Chicago – United Airlines on Thursday concluded a contentious effort to wring out more labor costs in a bid to leave bankruptcy when its machinists union announced ratification of a new contract.
The agreement with the International Association of Machinists and Aerospace Workers cuts pay by up to 5.5 percent and trims some benefits, which should save United about $175 million annually.
With the ratification, each of United’s six unions has agreed to new contracts, resulting in $700 million in annual labor savings.
It clears the way for United to file a reorganization plan with the bankruptcy court, which it expects to do around Aug. 1.
About 67 percent of IAM members, which include 20,000 baggage handlers, customer service representatives and other ground workers, voted in favor of the agreement. The union this spring had threatened to strike if a bankruptcy judge annulled their contract.
Separately, a federal judge in Chicago rejected an appeal from United’s flight attendants union challenging bankruptcy Judge Eugene Wedoff’s May ruling that allowed the company to terminate its pension plan and transfer obligations to the federal government’s pension insurer.
