United to seek benefit cuts
Airline to ask court's OK pending deal on retirees' medical
By David Kesmodel, Rocky Mountain News
May 21, 2004
United Airlines is expected today to seek bankruptcy-court approval to reduce medical benefits for retirees because negotiations with retirees' representatives have yet to yield an agreement on cuts.
United faces a court-mandated deadline at the end of the business day in Chicago to ask U.S. Bankruptcy Judge Eugene Wedoff to impose benefit changes under Section 1114 of the bankruptcy code.
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Under the 1114 rules, the parties could continue to pursue an agreement before Wedoff issues a ruling, which would be expected on or about June 18.
The Chicago- based carrier said late Thursday it remained "hopeful" a pact could be reached by the end of today, but labor- union sources saw no sign of an imminent deal.
United, Denver's dominant airline, has proposed to overhaul the medical benefits it provides to roughly 35,000 U.S. retirees who retired before July 1, 2003. It estimates the changes would allow it to save more than $250 million in cash over the next five years, according to a filing last month with the U.S. Securities and Exchange Commission.
The proposed cutbacks, which have met with fierce resistance from several labor groups, would account for about 1 percent of the $5 billion in total annual cost cuts United has targeted as part of its effort to emerge from bankruptcy in this year's second half.
Jean Medina, a spokeswoman for UAL Corp.'s United, said she couldn't comment on details of negotiations between the airline and retirees' representatives.
"We're still negotiating and our hope is to reach a consensual agreement," she said.
A spokesman for the Machinists union, which represents retired customer-service workers and others, said only that discussions were ongoing.
A spokeswoman for the Association of Flight Attendants union, which is representing about 4,000 retired attendants, declined to discuss the talks. A spokesman for the United Retired Pilots Benefit Protection Association, a nonunion group representing more than 3,000 retired pilots, would not comment.
O.V. Delle-Femine, national director of the Aircraft Mechanics Fraternal Association, a union representing retired mechanics, did not return a phone call.
All of United's major unions except the Air Line Pilots Association, which represents active pilots, criticized the carrier's effort to cut retirees' medical benefits when it was announced in January.
The Association of Flight Attendants, the Machinists and the Aircraft Mechanics Fraternal Association accused United of persuading thousands of workers last year to retire before July 1, 2003, by telling them their benefits would remain intact if they did so. In March, a bankruptcy court-appointed examiner concluded United didn't mislead employees.
United, which has been hit hard by high jet fuel costs this year, is seeking $1.6 billion in U.S. loan guarantees to help it emerge from Chapter 11 protection.
As part of its effort to achieve $5 billion in annual cost cuts, the giant airline has pared $2.56 billion in salaries and other labor expenses, and has shaved the cost of airplane leases and contracts with commuter affiliates.
Airline to ask court's OK pending deal on retirees' medical
By David Kesmodel, Rocky Mountain News
May 21, 2004
United Airlines is expected today to seek bankruptcy-court approval to reduce medical benefits for retirees because negotiations with retirees' representatives have yet to yield an agreement on cuts.
United faces a court-mandated deadline at the end of the business day in Chicago to ask U.S. Bankruptcy Judge Eugene Wedoff to impose benefit changes under Section 1114 of the bankruptcy code.
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Under the 1114 rules, the parties could continue to pursue an agreement before Wedoff issues a ruling, which would be expected on or about June 18.
The Chicago- based carrier said late Thursday it remained "hopeful" a pact could be reached by the end of today, but labor- union sources saw no sign of an imminent deal.
United, Denver's dominant airline, has proposed to overhaul the medical benefits it provides to roughly 35,000 U.S. retirees who retired before July 1, 2003. It estimates the changes would allow it to save more than $250 million in cash over the next five years, according to a filing last month with the U.S. Securities and Exchange Commission.
The proposed cutbacks, which have met with fierce resistance from several labor groups, would account for about 1 percent of the $5 billion in total annual cost cuts United has targeted as part of its effort to emerge from bankruptcy in this year's second half.
Jean Medina, a spokeswoman for UAL Corp.'s United, said she couldn't comment on details of negotiations between the airline and retirees' representatives.
"We're still negotiating and our hope is to reach a consensual agreement," she said.
A spokesman for the Machinists union, which represents retired customer-service workers and others, said only that discussions were ongoing.
A spokeswoman for the Association of Flight Attendants union, which is representing about 4,000 retired attendants, declined to discuss the talks. A spokesman for the United Retired Pilots Benefit Protection Association, a nonunion group representing more than 3,000 retired pilots, would not comment.
O.V. Delle-Femine, national director of the Aircraft Mechanics Fraternal Association, a union representing retired mechanics, did not return a phone call.
All of United's major unions except the Air Line Pilots Association, which represents active pilots, criticized the carrier's effort to cut retirees' medical benefits when it was announced in January.
The Association of Flight Attendants, the Machinists and the Aircraft Mechanics Fraternal Association accused United of persuading thousands of workers last year to retire before July 1, 2003, by telling them their benefits would remain intact if they did so. In March, a bankruptcy court-appointed examiner concluded United didn't mislead employees.
United, which has been hit hard by high jet fuel costs this year, is seeking $1.6 billion in U.S. loan guarantees to help it emerge from Chapter 11 protection.
As part of its effort to achieve $5 billion in annual cost cuts, the giant airline has pared $2.56 billion in salaries and other labor expenses, and has shaved the cost of airplane leases and contracts with commuter affiliates.
