CHICAGO -- UAL Corp., parent of United Airlines, asked a bankruptcy court Wednesday to terminate its union contracts if the carrier can't get an additional $725 million in cost savings from employees by mid-January.
The nation's No. 2 airline says it needs the additional labor concessions and the ability to drop traditional pensions to secure financing and get out of bankruptcy reorganization. The cuts would come atop the $2.5 billion in annual labor concessions the United employees have already made.
In its court filing, the company said it "is committed to attempting to negotiate agreements with its unions on the required savings," but that "urgent financial needs compel the company to file this motion."
The additional labor cuts include $191.1 million for pilots, $137.6 million for flight attendants, $101.2 million for mechanics and airplane cleaners, $2.9 million for flight controllers and $180 million for ticket agents, baggage handlers and other employees who deal with the public.
United, which already has cut $5 billion from annual expenditures since filing for Chapter 11 bankruptcy protection in December 2002, has said it needs $2 billion more to emerge from the proceedings. A hearing on the motion was scheduled for Jan. 10.
The Association of Flight Attendants declined to comment on Wednesday's filing, but it has already promised to fight the company "over every dime."
United's motion follows a similar action two weeks ago by US Airways Group Inc., which asked a bankruptcy court judge to cancel the long-term contracts of its flight attendants, mechanics and customer service and ticket agents if the workers fail to agree to cuts.
The president of the nation's largest flight attendants union has said that its members would go on a nationwide strike if a bankruptcy court allows United Airlines and Arlington-based US Airways to cancel their labor contracts.
Besides the $725 million in pay and benefit reductions, United officials have said they could save $650 million a year by terminating pension plans. An additional $655 million in non-labor cost savings, already identified, would put the company close to the $2 billion mark.
In its filing, UAL Corp. also said it was proposing a one-time 4 percent pay cut for all employees from Jan. 1 until the carrier exits reorganization "to help weather the remainder of the bankruptcy."
Last year, the pilots union announced its members had agreed to reduce their pay by 30 percent and make further cuts through changed work rules.
Last week, Judge Eugene Wedoff extended from Dec. 1 until Jan. 31 the deadline for United to file a reorganization plan without risk of a rival plan submitted by outside investors. He also approved United's agreement with its lenders to temporarily ease loan requirements.
