CHICAGO – UAL Corp. (UAL), parent of United Airlines (search), is in the midst of "rigorous" negotiations with its labor groups, but still sees an exit from bankruptcy by fall, the company's chief executive said Monday.
The embattled No. 2 U.S. carrier is engaged with each of its labor unions and is pursuing various cost savings plans with them, Glenn Tilton (search) said after a City Club of Chicago luncheon.
United, in bankruptcy since December 2002, has said it needs to secure $725 million in annual labor savings to exit Chapter 11. Tilton said negotiations over wage concessions and pension plans are rigorous, but that it is likely the company will emerge from Chapter 11 protection late this year.
"If you take the work that we have to do in the court and lay it against the calendar, it would suggest that the time to exit is going to be in the fall," Tilton said.
The Elk Grove Village, Illinois-based airline has concession deals in place with four of its six unions but is still negotiating with the International Association of Machinists and the Aircraft Mechanics Fraternal Association.
United has said it needs to eliminate its four employee pension plans and replace them with cheaper plans. If the carrier cannot come to an agreement with its unions on the pensions, a trial on the matter is set to begin May 11.
The airline has taken criticism recently, particularly from the flight attendants union, who said last week that UAL's management is "refusing to meet the same rigorous standards that employees are held to."
The company has brushed aside that criticism, saying sacrifices are being made on all levels.
Tilton also said he sees the need for consolidation among the largest network carriers. Excluding U.S. Airways Group Inc. (UAIR), also in bankruptcy restructuring into a leaner operations, there are five major network carriers, he said.
"There are simply too many companies doing exactly the same thing," Tilton said. "I think five is too many, perhaps too many by two."
Tilton did not elaborate on which carriers likely would be involved in consolidation.