United, Union Pact Calls for Pay Cut

CHICAGO (AP) -- A tentative contract between UAL Corp.'s United Airlines and the union representing its ramp and customer-service workers calls for a 5.5 percent pay cut.

Terms of the five-year agreement, which was made available to the membership of the International Association of Machinists and Aerospace Workers on the union's Web site Tuesday afternoon, also include changes to holiday pay and vacation time, among other things.

Voting on the pact is expected to conclude by July 22.

The deal also calls for UAL, the nation's second-largest carrier, to make future pension contributions to the IAM National Pension Plan instead of a 401(k)-style plan, which had been the airline's preference. There will be no contributions to the IAM National Plan prior to March 1, 2006. The contribution rate would start at 4 percent of a given employee's salary for the first year, rising to 6.5 percent in the last year of the contract.

The tentative agreement comes after the airline and the union late last month reached what both sides called an agreement ''in principle.'' The deal at the time was subject to additional due diligence by United, particularly related to pensions. Once the airline signed off on the pact, it became a deal that could be voted on by the union's membership.

If the contract is ratified, UAL will have completed new labor agreements with all of its unions, generating annual savings of $700 million on top of $2.5 billion achieved earlier in the airline's bankruptcy case.

At a recent court appearance, UAL Chief Financial Officer Jake Brace said the airline still intends to emerge from bankruptcy this fall, though he declined to offer a specific date. The company, headquartered in Elk Grove Township, Ill., still must work out new terms on dozens of plane leases and secure exit financing, among other issues.