United Airlines reaches agreements with unions - update 2

06/02/05 - newratings.com

NEW YORK, June 2 (newratings.com) – United Airlines (UAL) on Tuesday reached an agreement with its machinists union regarding a new contract, while its mechanics voted to ratify a separate pact. The two agreements would enable the company to achieve its targeted cuts in annual costs and avoid a possible strike by the unions.

The agreements came ahead of a potential ruling by a bankruptcy court, ordering the annulment of all existing contracts and the imposition of compulsory pay and benefit cuts in the absence of an agreement. The ruling was expected to be followed by a strike by the company’s machinists union. United Airlines had been targeting $176 million in cost savings from the union through pay cuts and other concessions. The latest agreement, which resolves all issues and includes a new pension replacement plan, is subject to ratification by the union members and the bankruptcy court. Meanwhile, the company’s mechanics union also ratified a five-year deal calling for pay cuts, outsourcing and other concessions. The company is expected to post annual savings worth $96 million from its contract with the mechanics union. The bankruptcy court has asked the two sides to work out the details of the new agreements and perform due diligence by June 17.