United objects to union's request for a trustee

By Jeff Pines

Washington, Sept. 22 - United Air Lines Inc. rejected the International Association of Machinists and Aerospace Workers request for a trustee, saying the union is trying to "preserve the IAM pension plans by any means necessary."

United has said it will not continue funding its pension plans and has appointed a fiduciary under an agreement with the Labor Department.

United filed its response with the U.S. Bankruptcy Court for the Northern District of Illinois Tuesday.

In the past, the airline's management buckled to the union pressure instead of facing "difficult and unpleasant realities. But avoidance of tough decisions is no longer an option. At this stage of United's reorganization, the path of least resistance is a dead-end street," United said.

Generally parties ask for a trustee if there is some type of misconduct, but the airline called its governance under Chapter 11 "remarkable in the face of unprecedented and trying circumstances."

The IAM has a seat on the airline's board and its representative is aware of all the airline has done to save money and restructure itself, United said.

But the union believes management has failed and now it wants the airline's labor force to suffer because of management's missteps. The union believes United should have had a back-up plan ready in the event the Air Transportation Stabilization Board rejected its request for federal loan guarantees, which the board did.

To save money, the unions agreed to lower pay and benefits. Salaried employees and managers also took pay cuts and aircraft leases were rejected or modified and other initiatives were instituted.

Last month, the union objected to an extension to United's exclusive right to file a reorganization plan and said that it is time to let someone else propose a reorganization plan.

United filed for bankruptcy on Dec. 9, 2002. Its Chapter 11 case number is 02-48191.

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