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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: September 29, 2000
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(Date of earliest event reported)
UAL CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 1-6033 36-2675207
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
1200 Algonquin Road, Elk Grove Township, Illinois 60007
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 700-4000
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Not Applicable
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(Former name or former address, if changed since last report)
ITEM 5. OTHER EVENTS.
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UAL Corporation (the "Company") is filing herewith a
summary of selected provisions from the tentative agreement
between United Air Lines, Inc. and the Air Line Pilots Association,
International, as Exhibit 99.1, and a press release as Exhibit 99.2.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
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Exhibit No. Description
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99.1 Summary of Selected Provisions
from the Tentative Agreement between United Air Lines, Inc.
and the Air Line Pilots Association, International
99.2 Press Release: UAL Corporation Expects to Post a Loss
for the Third Quarter
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
UAL CORPORATION
By: /s/ Francesca M. Maher
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Name: Francesca M. Maher
Title: Senior Vice President,
General Counsel and
Secretary
Dated: September 26, 2000
Exhibit 99.1
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TENTATIVE UNITED-ALPA 2000 AGREEMENT - SUMMARY
The tentative agreement on a new contract for United pilots was
announced by United Airlines and the Air Line Pilots Association
(ALPA) on Aug. 26, 2000. ALPA's UAL Master Executive Committee
endorsed the agreement on Sept. 9, and the Labor Committee of the
UAL board of directors endorsed it on Sept. 13. The tentative
agreement is currently under review by the pilots. If ratified,
the contract will be retroactive to April 12, 2000, the amendable
date of the pilots' contract, except as otherwise provided.
DURATION
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- - The amendable date of the contract is Sept. 1, 2004.
SCOPE
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- - The tentative contract allows United Express carriers to
increase the number of small jets (SJ) beyond the current 65
limit and includes:
- one-for-one replacement of up to 150 turboprops with SJs.
- more SJs if United's fleet grows above 451 narrowbody and
141 widebody fleet size.
- - The tentative contract allows United to acquire up to 20
percent voting equity and 20 percent non-voting equity of a
Star Alliance member, or of a carrier that commits to
Star membership.
- - United may share profits and losses of revenue with foreign
carriers with whom United has antitrust immunity, provided
United gets its fair share of the flying.
- - The tentative contract establishes that United will not fly
or train pilots during a lawful strike by United pilots, and the
no-strike clause in the former agreement has been eliminated.
- - The number of guaranteed active pilot positions, total
system and international block hours, mainline jet fleet and
furlough protection has been updated.
- - The definition of successor (purchaser of the company) has
been modified to include a purchaser of 50 percent or more of the
equity or value of the assets of United or its parent (1).
WAGES
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- - The initial weighted average increase in wages is 23.8
percent over snapback (2).
- The increase in first-year wages ranges between 21.5 percent
and 22.5 percent for pilots of the narrowbody fleets.
- The B777 and B747-400 fleet pilots both get a 28.7 percent
increase over snapback.
- - The annual increases will begin on May 1, 2001, with a 4.5
percent increase for all fleets with the exception of the
747-400, which will be 5.62 percent. The additional annual
increases will occur on May 1, 2002, May 1, 2003 and
May 1, 2004, with the same increases.
BENEFITS
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- - The defined benefit plan-related costs have increased from
benefit improvements and the effect of higher wages.
- The multiplier for determining pension benefit has increased
from 1.41 percent to 1.50 percent per year of service.
- The early-retirement reductions have been reduced to 3
percent per year (from 6 percent) prior to age 60.
- - The defined contribution benefit costs have increased
due to benefit improvements and the effect of higher
wages.
- The contribution percentage has increased from 9 percent to
11 percent of wages.
- - Medical and dental benefit costs have been increased modestly
due to benefit plan improvements.
- - For active employees, a short-term disability benefit is
paid at 55 percent of pay for three months.
WORK RULES
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- - Premiums have been established for nighttime flying and
modified for international flying.
- - Domestic and international hourly expense per diem has been
increased to $2.00 and $2.50, respectively, effective April
12, 2000, and will increase $0.10 each May 1 (starting in
2001).
- - The agreement establishes "flex months," which permit
scheduling of pilots by fleet up to 83 hours in as many as
four months annually.
