This information is no longer current - it is for reference only. It is an archive review of events that took place during United Airline's Chapter 11 Bankruptcy from December 9, 2002 - February 1, 2006.

Recap of Meeting With UAL Management

Page updated: August 29, 2002

On Tuesday, Greg Davidowitch, MEC President, Bill Swelbar of ECLAT Consulting, AFA's financial consultant, and representatives of the other Unions at United met with members of United’s financial department in another meeting about United’s financial status. These meetings are a part of regularly scheduled financial meetings that have been taking place since December in an effort to gather information and remain available for serious discussions about plans to return our carrier to profitability. Financial representatives of United presented the total cost savings needed from labor, equaling $1.5 Billion per year for six years. The company has hired Jack Gallagher, attorney for Phil Hastings, Janofski, and Walker, a known union buster from the days of Frank Lorenzo and Eastern Airlines, to assist them during this process.

Yesterday, AFA’s financial analyst Bill Swelbar, attorney Robb Clayman of Guerrieri, Edmond & Clayman and our Financial Review Committee consisting of Council 10 Seattle President, Diane Tucker; Council 6 Newark President, Karen Mazuer; Council 12 Los Angeles Member, Linda Farrow; and Greg Davidowitch, met with the Air Line Pilot’s Association; the International Association of Machinists and Aerospace Workers, 141 and 141-M; the Professional Airline Flight Control Association; the Transport Workers Union of America representing the Meteorologists and Operations Specialist; the SRT representing management and salaried employees, and United’s senior management at the training center auditorium. The following information recounts the presentation from the company:

United’s CEO, Jack Creighton addressed the group for a few minutes.  He wanted to inform us that the financial situation was real.  He told the group that he had misspoken in May regarding bankruptcy and that it is highly possible we will be filing unless they get the cost reductions that they believe the Air Transportation Stabilization Board (ATSB) is requiring.  The 30-day timeline ends September 16th and was put into place so that United could present a plan to the ATSB in time for them to approve the loan and arrange the financing prior to the due date for the first loan.

Pete Kain, Vice President Labor Relations, acted as the facilitator.  He was optimistic that even with the short timeline, because of all the talent in the room, agreements would be reached so that there would be financing.  Each group would go to a separate room with their management counterparts and receive their individual proposals.  These would not be shared with the other groups.

Bob Mertz Vice President of Finance reiterated the need for the concessions.  On November 17, $300 million is due.  Payment of this from the cash on hand would take us below their threshold for filing bankruptcy.  The second payment is due December 2, 2002 and that is a $575 million bond to the Enhanced Equipment Trust Certificate.  Management’s loan request to the ATSB is for $2 billion, which they need now.

Staffers at the ATSB have reiterated that more money is needed to approve the loan guarantee.  United needs the approval of the ATSB by September 16, 2002 to allow time to go to the banks before the first loan is due.   They also say that they need ratified contracts, they will not get any cash until the contracts are ratified.  The ATSB will give a conditional approval pending ratification.  The ATSB also wants a business plan.

The Finance department recapped the meetings with the ATSB where they were told the cost savings were inadequate.  There was a competitive disadvantage and the revenue forecasts were overly optimistic.  They have been looking under every rock for money.

Pete Kain then informed us that all the proposals contained wage reductions as well as medical and dental changes.  We could suggest alternatives.   They had used US Airways as a model.  The proposals were aggressive and rapid so that we could move forward.  Each group would be receiving their own proposal and not the proposal of the others.

Concern was expressed that management would get these concessions and still file for bankruptcy.  Pete Kain hoped that was not the case.

The United Master Executive Council reviewed the term sheet today and reaffirmed the August 22, 2002 Resolution that request a viable business plan from United management which “will be reviewed by the AFA UAL MEC and its advisors to determine if the plan represents a comprehensive vision for a full recovery of the airline through operational changes that increase United’s ability to generate revenue to prevent a bankruptcy filing, and not just a demand for employee concessions.” See “Viable Business Plan Resolution” for the full resolution.

MEC President, Greg Davidowitch met with ALPA’s MEC President, Paul Whiteford this afternoon, and will meet with leaders of all Unions at United on Wednesday, September 4th. Today, the pilots rejected the proposal from management, calling the terms “totally and wholly unacceptable.” The IAM stated today that they will “not discuss any proposals until a new chief executive was on board.”

The Flight Attendant Term Sheet and a review of the term sheet are available on the website. While we continue to meet with the company, we are not in negotiations at this time. Flight Attendants cannot consider any concessions without a viable plan for recovery of our airline. AFA will continue to participate in financial discussions and viable solutions for the future of our company that are in the best interests of the Members we represent.

Contact your Local Council or attend a Local Council Meeting to ask any questions you may have.

Return to Recovery Plan Tentative Agreement

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