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The Plight of United Airlines - 2002-12-04

United Airlines, the world’s second largest carrier, hasn’t been profitable for years, but since the terrorist attacks 15 months ago, it’s struggled just to stay in business. United is now facing imminent bankruptcy. Carolyn Weaver has details.

United Airlines hopes its rank-and-file mechanics union will vote “yes” this week on a new plan for pay cuts, one United says is needed to save the company from bankruptcy.

The new plan still calls for the 13,000 mechanics to take a seven percent pay cut but it gives workers more control over scheduling time off, and other work life issues.

United’s other unions have already voted to accept wage cuts, a precondition for the future federal loan guarantees that the carrier desperately needs. The company is losing a reported eight-million-dollars a day.

If United does file for bankruptcy, it will be the largest airline bankruptcy ever, and shareholders could lose all their investment. But industry observers say that passengers on both United’s domestic and international flights won’t notice any difference in service; that is, unless the airline’s labor problems continue even after a bankruptcy filing. Darryl Jenkins is director of the George Washington University Aviation Institute.

“If they don’t keep peace with their unions and travelers begin to be disrupted at all, at that point, there’s really not a lot of hope for United.”

And if the federal government decides not to bail United out with those loan guarantees, as many observers predict, it won’t matter which way the mechanics vote.