Benefits News
United Airlines parent UAL CORP. said it needs its retirees to pay for a greater portion of their medical benefits as part of the company's plan to emerge from bankruptcy. "We believe it is important to maintain medical benefits for our 35,000 retirees, so we are taking the difficult but necessary step of asking retirees to pay a greater share of the costs," Peter McDonald, executive vice president of operations, said in a statement. United has been operating in Chapter 11 for 13 months and is trying to cut costs across its business in order to emerge from bankruptcy later this year. The union representing United's flight attendants issued a sharply worded press release criticizing the carrier for its plan to cut retiree medical benefits. (Reuters 12:31 PM ET 01/14/2004
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Sent: Sunday, January 18, 2004 8:28 PM
> Subject: UAL Medical
>
>
> By David Kesmodel, Rocky Mountain News
> January 16, 2004
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> Labor opposition to United Airlines' effort to make its retirees pay
> more for medical care intensified Thursday, with one big union setting
> plans to file a grievance against the carrier.
>
> The Association of Flight Attendants, which represents 21,000 active
> workers, intends to file a formal complaint as soon as today that
> accuses United of violating a contract.
>
> Also Thursday, an organization of retired United pilots became the
> first group of retirees to publicly comment on the plan by lashing out
> against it in a news release.
>
> The developments signal a new period of labor unrest at the giant
> carrier just months before it plans to emerge from the industry's
> largest bankruptcy.
>
> Chicago-based United says it will seek agreements with representatives
> of its 35,000 U.S. retirees on the revised benefits, which it says it
> needs to exit Chapter 11. Any pact would require a bankruptcy judge's
> approval, and United is expected to ask the judge to impose changes
> should talks fail.
>
> The Association of Flight Attendants said a document signed by United
> supports its case that the airline committed to preserving the
> benefits of any attendant who retired before July 1, 2003. The
> document is part of a new labor contract that went into effect May 1,
> 2003.
>
> The union said the carrier enticed more than 2,500 attendants to
> retire last summer by promising that the benefits would remain.
>
> Greg Davidowitch, head of United's attendants, said in a statement,
> "We're going to present a compelling case that United lied to its
> flight attendants. The changes they are seeking are a crime of
> opportunity and are not necessary for United's successful
> reorganization."
>
> United spokeswoman Jean Medina said she would have no comment on the
> possibility of a grievance being filed.
>
> UAL Corp.'s United plans to start talks with retirees under Section
> 1114 of the U.S. bankruptcy code. The law permits companies to modify
> or terminate certain retiree benefits if the court deems it necessary
> for the company's restructuring.
>
> United informed workers of the possibility of retirees' medical
> benefits changing under Chapter 11 in letters mailed to their homes,
> postings on the company's internal Web site, recordings on a company
> hot line and other means, Medina said.
>
> Denver's biggest carrier won't say how much it seeks in annual savings
> from the move.
>
> Its action follows a trend at other big U.S. companies of making
> retirees pay more of the cost of medical care.
>
> United said it spent $339 million for retirees' medical benefits in
> 2002, the latest year for which data are available. But only $135
> million was in cash; the rest reflects money set aside for future plan
> expenses. Future expenses were significantly altered when current
> workers agreed to $2.56 billion in annual wage and benefit cuts last
> year.
>
> The United Retired Pilots Benefit Protection Association on Thursday
> voiced its opposition to the plan.
>
> Just this month, the group said, United's retired pilots began
> shouldering more of the cost of their medical care as part of a
> previous agreement. Retired pilots under 65, for example, had not paid
> any of their costs previously.
>
> It is "unconscionable" for United to seek higher contributions now,
> said Roger Hall, president of the group. "These added costs and
> reduced benefits will add a great financial burden to our retirees,
> particularly those with serious medical problems."
>
> The organization - formed after United's 2002 bankruptcy filing - said
> it will seek to represent its more than 3,000 members in talks with
> United over any medical-benefit changes. The group essentially would
> be defending the interests of all retired United pilots, said the
> group's spokesman, retired Captain Ken Bradley.
>
> Also Thursday, the Aircraft Mechanics Fraternal Association, which
> represents United's aircraft mechanics and cleaners, called United's
> plan "a travesty." The union said it had formed a committee that would
> fight for retired mechanics' interests.
>
> On Wednesday, the Machinists union, which represents customer- service
> workers, blasted the company and said its lawyers will defend the
> rights of its former members. The pilots union, the Air Line Pilots
> Association, did not criticize the move and said it didn't represent
> the retirees.
>
>