Verizon sees 'difficult negotiation' ahead for union deal

In August, 45,000 of Verizon's (NYSE:VZ) wireline union workers went on strike for two weeks.

The labor dispute forced the service provider to suspend new FiOS installations because the company had to divert its attention to maintenance, resulting in a backlog of 100,000 orders by the time the employees returned to work.

And, while Communications Workers of America (CWA) and the International Brotherhood of Electrical Workers (IBEW) members returned to work and contract negotiations continued, the move didn't bode well for the future.

Verizon CFO Fran Shammo, during the company's earnings call Thursday, said contract talks are likely to continue to be contentious, according to a Seeking Alpha earnings call transcript.

"I think it's safe to say that as we entered into this new negotiation, we knew that this is going to be an extremely difficult negotiation," Shammo is quoted as saying. "We have said very strongly that we need cost structure within the Wireline business. Obviously, if you look at the profitability of this business over the last five years, it has decreased. And this cost structure is not palatable going forward."

Shammo said the company is looking for labor concessions, including increases in worker health-care contributions and revisions to their pension plans. And, he said, Verizon expects to get them.

"We're not asking for things that have not already been given to other companies. These are not new issues," he said. "So we are standing strong. We need this cost restructure in order to build on the profitability of our Wireline unit."

Shammo said Verizon's massive investment into its FiOS platform make it essential that the company trim the "very lucrative benefits and average salaries of $90,000 with an incremental $50,000 of health care and pension" that Verizon's union workers get.

"So we continue to negotiate," he is quoted by Seeking Alpha as saying. "We continue to put proposals on and we'll see where we go, but we knew this was going to be a long haul."

For more:
- see this Seeking Alpha earnings call transcript

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