United Continental Mechanics Reject Tentative Labor Contract

A wide majority of the 9,000 mechanics at United Continental Holdings Inc. voted to reject a new six-and-a-half year labor contract, their first tentative joint agreement since United and Continental merged in 2010, said their union, the International Brotherhood of Teamsters.

The union called the agreement "substandard" and said it particularly objected to the idea of implementing a new wage scale for new mechanics. "At a time when United Airlines is incredibly profitable, it is clear that mechanics deserve a better offer from the company," Jim Hoffa, Teamsters general president, said in a statement.

The Teamsters said they would petition the National Mediation Board to declare the talks at impasse so the mechanics can go out on strike. The board, which oversees labor relations in the airline and railroad industries, normally wouldn't reach that determination until more bargaining is achieved.

Oscar Munoz, United's chief executive, said it a statement that he is disappointed by the outcome. But he said, "we are eager to get right back to the table. I will personally meet with our labor leaders to make sure we reach an agreement that will work for our technicians." Mr. Munoz, who suffered a heart attack in October and later had a heart transplant, isn't expected to be back full time at the company until later in the first quarter.

United mechanics aren't the first airline employee group to spurn a tentative contract. With the major airlines producing record profits, other labor groups also have shown their dissatisfaction with contract offers they felt were too low. The pilots at Delta Air Lines Inc., shot down a contract proposal last summer, as did pilots and flight attendants at Southwest Airlines Co.

The rejected United mechanic agreement could have included a 25% increase in the top mechanics hourly rate and a 33% cumulative increase over the duration of the agreement, along with an $80 million signing bonus and furlough protection for all active mechanics. But it also had newly established wage scales, holidays, vacation and sick leave for mechanics hired on or after the contract went into effect, a so-called B-scale that unions detest.

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(END) Dow Jones Newswires

February 16, 2016 15:05 ET (20:05 GMT)

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