Updated from 2:01 p.m. EST
United Airlines' parent
and its pilots' union have reached a tentative agreement on a new contract, both sides confirmed Tuesday.
United spokeswoman Jean Medina said the airline is not providing details of the deal. "We're pleased to reach a tentative agreement with the Air Line Pilots Association on the cost savings the company needs to secure the exit financing necessary to restructure successfully," she said.
The Master Executive Council of ALPA, which represents some 6,400 United pilots, will review the agreement Thursday, said Dave Kelly, a union spokesman. He declined to comment further.
United, which has been under Chapter 11 bankruptcy protection since December 2002, had been seeking $191.1 million in annual concessions from its pilots as part of $725 million in annual labor savings. The airline also wants to terminate and replace its pension plans. All told, United is targeting $2 billion in annual savings, about a third of which would come from nonlabor cost-cutting.
United continues to negotiate with other unions on wage and benefit cuts, spokeswoman Medina said. But the airline has also asked a bankruptcy court to terminate union contracts under Section 1113(c) of the federal bankruptcy code, should collective bargaining fail by mid-January.
Since filing for bankruptcy protection, the airline has already secured $2.5 billion in concessions from both union and non-union employees.
On Monday, United announced permanent pay cuts starting Jan. 1 of 4% for salaried employees, 6% for management employees and 8% for officers. The company's chief executive, Glenn Tilton, and seven of his deputies have already said they would take 11% pay cuts.
In addition to these cuts, UAL will also make a temporary 4% reduction in salaries, to be restored upon the airline's exit from bankruptcy.
Some pilots said they believe management and salaried workers are not sacrificing enough. One pilot characterized the non-union cuts as "paltry" compared with the more than 40% pay cut he has already taken, along with the possible termination of his pension and concessions that would result from the current tentative agreement.
Like other U.S. airlines, United is struggling with high fuel costs and an inability to raise fares because of stiff competition and industry overcapacity.
United shares were up 2 cents, or 2.0%, at $1.02.