UAL requests emergency approval of bargaining agreement with machinists union

By Caroline Salls

Pittsburgh, July 22 - UAL Corp. requested emergency approval of its five-year tentative agreement modifying the collective bargaining agreements with the International Association of Machinists, according to a Friday filing with the U.S. Bankruptcy Court for the Northern District of Illinois.

The tentative agreement was announced June 17, and union members were scheduled to vote on it through Friday.

Under the agreement, the pay of most machinist union-represented employees will be reduced by 5.5% effective with the payroll period beginning July 1, with the pay not to begin increasing again until July 2007.

The agreement also provides that the union will withdraw its opposition to termination of the two United Air Lines, Inc. pension plans that union members participate in.

When those plans are terminated, United has agreed to participate in the IAM national pension plan.

Also under the agreement, the union employees can participate in a revised profit sharing program that pays out to employees if United profits exceed a certain amount; any plan of reorganization proposed or supported by United will include issuance of $60 million of convertible notes to union employees.

Also, machinist union employees will be treated as general unsecured creditors under a plan of reorganization and receive distribution in accordance.

In the motion, United said the agreement will provide a critical portion of its long-term cost savings and help it satisfy its debtor-in-possession financing covenants, obtain exit financing and "cope with the continuingly difficult airline industry environment."

A hearing on the emergency motion was scheduled for Friday.

UAL Corp., the Chicago-based parent of United Air Lines, filed for bankruptcy on Dec. 9, 2002. Its Chapter 11 case number is 02-48191.

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