United Airlines sees some daylight

by Nicole Duarte

published by the Medill News Service, February 01, 2006

United Airlines Inc. emerged from more than three years of bankruptcy Wednesday to renewed complaints from labor groups who sacrificed to help the nation's No. 2 airline stay in business.

The airline trimmed its work force, slashed pay and cut benefits including pensions as part of a turnaround plan.

At a news conference in the United terminal at O'Hare International Airport, United Chief Operating Officer Pete McDonald offered employees and customers thanks for their support and predicted a profitable 2006 despite high fuel prices. He acknowledged that employees have made "contributions to ensure the long-term viability of the business."

But employee groups said they wanted something more concrete.

"We call on management to step up and execute the plan, use the tools we've given them and make this thing work," said Herb Hunter, pilot's spokesman for the United chapter of the Air Line Pilots Association, which called on United to restore 2,200 furloughed pilots.

The pilots association noted in a statement that pilots took a 40 percent pay cut and saw their benefits and pensions sacrificed in order to keep the company in business. "The indisputable fact is that the resolve of the employees of United Airlines is the major reason the airline exited bankruptcy, and the pilots represent a huge part of that group," the statement said.

Sara Nelson Dela Cruz, communications officer for the Association of Flight Attendants, said her members made "life-altering sacrifices" including pay cuts and the elimination of their defined-benefit pensions. She said flight attendants are still trying to complete negotiations with the company on a replacement pension plan.

"The management doesn't recognize the value of the front-line employees," said Dela Cruz, who vowed flight attendants would continue to challenge every "bad" decision made by management officials who "line their pockets with our sacrifices."

United recently angered labor groups with an announcement that its top 400 executives would receive 8 percent, or 10 million shares, of the company's 125 million shares of outstanding stock, as compensation. The executive stock will vest over four years. "We believe that for management compensation, a considerable part of that should be at risk," McDonald said.

But some labor groups said it was wrong to reward executives with stock.

"One of the mantras of this corporation for the entire bankruptcy has been shared sacrifice, and it would be hard imagine a situation where one would look at this as a shared sacrifice," said Mark Bathurst, chairman of the United master executive council of the pilots association.

Rank-and-file employees are slated to receive $2 billion worth of stock that would go into their 401(k) accounts and would be immediately convertible to cash, McDonald said.

"It's important to note that these agreements that we've reached with our employees have all been consensual," McDonald said in response to a question about the executive stock plan.

The company's stock will begin trading Thursday.