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United May Soon Have A Strike On Its Hands

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United Airlines is planning to cut $9.9 billion in pension accounts, and the labor unions are outraged and have threatened to strike later in the month if United does so.

“Our members are ready to go if they mess with the pension or terminate our contract,” said Carl Finamore of the International Association of Machinists and Aerospace Workers. “We will shut their airline down. Our members are fed up.”

If United goes through with the cuts, pressure will be increased on other airlines such as Delta, Northwest, and American to cut costs on their retirement plans. According to AP,

American and Northwest, the dominant carrier at Detroit Metro Airport, “have to point out to the unions the landscape is changing and that reforms have to be made,” said Ray Neidl, a Calyon Securities analyst in New York. “In the case of the pilots, that may hit home — they may decide it’s time to change the plan.”

…American Airlines, the world’s largest carrier, has joined with unions, Northwest and Delta Air Lines Inc. to lobby for legislation that would let carriers spread over 25 years pension payments due in the next four years. American contributed $461 million to its plans in 2004, bringing them to a funded level of about 80%.

As David Utter of WebProNews points out, Businesses with problems are required by law to start making up for pension shortages within five years, and United couldn’t meet that timeframe.

If the strike happens, United might find itself in a long legal dispute. United says that under the terms of its labor contracts, a strike would not be legal. They would be forced to take action.

Chris is a staff writer for WebProNews. Visit WebProNews for the latest ebusiness news.

United May Soon Have A Strike On Its Hands
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