Chicago – United Airlines and union leaders have moved closer to a settlement of their labor dispute, which could cut short a trial at which the bankrupt airline seeks to terminate two union contracts.
The pressure built Thursday on both sides as attorneys continue to press their case – and as U.S. Bankruptcy Judge Eugene Wedoff comes closer to the point where he could rule. United employs 6,000 people in Colorado and 60,000 nationwide.
The International Association of Machinists, which represents 20,000 ramp workers, customer-service agents and others, would like to reach a settlement before the judge renders a decision.
A verdict could come after the trial ends next week, or within 30 days.
Mechanics union attorney Lee Seham told the court that “there’s been substantial movement” in negotiations between the Aircraft Mechanics Fraternal Association and the company. He said the movement has primarily come from the mechanics union.
Plans are to wrap up negotiations today, and “either we reach an agreement … or we give up,” Seham said.
The machinists union is floating the possibility of United’s joining the union’s “multi-employer” pension plan as a way of replacing pension benefits its members at United and others at United are set to lose after a separate Wedoff decision Tuesday. The judge approved an agreement between United and the federal government’s Pension Benefit Guaranty Corp. that would end all four of the airline’s pension plans.
The IAM plan, which doesn’t exist at United, would be structured so that United would pay in a certain amount but wouldn’t be obligated beyond that payment. Employees would receive a set benefit.
US Airways is among the airlines participating in the plan now. It’s that airline’s only surviving pension plan after the government takeover of its plans earlier this year.
United is interested in getting a proposal from the machinists union on a replacement retirement plan, United chief financial officer Jake Brace testified Thursday during cross-examination by union attorneys.
The main remaining issue is how to value concessions that the machinists union would grant in the new labor agreement, according to union leader Randy Canale.
The union and company’s financial advisers met Thursday to discuss that issue. United says it hopes ultimately to gain $725 million in savings from all its unions.
“I think if we’re able to make progress on the valuations,” Canale said, “that momentum could result in a settlement next week.”
In talks in Chicago with both unions, “the tone and nature of discussions encourages me,” Brace said.
In court Thursday, United presented witnesses to support its argument that it deserves the authority from the court to throw out its contracts.
Those witnesses, including Brace, United’s fuel expert, an investment banker and a University of Pennsylvania professor discussed United’s business plan, called “Gershwin” after the composer of the airline’s signature background music “Rhapsody in Blue.”
The witnesses also pointed to United’s need to cut costs because of the high price of fuel and relatively high wages and benefits for mechanics and machinists union members.
United is proposing to those unions pay cuts and other changes, including the right to outsource some work.
The unions’ attorneys argued that United’s proposals aren’t fair and that the company has not considered alternatives proposed.
The company has already won pay cuts and other concessions from its flight attendants and pilots unions as well as two smaller unions.
Staff writer Kelly Yamanouchi can be reached at 303-820-1488 or kyamanouchi@denverpost.com.
