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United, Pilots Reach New Contract Deal

January 19, 2005|From Associated Press

United Airlines and its pilots' union reached tentative agreement on a revised new contract Tuesday, 11 days after a judge dismissed the previous deal as unfair to other unions.

The pilots' union leadership endorsed the agreement and sent it to about 6,400 United pilots for ratification. Balloting is scheduled to begin Thursday and go until Jan. 31.

Neither the company nor union would release details, but United said the savings were similar to those outlined in the previous deal, in which pilots had agreed to a 15% pay cut. The pilots planned to discuss the new contract today.

If approved, the latest agreement would help United in its push to rewrite all its labor contracts to save costs for the second time in its 25-month bankruptcy case. Elk Grove Village, Ill.-based UAL Corp., parent of United Airlines, said it needed to cut wages and benefits by $725 million annually -- on top of the $2.5 billion in annual reductions made in 2003 -- and eliminate defined-benefit pensions.

The previous contract would have provided United with $180 million in annual savings and paved the way for it to terminate the traditional pensions. Pilots agreed not to fight the pension move in exchange for other financial considerations.

But the flight attendants' and machinists' unions, joined by the government's pension agency and a committee of United's unsecured creditors, successfully opposed that deal. Bankruptcy Court Judge Eugene Wedoff ruled in their favor Jan. 7, saying it unfairly forced the other unions to join the pilots in letting United end their pension plans.

United said Tuesday that the new pact would provide the permanent labor cost savings it needed to complete its restructuring.

The leaders of the United branch of the Air Line Pilots Assn. said they opted to accept the revised agreement rather than mount a Bankruptcy Court challenge.

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