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President Letter: May 25, 2004
MEC President Letter
Section 1114 Filing and Bankruptcy Update
May 25, 2004
Ladies and Gentlemen:
United Airlines filed its motion in bankruptcy court on Friday, to slash retiree health care benefits, despite the efforts of the United Retiree Coalition, of which AFA is a member, to come to a consensual agreement. The Retiree Coalition includes the authorized representatives of salaried and management retirees and nearly all Unionized pre-July 1, 2003 retirees. As much as we believe United's proposal to slash retiree medical benefits is unreasonable and inconsistent with Section 1114 of the Bankruptcy Code, we have been meeting with the company in an effort to address the challenges before us and to avoid destructive litigation. In response to the Retiree Coalition's proposals, the company's negotiators repeatedly responded with fundamentally the same proposal it had first presented in March. United’s Section 1114 filing repeats this fundamentally unchanged proposal.
Not only is the proposal horribly onerous with a permanent, escalating burden for retirees on a fixed income, it also fails to address several issues and inequities. For example: unlike any other stakeholder in United, the company is demanding sacrifices for an unlimited amount of money or period of time; the cuts would remain in place and continue to increase far beyond the duration of the business plan; proportionately the cuts are far deeper than those demanded of active employees; the retirees have no opportunity to share in the success of United through success or profit sharing; and the company’s proposal does not recognize that thousands of these retirees forfeited their jobs and portions of their pensions to save their health care.
On Friday in bankruptcy court United revealed for the first time that it had reached a concessionary agreement with AMFA over changes to retiree health care for retired mechanics. Curiously, United chose not to disclose this fact to the Retiree Coalition even though we were in active negotiations all last week. AMFA’s agreement provides the Company with far more than it needs and imposes upon retirees far more than they can afford to pay.
Regardless of the actions of United management and AMFA, we will continue to do all in our power to preserve medical benefits for retired Flight Attendants. To that end we are prepared both to negotiate with the company as well as to litigate if a consensual agreement is not reached. In the absence of an agreement, a hearing on United’s Section 1114 motion will begin on Friday, June 11, and continue, if necessary, through June 17. It is anticipated that the Court will render a decision by June 18.
We encourage all retirees and active employees to attend the hearings in the public bankruptcy court in downtown Chicago. The Everett McKinley Dirksen United States Courthouse is located at 219 S. Dearborn Street and is directly above the Jackson stop on Chicago ’s El Blue Line. (Map and directions) We will keep you advised as these hearing dates approach.
In Solidarity,
Greg Davidowitch, President
United Master Executive Council