United Airlines yesterday said it reached a tentative agreement with the leaders of its machinists union on $1.5 billion in wage and benefit concessions over 51/2 years.
The agreement will help United obtain a $1.8 billion federal loan guarantee, which the nation's second-largest airline has said it must have to avoid a Chapter 11 bankruptcy filing. United has tried to convince the Air Transportation Stabilization Board -- the government panel overseeing the airline's loan-guarantee application -- that it can significantly reduce its costs and increase revenue, and eventually repay loans.
The International Association of Machinists and Aerospace Workers is the airline's largest employee group and the last union to agree to concessions.
United's 37,500 mechanics, baggage handlers and reservations agents will vote on the agreement Nov. 27.
Sources close to the negotiations said the agreement does not call for eliminating more jobs. Last month, United said it would lay off 1,200 machinists.
"Too many airlines have been forced into bankruptcy, never to return," said Randy Canale, president of United's machinist union.
"Too many good airline careers and families have been destroyed. Despite obstacles and unprecedented economic pressures, I still believe our greatest days lie before us."
Some Wall Street aviation analysts wondered if the agreement is enough to win over the Air Transportation Stabilization Board. Samuel C. Buttrick, UBS Warburg Ltd. airline analyst, said the board is more concerned about United's ability to improve revenue and refinance its debt than how much it cuts costs.
On Sunday, United said it obtained more than $1.5 billion in capital expense deferrals from aircraft manufacturers and suppliers.
United's 8,800 pilots have ratified $2.2 billion in concessions. Flight attendants are voting on a tentative agreement for $412 million in wage reductions.
This week, the airline said $1.3 billion will come from salaried and management employees.