United Airlines flight attendants' union offered to cut pay 3.6 percent as part of a plan to save parent UAL Corp US$5.8 billion over 5 1/2 years and keep the world's second-biggest airline out of bankruptcy court.
United's Association of Flight Attendants made the offer in negotiations this week with the carrier and told members in a summary of the proposal that attendants with six or more years of service, about 85 percent of 24,000 active attendants, would take the cut. The opening offer is subject to talks that are likely to keep up this weekend, said union spokeswoman Sara Dela Cruz.
UAL has said it must reduce costs to be viable, win approval for a federal loan guarantee that would help the company raise US$2 billion in private loans and avoid a bankruptcy filing.
"It's a step forward toward the notion of shared sacrifice," said JP Morgan analyst Jamie Baker, who has an "underweight" rating on UAL and doesn't own the stock.
The attendants earlier this year had refused to take part in wage cuts. Under the new terms, attendants would also skip two lump sum payments, due next March and in March 2005, that are equal to 5 percent of their previous year's pay. Attendants with more than six years service would give up a 2 percent pay increase in 2004.
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