HONOLULU, Hawaii — UAL Corp. says it will save $1.3 billion in five years by cutting non-union employee salaries 2.8 percent to 10.7 percent, skipping 2002 merit raises, and issuing stock options to the affected people, Pacific Business News reported.
These details, issued from United corporate headquarters in Chicago on Monday, are effective Dec. 1 for what the company calls SAM employees (salaried and management).
“With their help, we move one step closer to reaching our $5.8 billion labor-cost reduction target,” CEO GlennTilton said.
There is one step still to go. Pilots, flight attendants and other union workers have already negotiated wage concessions. But the International Association of Machinists and Aerospace Workers is yet to settle. The IAM represents the largest chunk of United workers including mechanics, baggage handles, check-in counter personnel, food service workers, and others on the ground.
The employee wage cuts are designed to avoid Chapter 11, but recervership is widely regarded as unavoidable unless the Air Transportation Stabilization Board approves $1.8 billion in federal loan guarantees so United, which supplies more airlift to Hawaii than any other airline, can refinance its debt before a $375 million debt payment comes due Dec. 2. The way ATSB’s decision is going down to the wire has sparked speculation that the administration may have decided it would be better to simply let United go bankrupt, but the White House has not given any such indication.
Over the weekend, United said its financial recovery plan projected profitability in 2004 after further downsizing that will trim about 7,000 more jobs, apparently including flight attendants furloughs previously planned for early next year. Having already retired 90 aircraft, United says it will retire about 50 more, and defer all new jetliner deliveries for two years.
The plan calls for a further 6 percent shrinkage in the UAL flight schedule — to produce an airline is that is 23 percent smaller than it was before Sept. 1.