CHICAGO – United Airlines (search) and its mechanics' union reached a tentative agreement on a new five-year contract Monday, moving the carrier a step closer to securing the company-wide labor concessions it seeks in order to exit bankruptcy.
The tentative deal gives United the $96 million in annual wage and benefit cuts it was seeking from the Aircraft Mechanics Fraternal Association (search), union spokesman Terry O'Rourke said Monday.
The deal was announced as a federal bankruptcy court trial on United's proposal to unilaterally impose lower wages and benefits moved into its final days. Both the mechanics and the machinists' union, which has not yet reached a contract settlement, have threatened to strike if United broke the contracts without consensual agreements.
"It's not something to celebrate," O'Rourke said of the agreement. "We are under the coercion of the bankruptcy court process, and we made the best of bad choices. "
United officials did not immediately return calls for comment Monday evening on the tentative deal.
The mechanics' agreement must still be ratified by the 7,000 United mechanics. They rejected the last tentative agreement in January, with 57 percent voting no. The results of the union ratification vote would be released May 31, the union said.
The company and unions are trying to wrap up deals before Judge Eugene Wedoff (search) rules on United's motion to replace existing contracts with lower pay and benefits.
United, the second-largest U.S. airline, is seeking annual wage and benefit cuts totaling $176 million from machinists and $96 million from mechanics as part of targeted labor savings of $700 million yearly. It says it needs the second round of cutbacks in two years in order to persuade banks to lend it $2 billion so it can come out of Chapter 11 bankruptcy (search).