United Pilots Reject Pay Proposal; Dispute Headed for Arbitration

United Airlines’ pilots, angered by management’s hard-nosed bargaining over wage increases, overwhelmingly rejected a four-year contract agreement, their union announced Thursday.

The dispute, which could threaten United’s employee ownership experiment, will now go to arbitration.

Pilots are in the middle of a 5 1/2-year contract and cannot strike over wages, United spokesman Richard Martin said. The 1994 employee buyout of the company includes an agreement to reexamine wages to keep them competitive with those of other airlines.

The proposal would have raised wages by 3% in 1997 and 1998 and by 2% in 1999 and 2000. The United branch of the Air Line Pilots Assn. said 89% of those eligible voted last month and that of those pilots, 80% voted against the contract.

“The pilots’ overwhelming rejection of the tentative agreement reflects a vote against a ‘business as usual attitude’ that has no place in an employee-owned company,” Michael H. Glawe, chairman of the branch, said in a statement.

Gerald Greenwald, chairman of United’s parent, Chicago-based UAL Corp., said he thought the wage increase offer was fair.

In the buyout, United pilots surrendered nearly 25% of their earnings in wages and benefits in return for stock that gave employees a 55% ownership of the company. But employees cannot cash in their stock until they leave the company. The pilots want to recapture that lost 25% by the time United employees decide in 2000 whether to renew the expiring employee stock ownership plan.