- - The minimum-monthly pay guarantee has been reduced to 75 hours
from 78 hours, or 77 hours in flex months.
- - The agreement provides that pilots will be paid for the
greater of scheduled flight time, actual flight time or credit
time produced from a pilot's actual flight operation.
Additionally, reserve pilots will be paid credit time in the
same manner as line-holder pilots (pilots who have firm flight
schedules for the month).
- - Domestic scheduling has been improved to the mutual benefit
of the company and the pilots as follows:
- The level of pilot and aircraft co-pairing has been
increased.
- The length of ground time, duty period and time away from
home has been limited.
- The two-for-one rest provision, for duty periods greater
than eight hours within a 24 hour period, has been eliminated to
bring United in line with the rest of the industry.
- - Systemwide reserve coverage requirements have been increased
in accordance with the current practice:
Captain 17 percent
First Officer 15 percent
Shuttle 12 percent
Notes:
(1) parent - The parent of United Airlines is UAL Corporation.
(2) snapback - refers to the return of wages and the directed
account plan contribution to their levels before the onset of
United's Employee Stock Ownership Plan (ESOP), which began on
July 12, 1994.
Exhibit 99.2
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Corporate Communications Contact:
Media Relations (847) 700-5538
Investor Relations Contact:
Patricia Chaplinski (847) 700-7501
UAL CORPORATION EXPECTS TO POST A LOSS IN THE THIRD QUARTER
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CHICAGO, Sept. 29, 2000 -- UAL Corporation (NYSE: UAL), the
holding company whose primary subsidiary is United Airlines,
today announced that it expects to post a loss for the third
quarter.
"The third quarter has been a difficult period for United,"
said James E. Goodwin, UAL Corporation Chairman and Chief
Executive Officer. "The disruptions to our operations throughout
the quarter greatly inconvenienced our customers and front-line
employees, reducing revenues significantly. On the cost side,
while we are pleased that we were able to reach a tentative pilot
contract, the financial implications of the agreement, coupled
with the higher price of jet fuel, will further impact our
results. Therefore, we expect to post a loss in the third
quarter and probably in the fourth quarter as well."
The company experienced an abnormally high level of delays
and cancellations throughout the peak travel season. In
response, it adjusted its schedule to reduce the inconvenience
caused by the disruptions to its customers and front-line
employees, and this, combined with the effect of the disruptions
themselves, had a significant effect on revenues.
Affecting the company's costs are the recent tentative pilot
contract agreement and the higher cost of jet fuel. The cost of
the tentative pilot agreement, as well as the expected impact of
other labor agreements which the company is now negotiating, will
be greater than originally anticipated. The higher price of fuel
is also a cost factor. The company has a hedge program in place
against crude oil cost increases for the year. However, the cost
of jet fuel has risen at a higher rate than the cost of crude oil,
and this will affect the company's costs for the quarter.
"While the quarter's events are negatively impacting our
financial performance," Goodwin commented, "we are making every
effort to improve our operations and restore our customers'
confidence in United. We believe that these efforts will help us
return to profitability. I'd like to take this opportunity to
thank our customers for their understanding and our front-line
employees for their dedication under extreme circumstances."
- more -
- 2 -
A summary of the material terms of the tentative United-ALPA 2000
contract agreement will be available today on united.com.
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995: The information contained in the outlook
section of this press release is forward looking and involves
risks and uncertainties that could result in actual results
differing materially from expected results. Some factors that
could significantly impact revenues and costs include, without
limitation: the airline pricing environment; industry capacity
decisions; competitors' route decisions; the success of the
company's cost control efforts; the cost of crude oil and jet
fuel; the success of fuel hedging strategies; the results of
union contract negotiation and ratification processes and their
impact on labor costs; operational disruptions as a result of bad
weather, air traffic control-related difficulties and the impact
of labor issues; the growth of e-commerce and off-tariff
distribution channels; the implementation of customer service
improvement strategies; actions of the U.S., foreign and local
governments; foreign currency exchange rate fluctuations; the
Pacific economic environment and travel patterns; the stability
of the U.S. economy; inflation; the economic environment of the
airline industry and the economic environment in general.
- UAL -
The web-page address for UAL Corp. and United Airlines is
united.com