United Airlines union officials, frustrated and confused by a government panel's rejection of the company's bid for a federal loan guarantee, yesterday said they're cool to the possibility of more concessions as executives scrambled to tweak their application for possible reconsideration.
Dawn Deeks, a spokeswoman for the flight attendants' union, said she was struggling to comprehend how the Air Transportation Stabilization Board could rule that United was showing enough progress that it did not need a $1.6 billion loan guarantee.
United's previous bid for a loan guarantee, in late 2002, was turned down because of questions about the viability of its business plan.
"They won't give the loan if you are too unsuccessful and they won't give it if you've turned your company around," Deeks said. "So what's the middle ground?"
The ATSB's decision, and indications that a majority of the board would reconsider it if given more information, put United in the position of having to prove its financial need -- after chief executive Glenn F. Tilton and other executives at UAL Corp., United's parent company, had made a number of statements recently that the airline's financial position was improving. Anne Womack Kolton, a spokeswoman for the Treasury Department, one of the three agencies represented on the board, said it would be "premature to speculate" on what information the board is looking for. United spokeswoman Jean Medina said the company will adjust the application, but declined to specify. Aaron J. Gellman, the former director of Northwestern University's transportation center, said because United has been turned down twice, any resubmission would have to be "fairly dramatic" -- and most likely would include additional employee concessions. Employees have already given up $2.5 billion a year in pay and benefits.
Steve Derebey, a spokesman for United's unit of the Air Line Pilots Association, said he's already given up 60 percent of his former pay and benefits -- though he declined to say how the union would respond to a request for more concessions.
Randy Canale, president of an Illinois district of the machinists' union, circulated a letter yesterday urging members not to panic. "We must not let the ATSB's decision derail the progress we've made. You have done your part to help United restructure," he said in the letter.
Kenneth J. Button, a transport economist, said Tilton's statements should not have hurt United's chances, although they may have. Button said United may have to scale back some routes and focus heavily on the more profitable ones. "This may not mean fewer staff or fewer planes, but a greater concentration on where the money is," Button said. Philip Baggaley, a Standard & Poor's analyst, said in a report that without a federal guarantee, United will have to further reduce costs in areas where it has already made cuts, such as payments on aircraft leases. A U.S. bankruptcy court approved a one-month extension yesterday for the airline to prepare its reorganization plan.
Staff writer Keith L. Alexander contributed to this report.