Chicago – United Airlines and its mechanics’ union reached a tentative agreement Monday on a new five-year contract, moving the carrier a step closer to securing the companywide labor concessions it seeks to exit bankruptcy.
The tentative deal gives United the $96 million in annual wage and benefit cuts it was seeking from the Aircraft Mechanics Fraternal Association, union spokesman Terry O’Rourke said late Monday.
The deal was announced as a federal bankruptcy court trial on United’s proposal to unilaterally impose lower wages and benefits moved into its final days. Both the mechanics and the machinists’ union – which has not yet reached a contract settlement – have threatened to strike if United broke the contracts without consensual agreements.
“It’s not something to celebrate,” O’Rourke said of the agreement. “We are under the coercion of the bankruptcy court process, and we made the best of bad choices.”
“We’re not excited about it,” agreed Local 9 spokesman Richard Turk in Denver. “It’s still a concessionary agreement.”
The mechanics union represents about 650 United employees in Denver.
United said it was pleased with the deal and hopes the mechanics union would ratify the proposal.
“This agreement consensually achieves the cost savings United needs, while addressing AMFA’s concerns over pay, job security, benefits and work rules,” United spokeswoman Jean Medina said.
The new tentative agreement comes after union members earlier this year voted down a proposed agreement that included pay cuts of 5 percent for mechanics and 10 percent for aircraft cleaners, along with terms for outsourcing some work.
The mechanics’ tentative agreement leaves the International Association of Machinists and Aerospace Workers as the only United union without at least a tentative deal. Pilots and flight attendants agreed earlier to five-year deals, although the flight attendants’ pact is in arbitration.
The mechanics’ agreement must still be ratified by the 7,000 mechanics at United, a unit of Elk Grove Village, Ill.- based UAL Corp. They rejected the last tentative agreement in January, with 57 percent voting no.
The results of the new ratification vote will be released May 31, the union said.
Aircraft Mechanics Fraternal Association spokesman Richard Turk said mechanics would take 3.9 percent pay cuts under the proposed deal on top of the 14 percent reduction in wages the union took two years ago in the last round of bankruptcy cutbacks by United.
Reduced benefits, such as sick days, holidays and vacation, would account for the rest of the labor savings, Turk said.
The company and unions are trying to wrap up deals before Bankruptcy Judge Eugene Wedoff rules on United’s motion to replace existing contracts with lower pay and benefits. He scheduled closing arguments in the trial for Thursday. It is unclear whether a ruling would come immediately afterward.
United, the second-largest U.S. airline, is seeking annual wage and benefit cuts totaling $176 million from machinists and $96 million from mechanics as part of targeted labor savings of $700 million yearly. It says it needs the second round of cutbacks in two years to persuade banks to lend the airline $2 billion so it can come out of Chapter 11 bankruptcy.
In separate negotiations Monday, negotiators for the machinists union presented a new contract proposal to United after spending the weekend away from the bargaining table and were awaiting a response, spokesman Joseph Tiberi said.
“If we can’t get something done by the time he rules, then we walk off,” Tiberi said. “It’ll be a tense couple of days.”
He said the mechanics’ agreement would not affect the machinists’ contract talks.
Denver Post staff writer Kelly Yamanouchi contributed to this report.
