United Airlines' plan to impose an additional US$725 million in labor cuts and eliminate traditional pension plans was assailed as "disastrous" on Friday by its flight attendants union, which pledged to fight the company "over every dime."
The union's objections signaled that the US' second-biggest airline is in for a tough fight as it seeks another round of harsh cutbacks involving employees who already have made US$2.5 billion in annual labor concessions.
CEO Glenn Tilton told employees the significant new wage and benefit concessions and changes in work rules are part of US$2 billion in annual savings the ailing carrier needs in order to secure financing and emerge successfully from bankruptcy.
But the Association of Flight Attendants (AFA) said the demands are "not fair, equitable, nor necessary for a successful reorganization."
"The company's demands are disastrous," said Greg Davidowitch, president of the United branch of the AFA. "If management stands by these stipulations they will destroy United Airlines. We're not going to let that happen. We will fight them at the bargaining table and we will fight them in court."
Leaders of the pilots' and machinists' unions declined comment on Friday while each group met to pore over the new numbers.
While United may be able to use the leverage of federal bankruptcy law to have its proposals imposed, industry analysts say any rebellion by employees could sink the airline. They said United is making a painful but sound business move -- if it can get employees to cooperate.
Tilton disclosed the company's intentions on an employee hot line late Thursday, making official what management had been discussing for months.
"There can be absolutely no doubt that this industry is facing serious challenges: air fares are at 12-year lows, fuel is at record highs, the industry faces surplus capacity, no pricing power, and we approach the slowest travel season of the year," he said. "We must address the current situation realistically and, at the same time, position our company to win in the future."
Responding later to the flight attendants' criticism, spokeswoman Jean Medina said "we have to make difficult decisions now" in order to exit bankruptcy as a competitive, profitable company.
Besides US$725 million in pay and benefit reductions, company officials said they would save US$650 million annually by terminating the pension plans. They said an additional US$655 million in non-labor cost savings, already identified, would put the company close to the US$2 billion in savings it expects to need to get out bankruptcy.