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Sir James 05-08-2005 02:23 PM

United vows to fire strikers

United vows to fire strikers
Threat `laughable,' flight attendants say

By Mark Skertic, Tribune staff reporter.

May 7, 2005

United Airlines said Friday that it would fire any flight attendants who take part in a threatened strike, firing an early salvo as the carrier and its unions prepare for their battle in bankruptcy court next week.

A strike would "force the company to take steps to preserve the airline," United said in a letter sent to the attorney for the Association of Flight Attendants.

United said a strike "would destroy the benefits of all of our hard work, alienate customers and threaten the entire enterprise."

The letter is the first public acknowledgement by Elk Grove Township-based United that a strike could severely damage its efforts to emerge from Chapter 11 bankruptcy protection.

A union spokeswoman called the threat "laughable."

"It's ... just more of the same from United," said Sara Nelson Dela Cruz.

United is scheduled to go before a U.S. Bankruptcy Court judge in Chicago Wednesday and seek to invalidate the contracts of three of its largest unions. The airline has said it no longer can afford the contracts, and it wants to invoke new pay and benefit terms.

The carrier has said that the Railway Labor Act, which governs airline workers, would prevent union employees from striking if their contacts are terminated. The unions counter that if their contracts are thrown out, the law won't apply because they cannot be forced to work under terms to which they never agreed.

The flight attendants union has been the most vocal, threatening to hold strikes that could interrupt service at isolated airports, along certain routes or systemwide.

Also Friday, the flight attendants and the International Association of Machinists and Aerospace Workers each filed objections to a proposed agreement to transfer United's pension obligations to a federal pension insurance agency.

The deal between the carrier and the Pension Benefit Guaranty Corp. also is opposed by several other groups, including some creditors who represent United bondholders. Aircraft and property back those bonds.

United will seek court approval of the deal at a hearing scheduled for Tuesday. The airline estimates the move would save it $645 million a year. But shifting responsibility for the pensions ultimately would cost most employees thousands of dollars in retirement income.

"We recognize that this is difficult for our employees, but the agreement is critical to the future of United, as it strengthens the financial platform this company needs to attract exit financing and compete," United spokeswoman Jean Medina told Bloomberg News.

The deal was endorsed Friday by the unsecured creditors committee, which represents groups owed money by United. The committee said it would back the plan if unspecified modifications were made to it.

Creditors opposing the agreement argue that it treats some groups unfairly. One foe called the agreement "an overanxious attempt to placate one constituency, albeit an important one, at the expense of other, higher-ranked creditors."

Morningstar Inc. analyst Chris Lozier said it's critical that United win the judge's approval to terminate its pension plans, and that it avoid labor strikes.

"United has come a long way under bankruptcy, but it cannot afford to have a disruption in service for any period of time right now," Lozier said.

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