updated 5/16/2005 9:36:29 PM ET 2005-05-17T01:36:29

Contract negotiations that could determine whether United Airlines is hit by a threatened employee strike remained unresolved Monday as a federal bankruptcy judge heard a fourth day of testimony in the carrier’s trial over labor costs.

Despite signals from both the mechanics’ and machinists’ unions last week that tentative settlements were close, no agreements had been announced by mid-afternoon as the trial moved closer to conclusion.

The company and unions are trying to wrap up deals before Judge Eugene Wedoff rules on United’s motion to replace existing contracts with lower pay and benefits. Both the Aircraft Mechanics Fraternal Association and the International Association of Machinists and Aerospace Workers have said they will strike if United breaks the contracts, as has the Association of Flight Attendants.

The judge scheduled closing arguments in the trial for Thursday. It is unclear whether a ruling would come immediately afterward.

After spending the weekend away from the bargaining table, IAM negotiators presented a new contract proposal to United and were awaiting a response, spokesman Joseph Tiberi said.

“If we can’t get something done by the time he rules, then we walk off,” Tiberi said. “It’ll be a tense couple of days.”

United and AMFA negotiators met through the weekend. Spokeswoman Jean Medina of United, a unit of UAL Corp., said only that talks were ongoing Monday.

Joe Prisco, president of AMFA Local 9 in San Francisco, declined to characterize the negotiations or say how close an agreement appeared.

“It’s always close, depending on how you look at it,” he said. “We’re neither pessimistic nor optimistic. It’s kind of hard to make a comment on it when you’re making concessions. No matter how you look at it, this is going to be concessions.”

United, the second-largest U.S. airline, is seeking annual wage and benefit cuts totaling $176 million from machinists and $96 million from mechanics as part of targeted labor savings of $700 million yearly. It says it needs the second round of cutbacks in two years in order to persuade banks to lend it $2 billion so it can come out of Chapter 11 bankruptcy.

About 20,000 ramp and customer service workers and 7,000 mechanics are represented in the talks.

The airline finished presenting its case at the trial, which began last Wednesday.
Michael Dingboom, United’s director of financial planning, testified that the company is likely to violate its bankruptcy lenders’ monthly financial requirements by August if it doesn’t get the sought-for labor cuts. That violation would require United to obtain a waiver from the banks in order to retain its interim bankruptcy financing.

Dingboom also said that while the price of oil has declined recently, fuel prices remain volatile and the company can’t count on lasting financial benefits from an improvement in that category alone.

AMFA attorney Lee Seham questioned the company’s decision to seek the full $96 million in concessions from mechanics even as oil prices fall.

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