United backs off hours reduction plan after union sues

United has walked back a plan to reduce 27,000 aircraft
maintenance and passenger service employees from full-time to part-time status
beginning May 24. 

United backtracked after the union representing those
employees sued the carrier, saying the hours reduction would violate United’s
obligation to refrain from imposing involuntary pay cuts, benefits cuts or
furloughs until Sept. 30 as a condition for accepting $5 billion in Cares Act
grants and low-interest loans. 

In a memo Wednesday, United COO Greg Hart wrote that all
employees will have the option to participate in a leave-of-absence program next
week that will take full-time employees from 40 hours per week to 30 hours per
week and part-time employees from 20 hours per week to 10 hours per week.
Full-time employees who participate in the program will retain full-time

“We will monitor the participation rates and report back on
the program’s performance at the end of June,” Hart wrote. “Without a high
level of participation, we will have no choice but to reconsider a mandatory
reduction to 30 hours for our full-time employees.”

On May 1, Hart had told United maintenance and passenger
service employees that they would be taking mandatory cuts from 40 hours per
week to 30 hours per week and that they would lose full-time status as a
result. Similar cuts were to be imposed on management personnel. 

Hart said that the carrier had unsuccessfully attempted to
negotiate a more favorable arrangement with the International Association of
Machinists and Aerospace Workers (IAM), which represents United’s maintenance
and passenger service personnel. 

The cuts are necessary, Hart said in the May 1 memo, because
United anticipates billions of dollars of cash burn for the next several

According to the language of the Cares Act, airlines that
accept federal assistance must “refrain from conducting involuntary furloughs
or reducing pay rates and benefits until September 30.”

In his memo Wednesday, Hart said United remains confident
that the plan it has now scrapped was legal. 

In its Tuesday lawsuit filed in the U.S. District Court in
New York, AIM alleged that those cuts would have resulted in involuntary pay
cuts of at least 25% as well as reductions in benefit accruals. 

The cut in hours amounts to furloughs, the union said, as
full-time employees were to be turned into part-time staff. 

The union asked the court to block United from imposing the
cuts until no earlier than Sept. 30.

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