United and Pilots Back to Negotiations

CHICAGO – United Airlines (search) is headed back to the negotiating table with its pilots after a bankruptcy judge threw out the union's latest contract. The airline, however, achieved last-minute negotiating breakthroughs Friday with two other unions to postpone an awkward courtroom showdown over its push for new contracts.

The flurry of developments came just ahead of a self-imposed labor deadline by the nation's No. 2 airline in its efforts to slash labor costs for the second time in its two-year bankruptcy.

The pilots' contract would have saved United $180 million annually and eliminated the pilots' defined-benefit pensions. But U.S. Bankruptcy Judge Eugene Wedoff took issue with a stipulation that other unions' pension plans also be terminated for the pilots' agreement to take effect.

Wedoff said the deal would "unduly tilt the bankruptcy process."

United Chief Financial Officer Jake Brace (search) said the company was disappointed in the ruling but pleased with the progress it made with the mechanics and flight attendants, calling it "overall a productive day."

The company reached a tentative agreement Friday with its mechanics and said it was on the verge of a similar pact with flight attendants. Details of the contracts were not disclosed.

Sara Nelson Dela Cruz, spokeswoman for the United unit of the Association of Flight Attendants (search), emphasized that any agreement reached at the negotiating table would have to be approved by members.

Even so, United must return to the bargaining table with the Air Line Pilots Association and now faces some form of negotiations with all six of its unions.

The company was forced to withdraw agreements reached earlier this week with two small unions representing about 200 flight dispatchers and meteorologists because they contained stipulations similar to the one Wedoff objected to in the pilots' deal.

The union representing baggage handlers, ramp workers and public-contact workers now faces an April 11 deadline for negotiating a pact after Wedoff on Thursday approved United's emergency motion to temporarily cut wages by 11.5 percent for that group, giving the two sides more time.

And, even if the deal reached Friday with the Aircraft Mechanics Fraternal Association is ratified, the two sides would take another 90 days to negotiate on pensions before United seeks court action.

The carrier, a unit of UAL Corp., maintains soaring fuel costs, industry overcapacity and profit-eroding fare wars with discount carriers forced it to seek $725 million in labor savings on top of $2.5 billion in cuts in 2003.