United Airlines, Machinists Union Formalize Contract

CHICAGO (AP) -- United Airlines and its machinists union reached a tentative contract agreement Friday, formalizing an agreement in principle hammered out late last month that averted a threatened strike.

Members of the International Association of Machinists and Aerospace Workers, which represents 20,000 baggage handlers, customer service representatives and other ground workers, have a July 22 deadline to vote on the five-year contract.

If approved, UAL Corp.'s United will have the final victory in a seven-month effort to rewrite its union contracts to save an additional $700 million (euro575 million) annually - a step the carrier says is crucial to its exit from bankruptcy.

Terms of the contract were not disclosed. Last month, the sides said their preliminary agreement would save United $175 million (euro144 million) in annual wage and benefit cuts.

The IAM said Friday the deal calls for contributions to a replacement pension fund be steered into the IAM's National Pension Plan rather than a company-sponsored plan, which had been a major sticking point in negotiations.

''We are pleased to have reached a tentative agreement with the IAM, which, if ratified, will bring to a close a major phase of our restructuring,'' United spokeswoman Jean Medina said Friday.

Randy Canale, president of IAM's District 141, said the tentative contract is ''the best way to avoid contract termination, provide secure pension benefits and job security for our members.''

The union's announcement came a few hours before United's monthly bankruptcy hearing Friday.

Bankruptcy Judge Eugene Wedoff was expected to rule on United's request to extend until Sept. 1 its exclusive right to file a reorganization plan, without competition from outside investors. United's exclusivity period expires July 1.

Wedoff has granted United such extensions several times during the 2 1/2-year bankruptcy. But there have been recent signs some creditors might be growing impatient with the airline's lengthy restructuring.

United's unsecured creditors committee in a court filing June 9 - while backing the exclusivity extension - implied there are outside investors that might have interest in restructuring the No. 2 U.S. airline.

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