ASSOCIATED PRESS United will cut 9,000 jobs and reduce its flight schedule by another 6 percent as part of an effort to return to profitability, the carrier's parent company announced yesterday.

United cuts
boost stock

Pilots approve tentative agreement
on wage cuts

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By Dave Carpenter
Associated Press

CHICAGO >> United Airlines' stock jumped sharply today after the struggling carrier announced the latest in a series of steep cost reductions aimed at keeping it out of bankruptcy court.

The company got an additional boost when its pilots union said the airline's pilots, as expected, had ratified a recent agreement for $2.2 billion in wage savings over 5 1/2 years. About 95 percent of United's 8,800 pilots approved the deal.

Also today, United confirmed that its salaried and management employees will take wage and other cuts contributing $1.3 billion in savings, as outlined in October, to its $5.8 billion package of financial cutbacks. And it said it plans to issue stock options to all employees who have agreed to pay reductions.

Despite the flurry of actions, it's still unclear whether United will be able to avoid the Chapter 11 bankruptcy filing it has warned of repeatedly because of impending debt payments and continuing cash losses of more than $7 million a day.

Investors, however, signaled increased hope that the latest moves -- including plans for 9,000 more job cuts -- have helped its chances of receiving a critically needed $1.8 billion government loan guarantee.

Shares of United parent company UAL Corp. closed up 56 cents, or 18.6 percent, to $3.51 on the New York Stock Exchange.

United announced yesterday that it will drop from its current 83,000 employees to 74,000 over the next year, retire 49 of its larger aircraft and reduce its flight schedule by another 6 percent -- steps it said would return it to profitability in 2004.

Today, in addition to disclosing details of the salaried and management employee cuts, United said it hopes to reach a tentative agreement soon with the International Association of Machinists. IAM groups representing mechanics and ground workers are the last major unions not to agree to reductions as part of the $5.8 billion in targeted cuts.

The moves announced yesterday, along with the earlier 18 percent pay reduction accepted by United's pilots, are part of a restructuring plan tied to the carrier's effort to return to profitability.

The airline has already cut more than 17,000 jobs since the Sept. 11 terrorist attacks.

Cash-crunched United faces a critical hurdle on Dec. 2 of a $375 million debt payment in its fight to avoid a bankruptcy filing, and it hopes to receive a $1.8 billion loan guarantee by then.

The carrier has been talking extensively with the Air Transportation Stabilization Board about its application and what it needs to do to qualify for the loan guarantee. But the federal panel has not tipped its hand about whether it will grant the loan guarantee, and many Wall Street analysts are expecting a bankruptcy filing -- although United plans to keep flying its daily schedule even if that step is necessary.

United's chairman and chief executive officer, Glenn Tilton, said Monday that the salaried and management employee cuts move the airline "one step closer to reaching our $5.8 billion labor-cost reduction target."

United said that in order to obtain the labor agreements on pay cuts, it had offered to grant stock options to participating employees representing 30 percent of UAL's shares, or roughly 52 million. Spokesman Jeff Green said specifics of the stock options were not yet being announced.

The additional 6 percent flight reduction announced Sunday would decrease the size of the nation's No. 2 carrier by 23 percent overall from pre-Sept. 11 levels.

Earlier this month, United said it plans to furlough 2,700 flight attendants beginning in January because of a reduced flight schedule planned for next year. Officials said the layoffs would bring the number of flight attendants on furlough to roughly 4,800.

United said it also plans to defer all scheduled aircraft deliveries through 2005 and lower capital spending.

The result of the wide-ranging cuts would be fewer and fuller flights on United's larger aircraft and greater reliance on smaller regional jets.