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UAL employees object to changes in retiree medical benefits
By Jeff Pines
Washington, June 2 - UAL Corp. retirees want to keep their medical benefits and objected to the company's attempt to permanently decrease them. The company wants to change the type and amounts of insurance coverage for retirees and increase their premiums.
In an objection filed Tuesday with the U.S. Bankruptcy Court for the Northern District of Illinois, six employee groups said reducing the medical benefits of employees who retired before July 1, 2003 is not essential to the company's reorganization. The six groups represent the flight attendants, machinists and aerospace workers, flight controllers, pilots, member of the Transport Workers Union of America and retired salaried employees.
UAL has used Chapter 11 to develop a cost structure that is one of the lowest of any hub-and-spoke carrier, the employee groups said. Labor cost cutting has saved the company $2.5 billion.
Traffic is up for the airline by 14% for the first quarter compared with last year's first quarter, and United reported a positive cash flow of $4 million per day ending the first quarter with a $2.6 billion cash balance.
The decrease in benefits will not save the airline holding company much money, but it will cost retirees a lot more. These reductions would also be permanent, since current retirees are unable to renegotiate their benefits, they said.
UAL retirees have offered to accept a temporary reduction of close to $300 million in benefits until 2010, but the company wants $359 million in savings for the same period.
UAL filed for bankruptcy on Dec. 9, 2002. The company's Chapter 11 case number is 02-48191.
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