United Airlines parent
set plans to cut nonunion workers' pay as part of an effort to slash costs and emerge from bankruptcy protection.
The company, which has been operating under Chapter 11 since December 2002, said it will permanently reduce pay for salaried employees by 4%, for management employees by 6% and for officers by 8%. 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. The various cuts take effect Jan. 1. The company estimated the cuts would save it $112 million a year.
"This is a very difficult time for all our employees," said Sara Fields, senior vice president at UAL, in a press release. "But it is absolutely essential if we are to build a strong and healthy company providing good, secure jobs, competitive compensation and benefits, and the opportunity to participate in the company's success in the future."
UAL is already negotiating with employee unions on wage and benefit concessions, but the airline has also asked a federal bankruptcy court to terminate its union contracts should the negotiations fail.
The company's stock finished Monday's session down a penny at $1.