Looks like UAL is going to settle with the IAM, then ask for the money back from all the unions. It that doesn't work, they file chapter 11 and take it from there...
. ._________________________________________________
. .January 23, 2002
UAL Directors Decide to Accept Proposals. .Of Presidential Panel to End Labor Dispute
By SUSAN CAREY . .Staff Reporter of THE WALL STREET JOURNAL
CHICAGO -- UAL Corp.'s United Airlines said that despite "serious reservations," it decided to accept costly recommendations made by a federal panel aiming to end a labor dispute between the company and its mechanics union without a devastating strike.
As a result, the International Association of Machinists said it will put the same recommendations to a vote of its 15,000 members in the next few weeks. If they reject the plan, they could strike Feb. 20 unless Congress imposes a settlement on them.
But it is unlikely the mechanics will turn down the recommendations, issued Sunday by a three-member panel President Bush appointed in December to forestall a work stoppage. The Presidential Emergency Board rejected United's position that the group's wages should be frozen until the carrier returns to profitability.
Instead, the board endorsed sizable raises -- for instance, a total 37% increase payable immediately for a veteran mechanic -- that would bring the group's wages to the top of the industry. The panel's numbers came within the ballpark of what the union itself had sought in more than two years of negotiations.
Alarmed by the prospect of higher labor costs, investors knocked down UAL's shares Tuesday. The stock lost 9.7%, or $1.55, to trade at $14.45 in 4 p.m. composite trading on the New York Stock Exchange.
Prior to the company's announcement, Standard & Poor's Corp. Tuesday cut its rating on UAL's corporate credit rating, already in "speculative" territory, to single-B-plus from double-B-minus, and also lowered its ratings on a number of other UAL and United debt issues and other securities. The corporate credit rating is a benchmark of a company's risk of default. S&P cited, among other things, "substantial ongoing losses and lack of progress in crucial negotiations aimed at containing the airline's high labor costs." United declined to comment on S&P's action.
United said the labor committee of UAL's board voted to accept the federal panel's report as the basis for a contract settlement despite "serious reservations" that it declined to explain. A spokesman for the Machinists union said the recommendations will now go to its members, "who will have the final say."
Jack Creighton, a retired paper-company executive and outside UAL director brought in as chief executive last fall, has been trying to persuade employees to voluntarily embrace pay cuts to help the company through its financial problems. Without that relief, United told the presidential board, it may be unable to stave off a bankruptcy-court filing.
But the mechanics insisted they wouldn't entertain any concessions until their pay caught up with other groups at United, who are paid top industry scales. The Machinists union also has 30,000 United ground workers in their second year of talks aimed at a new contract. Until those employees are brought up to top pay, it is unlikely that group would be open to Mr. Creighton's pleadings either.
The CEO hasn't quantified the savings sought but did say recently that the overall amount needs to be "several billion" dollars "over the next few years." The presidential board said it supports a financial-recovery plan in which workers cut their wages, so long as all domestic United workers participate proportionately. Some union strategists say privately that such givebacks are inevitable but warn that members will have to ratify such big changes to their contracts.
The presidential panel recommended that top pay of a United mechanic be raised to $35.14 when the new contract is signed. That would put the group a few cents an hour ahead of mechanics at AMR Corp.'s American Airlines, currently the top paid. But because United can ill-afford to pay in one cash sum the difference between what the group would have earned and what it did earn back to July 2000, when the previous contract became open for renewal, the federal panel suggested that "retro pay" expense be deferred and paid in eight quarterly installments starting in April 2003.