(Adds cost to United, byline)
By Alana Wise
NEW YORK Dec 5 Union mechanics at United
Continental Holdings Inc on Monday ratified a six-year
joint collective bargaining agreement with the airline, marking
the end to several years of contract talks between the two
The agreement, approved by United mechanics who are
represented by the International Brotherhood of Teamsters, is a
major step toward integrating United and Continental, which
merged in 2010, and reducing flight cancellations.
Under the contract, 9,000 mechanics at United, the No. 3
U.S. airline by passenger traffic, will see pay hikes that will
put their compensation packages "2 percent above the highest
compensation in the industry every two years."
"This contract represents the largest contract for a
mechanics group in airline industry history," the director of
the Teamsters airline division, David Bourne, said in a
statement. "It is a package worth a collective $1.7 billion in
improvements in compensation and benefits over the current
United Airlines shares were down 1.5 percent at $68.26 by
day's end in the New York Stock Exchange.
United expects the mechanics' contract and an additional
payout to pilots to match a wage increase at rival Delta Air
Lines Inc will add between 1.5 and 2 percentage points
to its unit costs, excluding fuel and other expenses, in 2017,
its Chief Financial Officer Andrew Levy said last month during
an investor day presentation.
In total, the company expects unit costs to rise between 3.5
percent and 4.5 percent in 2017 from a year earlier.
United said on its last quarterly earnings call that cheap
airfares and higher wages from new contracts would squeeze its
results this fall, making it difficult to be as profitable as
Nearly 52 percent of the 8,123 voting members supported the
agreement, an upswing from the just 7 percent who voted in favor
of a previous contract.
Without a joint contract, United and Continental crews had
been staffing separate flights since the merger. When a flight
on a pre-merger United plane was short-staffed, pre-merger
Continental employees could not be brought in, and vice versa,
sometimes leading to cancellations.
That is slated to change with Monday's news and a contract
recently reached with the flight attendants.
(Reporting by Alana Wise and Jeffrey Dastin; editing by
Jonathan Oatis and Lisa Shumaker)