Verizon Executive says ongoing union negotiations are hindering wireline cost savings

A high level Verizon executive sees the contract negotiations currently taking place with its union wireline workforce as an important element that is driving higher costs in its wireline business. Fran Shammo, executive vice president and chief financial officer of Verizon, told investors that it won't be able to see the true benefits of cost improvements in its wireline business until it finalizes the contract with the CWA (Communications Workers of America). "I think we'll make a lot of progress, but not to the tune we initially thought due to the union contract," Shammo said. "The union contract is still not closed and we're still in negotiation with the representation and it's going very slow so that's going to hinder some cost savings that we had counted on with that new contract."

Shammo said that Verizon looks at finalizing the union contract "as a timing issue, not necessarily a give up issue so that will come in 2016, but it's a matter of when we can solidify this final contract." Wireline workers who are represented by the CWA have been working without a contract since August. CWA and Verizon have not been able to come to terms on a number of points such as how to structure pension benefits and health care contributions, and removing restrictions on the company's right to contract out and offshore union jobs.