Blames Rising Fuel Costs And Weak Income

Still struggling against a tide of red ink, bankrupt United Airlines Friday told a Chicago federal judge that it needs to make significant additional cost cuts if it is to survive.

Noting the current spike in fuel prices, what it termed "industry over-capacity" and rock-bottom airfares, United told the judge -- and it's employees -- that it must find more ways to cut labor costs.

"Given the current jet fuel prices and revenue forecasts, we believe that our additional cost savings may have to be increased substantially," CEO Glenn Tilton told employees on a company hot line from Shanghai, China. "We are currently discussing that target with all of our key stakeholders." He was quoted by the Washington Post.

United's CFO, Jake Brace, painted a woeful picture for the bankruptcy judge. "The environment in the industry is bad - it's as bad as we've ever seen it."

United is expected to announce another major round of job cuts when it unveils its plan to exit bankruptcy next month. The company had more than 100,000 workers before 9/11. It has 62,000 today and thousands more will almost certainly get pink slips in the months ahead.

The ALPA, stinging from United's decision to pull out of pension fund contributions, said it understands the remarkable task ahead of the airline, but "the company has not fully explored all non-labor cost savings before turning to its pilots and other employees for another bailout. Neither has the company secured appropriate sacrifices from United's creditors, aircraft lessors or Star Alliance airline partners."

All Along The Watchtower...

In fact, all four of United's major unions are digging in -- especially on the issue of pension contributions. The AFA filed a grievance back in July when United bypassed a $19.7 million payment to the fund. That grievance will be heard in bankruptcy court this week.

Even if the court allows United to skip all pension contributions between now and its expected exit from bankruptcy next year, the Denver Post reports the airline will still be liable for about $4.1 billion in retirement funds before 2008.

FMI: www.united.com