UA Looking to Unions for Help

Threatening Chapter 11 filing, struggling carrier gives itself 30 days to find relief

United Airlines is giving itself 30 days to win concessions from its unions and come up with a new business strategy or face a Chapter 11 bankruptcy filing.

Jack Creighton, the airline’s chairman and CEO, noted that the airline is facing debt payments of $875 million in the fourth quarter, and the company does not have sufficient access to the public capital markets to repay them. He said the airline has launched an “intensified recovery effort. ... We have given ourselves a very short timeframe 30 days to conclude our discussions with all stakeholders.”

Creighton said the airline is preparing for the potential of a Chapter 11 filing this fall.

“Unless we lower our costs dramatically, filing for bankruptcy protection will be the only way we can ensure the company’s future and the continued operation of our airline,” he said.

Meanwhile, flight attendants at United made a very strong statement in a press release concerning the airline’s attempt to restructure and amend its application for a loan guarantee from the federal government.

Questionable Decisions

Greg Davidowitch, flight attendants union council president, said in the release that “short-sighted management decisions, such as the premature announcement of a potential bankruptcy, will ultimately cost the carrier more money in lost revenue from passengers booking away than it could ever get out of flight attendants’ pockets.”

Davidowitch added: “Before flight attendants invest our hard earned wages in our airline, we must know what we are investing in.

“Management must take the lead on the cost cuts it says it needs, rather than saying, ‘We’ll only do it if everyone else does.’ Management must recognize the unique benefits the United flight attendants contract provides and the contributions we make every day as the airline’s front-line employees.

“United says its total labor cost represents 52 cents of every dollar of revenue, but flight attendant costs represent approximately 7 cents of every dollar. No reasonable assessment of United’s flight attendant costs could determine they are a problem for the airline.”