Tuesday, March 18, 2003

United raises pressure on unions



By Dave Carpenter
The Associated Press

CHICAGO - United Airlines asked a bankruptcy judge Monday to nullify its labor contracts after failing to reach agreements by a self-imposed deadline, raising pressure on its unions to agree to long-term cost cuts.

The move gives the two sides until May 1 to settle on negotiated terms or the court could void the contracts - a drastic and risky means of slashing labor costs that is rarely employed in airline bankruptcies.

If agreements aren't in place by then, the requested ruling by Judge Eugene Wedoff would enable United to impose its own, stricter terms, helping it stay on its lenders' timetable to show progress in bankruptcy or lose its financing.

That would send ripples through the beleaguered airline industry, where other troubled carriers are closely watching United's efforts to lower costs in hopes of making their own severe labor cost reductions.

It also would effectively wipe out decades' worth of negotiated contract provisions at United, the world's second-largest airline. Nullifying contracts is generally avoided in the industry, in part because of the danger of alienating employees at a time when labor turmoil can doom a struggling carrier.




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