United, negotiators for pilots agree on labor deal

DALLAS — United Airlines says it has a deal with union negotiators on a new labor contract with its own pilots and those from the former Continental Airlines.

United Continental Holdings Inc. said Friday that the agreement is an important step in creating a single workforce at the company, which was formed by a 2010 merger.

The union called it an agreement in principle on economic issues and said some details still needed to be finished. It is subject to approval by governing boards of the two pilot groups and by rank-and-file pilots.

Details of the agreement were not immediately disclosed, but Jay Pierce, chairman of the Continental pilots' group, said it included pay raises and better job protection and benefits.

Fred Abbott, United's senior vice president of flight operations, called it "an important step forward for our company."

The sides have been bargaining for more than two years, with pilots seeking pay raises and limits on outsourcing of flying to other airlines.

A federal mediator was brought in to help with the negotiations, and a member of the U.S. National Mediation Board also weighed in.

Both the United and former Continental pilots are represented by the Air Line Pilots Association, but by separate groups within the union.

Just two weeks ago, pilots voted overwhelmingly to authorize a strike against United, the world's biggest airline. While the vote was largely symbolic — federal law makes it difficult for airline workers to strike legally — it indicated the depth of the pilots' unhappiness over lack of a deal.

The pilots are still working under contracts approved last decade, when both United and Continental were in much worse financial shape. United went through bankruptcy proceedings, as Continental did in the 1990s.

The pilots, who are paid less than those at Delta Air Lines, were seeking pay raises and limits on outsourcing. United said last week that it would end a joint venture with Ireland's Aer Lingus on lucrative flights between Washington, D.C., and Madrid and which was a particular source of anger among its pilots.

United sells seats as if they are United flights, but the flying is done by Aer Lingus pilots. The union had proposed eliminating the Aer Lingus deal.

Hunter Keay, an airline analyst for Wolfe Trahan & Co., said the Aer Lingus flight amounted to just 1.6 percent of United's trans-Atlantic flying but was so despised by pilots that it "evolved into more trouble than it was worth to (United) management."

As the number of big U.S. airlines has shrunk through mergers — Delta bought Northwest in 2008 — the carriers have reduced seats and pushed up prices and added new fees to offset expensive jet fuel. Higher fares helped United Continental earn about $1 billion since the start of 2010.

United, however, has struggled at times to combine two independent airlines under a single wing. CEO Jeff Smisek has admitted stumbles, including technical problems that have plagued the company's reservations system since separate United and Continental systems were combined in March.

Although it has dropped the Continental name, United still operates much like two airlines, with Continental flight crews still flying the former Continental planes.

United Continental shares rose 21 cents to $18.37 in morning trading. Most other airline stocks were also up modestly.