Court wants United, union to hash out deal

updated 2:07 p.m. ET May 20, 2005

CHICAGO - A federal bankruptcy judge said Friday he would not issue a ruling until May 31 on United Airlines’ request to impose lower pay and benefits on its machinists union, a decision aimed at letting the two sides agree on a long-term contract.

Judge Eugene Wedoff’s statement came after closing arguments in a weeklong trial and removed the immediate threat of a strike at the nation’s No. 2 carrier.

“It gives us time to hopefully resolve these matters completely, which is what we wanted all along,” United spokeswoman Jean Medina said.

United and the International Association of Machinists and Aerospace Workers remained in talks at a local hotel. A spokesman for the union, which had insisted it would strike if Wedoff imposed United’s contract terms, said the two sides were exchanging proposals and hoped the judge’s ruling would be unnecessary.

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Both sides said pensions remained the main sticking point, although neither side would give details.

Despite the respite, the IAM said it would seek a restraining order to prevent United from barring a strike. After Wedoff refused to grant such an order, the IAM took its request to U.S. District Court, where the matter was to be heard later Friday.

Medina said United believes a strike would be illegal under bankruptcy law regardless of any restraining order.

United, a unit of Elk Grove Village, Ill.-based UAL Corp., is seeking annual concessions totaling $176 million over five years from machinists to complete a targeted $700 million in labor cost reductions.

Unlike the tense and sometimes emotional hearing last week over United’s termination of employee pensions, the weeklong labor trial has been largely absent of sharp exchanges and accusations — suggesting both sides were always hopeful of a resolution through negotiations.

Nonetheless, the threat of a possible strike hung over the proceedings.

IAM spokesman Joseph Tiberi reiterated that the union’s 20,000 members, who include ramp and store workers and public-contact employees, would not back off their strike threat if the contract is broken.

“If we can’t get a deal by the time the judge makes a ruling, we’re prepared to shut down United Airlines,” he said.

Besides wages and benefits, the two sides were negotiating over a defined-contribution pension plan to replace the defined-benefits plan United is terminating as part of a companywide push to cut labor costs.

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