The Aircraft Mechanics Fraternal Association rejected United Airlines’ deal to save $101 million through salary cuts and other means, standing in stark contrast to other labor groups who have approved over $300 million in cost savings. In fact, the mechanics voted to strike if United goes to court to try to impose changes in its contract.
High fuel costs and tough domestic competition contributed to a $664 million net loss for the fourth quarter for UAL Corp., parent of United Airlines. Though operating revenues rose 5% to $4 billion, expenses increased 14% to $4.48 billion. This led to an operating loss for the airline of $493 million.
For the full year of 2004, United stacked a $1.64 billion loss on top of a $2.81 billion net loss in 2003. Operating revenues for the year wee up 9.8% to $16.39 billion, and operating expenses rose 5.4% to $17.17 billion, leaving the airline with an operating loss of $777 million. This was an improvement over the $1.36 billion operating loss in 2003.
After rejecting one proposed contract with pilots, the judge handling the United’s bankruptcy said he would approve the current deal if it were ratified by the pilots. A reported 75% of pilots who participated in the vote approved an 11.8% pay cut, saying they would be relentless in holding airline management accountable for exiting from bankruptcy.
Flight attendants agreed to a 9.5% wage cut, but by a narrower 56% margin of those participating in the vote. The flight attendants took a hard line with airline management saying they would rather take the lesser of two evils and shape concessions rather than have “mistrusted management” reject their contract and impose concessions.
The mechanics rejected a tentative agreement “overwhelmingly” and further voted to strike should the airline seek to have the court impose changes on their contract. The mechanics’ union said it would present a proposal that would provide savings without continuing to cut wages and benefits.
United had said it needed to cut $725 million in costs. The two contracts accepted by the pilots and flight attendants include $311 million in reductions.