The Marketplace Report: UAL Union Threatens Strike

Alex Chadwick talks to Bob Moon of Marketplace about United Airlines' attempt to avert a threatened strike by its machinists union. At the heart of the conflict is a plan to switch to a new, lower-cost pension plan.

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ALEX CHADWICK, host:

Back now with DAY TO DAY. I'm Alex Chadwick.

United Airlines and its Machinists union worked through the night trying to come to terms on contract concessions. This may actually wind up with a federal bankruptcy judge, and the union could strike against the financially ailing airline. Joining us is Bob Moon from the "Marketplace" news bureau in New York.

Bob, is there much of a chance the airline and the union are going to work out their differences?

BOB MOON ("Marketplace"): That's a good question, Alex. As you mentioned, they were bargaining all night long and into this morning, but there's no word on any agreement. They were hoping to workout their differences before this federal bankruptcy judge in Chicago rules, possibly later today, on unilaterally imposing the cuts that United is seeking. A trial on the issue is wrapping up with closing arguments today, and the judge could rule immediately or he could wait a few days. But the Machinists union, which represents about 20,000 ramp and customer service workers, says if he rules against the union that would immediately trigger a strike, which could, of course, wreck the bankrupt carrier. United contends such a strike would be illegal. The union says it would be permitted.

CHADWICK: If you were running United Airlines, wouldn't you like to get through a week without having your company's name in the papers? I mean, last week it was this pension plans that they've defaulted on. It's just a lot of problems there.

MOON: Yeah. It has been a very long road for United. And in fact, the pension issue does appear to be a major stumbling block in these talks with the Machinists union. In place of the old pension plan, United wants to offer a defined contribution plan, such as a 401(k), but the Machinists union is promoting its national pension plan and wants United to contribute to that.

The International Association of Machinists and Aerospace Workers is the only union that hasn't reached a deal with the airline. It also contends that its members are being asked to shoulder a disproportionate share of the total labor-related cuts that are being sought by United. The carrier says it needs to come up with $700 million in labor-related savings to win exit financing and successfully emerge from bankruptcy protection. The Machinists union says its members are the lowest-paid, and yet are being asked to take the largest cuts. United wants them to agree to wage and other concessions that would amount to about $176 million a year in savings.

CHADWICK: Bob, what else in airline news today?

MOON: Well, America West, as you may have heard just yesterday, agreed to buy US Airways. That should help USAir emerge from bankruptcy protection. Delta Air Lines, meantime, says it will keep making contributions to its employee pension plans as long as possible. Delta is the third-largest US carrier. It's been working with the Airline Pilots Association and Northwest Airlines to win passage of legislation that would let the company spread its pension contributions over 25 years.

Today in the "Marketplace" newsroom, we're looking at a new chain of Latin-themed coffee shops that plan to pick off customers at Starbucks.

CHADWICK: All right. Thank you, Bob. Bob Moon of public radio's daily business show, "Marketplace," produced by American Public Media.

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