UAL's Unions Not in a Giving Mood

Updated from 3 p.m. EDT

United Airlines wants to cut labor costs by $9 billion over the next six years, a move the carrier hopes will stave off the need for bankruptcy protection and secure a handout from the government. But the company might not reach those goals if labor has a say in the matter.

United, a unit of UAL UAL and the world's second-largest carrier, unveiled an emergency restructuring proposal that calls for $2.5 billion a year in annual cost savings, with $1.5 billion of that coming from reductions in labor costs.

Previously, United's pilots union had agreed to cut wages and benefits by 10% over the next three years, for a total savings of $520 million. But union leaders said the current proposal, which United needs in order to receive a $1.8 billion government-backed loan, goes too far.

Flight attendants, represented by the Association of Flight Attendants, have balked at United's proposed cuts. "United management wants its employees to invest $9 billion of our hard earned money in an airline with no plan and no leader," said Greg Davidowitch, AFA president. "While we will continue to meet with the company, there will be no concession talks under these circumstances."

Machinists were also upset. "You can see their desire is to rip the heart from our agreement and balance their mismanagement on the backs of the workers," said Scotty Ford, president and general chairman of District 141-M of the International Association of Machinists and Aerospace Workers, in a note to members. "We sincerely hope that this process can be completed expeditiously and that a new CEO can develop a business plan that does not punish workers for issues in which they have no control."

Without a permanent CEO, United will have trouble wheedling concessions from its labor unions, which have been unwilling to negotiate with management thus far. Of its labor force, only United's pilots have offered anything in the way of wage concessions.

With United burning more than $1 million daily and with billions of dollars of debt needing refinancing in the upcoming fourth quarter, the latest news increases the possibility that it will follow US Airways into bankruptcy. In midafternoon trading Friday, UAL's stock dropped 13 cents to $2.92.