• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

United Workers Protest Amid $1.4 Billion Loss

Posted on: Monday, 1 August 2005, 21:00 CDT

As United Airlines flight attendants picketed international airports on Thursday, including about 300 protesting at O'Hare International Airport, the bankrupt airline reported a second- quarter $1.4 billion loss.

The Association of Flight Attendants staged informational pickets at 20-plus airports on United's routes, protesting the airline's transfer of union pensions to a semi-governmental insurance agency.

United Chief Executive Officer Glenn Tilton pointed to the Elk Grove Township-based airline's narrow $48 million operating profit. That came before $1.39 billion in reorganization costs, including non-cash expenses related to scrapping pension plans and rejecting airplane leases and contracts.

"Of the major network carriers, only three ... ourselves, American and Continental ... reported an operating profit this quarter," Tilton said.

The company plans to file a bankruptcy exit plan with the court by Aug. 2.

"We believe we are still in line with that timetable," said Dave Dimmer, a United spokesman.

Still, some analysts expressed doubts.

"Unfortunately, United won't have several quarters of positive results to show it is ready to come out of bankruptcy," said Joseph Schwieterman, director of the Chaddick Institute for Metropolitan Development at DePaul University, Chicago. "This was a staggering loss but one needs to read between the lines for the full story."

The threat of flight interruptions by flight attendants could also change the airline's diagnosis, said Michael Boyd, a Colorado- based airline analyst.

But the airline said any strike would be illegal and "will not be tolerated." The airline has threatened to fire any flight attendant that strikes.

Ray Neidl, an analyst at New York-based Calyon Securities, was more upbeat about the carrier's prospects. "They are making progress," he said, with costs, excluding fuel, on track for a return to profitability.

The second largest U.S. airlines has lost more than $7 billion since filing for Chapter 11 bankruptcy protection in December 2002.

Rival Delta Air Lines, fighting to avoid bankruptcy, reported a $382 million quarterly loss. Northwest Airlines turned in a $225 million loss for the quarter.

United in the second quarter managed to wring $700 million in average annual savings from its work force and dump its under- funded pensions on government insurers, although flight attendants are appealing a bankruptcy judge's decision. The pension shift saved the company about $645 million a year, the company said.

United's costs fell 13 percent in the second quarter. However, jet fuel costs increased almost 38 percent to $955 million. Still, United has a cash balance of $2.6 billion.

- Daily Herald news services contributed to this report.

Source: Daily Herald; Arlington Heights, Ill.

More News in this Category