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WASHINGTON - Safeway Inc. is in contract negotiations with the union representing its Dominick's Supermarkets Inc. employees in the Chicago area, according to a Form 8-K filed Monday with the Securities and Exchange Commission.
The company said it told the union in a meeting Monday that it would dispose of Dominick's Supermarkets' assets "absent a restructuring of the labor contracts to achieve parity with Jewel Food Stores," its primary unionized competitor, Dow Jones newswires reports.
Safeway said the current labor contracts expire Saturday.
The company informed the union that it won't attempt to operate any of Dominick's Supermarkets' stores if the workers go on strike, the filing said.
Safeway said it reminded the union at the meeting that Dominick's Supermarkets has been operating at a significant cost disadvantage to Jewel Food Stores, and that Dominick's Supermarkets same-store sales have been negative for more than three years and are expected to be negative in 2002.
In addition, Safeway said it told the union that Dominick's income has declined significantly since 1999. It added that if Dominick's agreed to the union's proposed wage increases, and assuming 3 percent negative same-store sales, Dominick's would incur a loss in 2003 and beyond, and have negative cash flow in 2005 and beyond.