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United Airlines workers reject proposed wage cuts

United Airlines' 13,000 mechanics and cleaning workers rejected proposed pay and benefit cuts that the world's second-largest airline has said it needs to help win US government aid and avoid a bankruptcy filing.

UAL Corp Chief Financial Officer Jake Brace said the company has been talking to the union on Thursday night and yesterday about when they can meet to resolve concerns by the mechanics group.

"We are focused on staying with the allocations that we put in front of each of the labor groups," he said.

The employee-controlled company is racing to secure US$5.2 billion in worker concessions over five years to support a US loan-guarantee application allowing the carrier to raise US$2 billion and pay US$375 million of debt due on Monday. Without fresh capital, UAL has said it may be forced to seek bankruptcy protection.

"The clock is running," for a potential bankruptcy filing, said Dan Solon, an analyst at Avmark International, a London-based consultancy. "This certainly presents another stumbling block in getting to the table with the Air Transportation Stabilization board, the guys that have to approve the loan guarantee."

The rejection by the 13,000 employees in the Machinists union might derail contracts already ratified by other United unions that require participation by all workers.

The airline's 24,500 baggage handlers, airport customer service workers and reservations agents, also represented by the Machinists, voted in favor of separate concessionary pacts.

The mechanics would have taken a 7 percent wage cut under the terms and the other Machinists workers would see a 6 percent wage reduction, compared with an 18 percent decrease accepted by the higher-paid pilots. The contracts include changes to other benefits, such as vacation days.
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