United Airlines is returning to the bargaining table with its mechanics after a bankruptcy court judge agreed to impose short-term pay cuts on the union while the two sides resume talks.
Bankruptcy Judge Eugene Wedoff granted United’s request Monday to temporarily cut mechanics’ pay by 10 percent. Members of the Aircraft Mechanics Fraternal Association last week rejected a long-term deal agreed on by negotiators that would have reduced benefits and cut pay 5 percent.
United said the cuts, which take effect Tuesday and last through May, will save the company $21 million.
Also Monday, United’s pilots and flight attendants’ unions ratified five-year agreements that cut pay and wages, moving the company closer to its goal saving an additional $725 million in annual costs in an effort to exit Chapter 11 bankruptcy.
Approval of those contracts leaves United without fresh concessions from two of its biggest employee groups: mechanics and the union representing baggage handlers, ramp workers and public-contact workers, which has until April 11 to negotiate a new pact.
United attorney Alexander Dimitrief told Wedoff during Monday’s hearing that AMFA’s refusal to accept concessions threatened to ruin progress the company has made with its other unions.
Wedoff agreed, telling both sides that an amicable relationship between the company and its unions “is the only way in which there is going to be a successful reorganization.”
In rejecting their agreement last week, AMFA members voted to strike if Wedoff allows United to replace its existing contract.
AMFA spokesman David Quinn said after Monday’s hearing that union members would not respond to the temporary cuts with any labor actions. The union is also willing to return to the bargaining table, he said.
“If the company would like to engage in further negotiations, we will keep our ears open,” Quinn said. “We hope they take this (rejection vote) as a heads up.”
The contract ratified Monday by the Air Line Pilots Association includes an 11.8 percent pay cut, which would save the airline $180 million in annual costs. The Association of Flight Attendants agreed to have their wages reduced 9.5 percent, which United has said would save the company $131 million a year.
About 75 percent of ALPA approved the new contract. AFA’s vote was narrower, with 56 percent of flight attendants voting to approve the deal.
“Our dedication to our jobs and our airline shall not waiver, but we demand current management deliver on its responsibility to exit bankruptcy in short order,” the union’s leadership said in a letter to its membership.
United, a unit of Elk Grove Village, Ill.-based UAL Corp., said it needs $725 million in annual cost savings from its six unions, which also agreed to a combined $2.5 billion in concessions two years ago.
While the givebacks from pilots and flight attendants are critical for United, analysts say the carrier still has not settled its most pressing problem — the threat by mechanics to strike if no long-term agreement is reached.
“The fly in ointment continues to be the mechanics,” said Scott Hamilton, a Seattle-based airline analyst. “They are almost impossible to replace on a timely basis.”
