking back 14 of United's 460 airplanes. The court said the planes could be repossessed unless United paid off its rental payments in full.

United subsequently rejected leases on six of the disputed planes, leaving eight vulnerable to repossession.

Medina said one route will be dropped because of the repossessions, between Chicago and Buenos Aires. United will continue to fly to Buenos Aires out of Washington.

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