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United Execs 'Perpetrated Fraud,' Union Alleges in Court Filing

Date: April 15, 2005

Current Management Should Not Be Rewarded with 'Exclusivity' Extension, Flight Attendants Say

CHICAGO - In a brief filed today with the U. S. Bankruptcy Court for the Northern District of Illinois, Eastern Division, objecting to extending the exclusive period for United Airlines' current management to develop a plan for the company to exit bankruptcy, the Association of Flight Attendants-CWA (AFA) presented specific details of "fraudulent conduct" that formed "a larger pattern of bad faith" on the part of top company management.

"We caught them red-handed," said AFA United Master Executive Council President Greg Davidowitch, "pulling shenanigans that no self-respecting employer would ever do to its employees. They tried to give themselves raises while everyone else suffered cuts, and attempted to hide it. Instead of being red-faced when shown the facts," Davidowitch said, "they've acted like shameless bullies, attacking the flight attendants' contract, while trying to distract public attention from their shell game and hoping to pull a fast one on the creditors and the Court."

According to the union's brief, "the magnitude of United's fraud and dishonesty can be quantified; it equates to $445 million -- $295 million in illusory wage cuts and $150 million in double-counted productivity savings." Davidowitch questioned "how can anyone have an iota of faith or trust that this set of executives can successfully re-organize UAL with this track record?" The union, Davidowitch noted, became concerned that management was not keeping its commitment to maintain the proper proportions of cost savings it had allocated among the company's employee groups.

"When we asked them for facts," the union official said, "they tried to conceal crucial information. When we persisted, they delayed. When they were caught submitting incomplete information, they tried stone-walling. Finally," he said, "when we showed them proof that their calculations of wage cuts for Salaried and Management employees were not properly done, they had no choice but to concede the impropriety of their approach. When we confronted them with the fact that they were double-counting the same 'productivity improvements' in their business plan, they back-pedaled. Still," Davidowitch said, "their word-games and charades didn't end. Now that they're compelled to address the gaping holes in their highly suspect approach, they've resorted to plugging in numbers as 'productivity enhancements' that fail to meet the smell test."

Last Friday, the union provided notice to UAL that it had 20 days to cure the problem, or the union would consider the Letter of Agreement that modified the 2003-2009 Flight Attendant Agreement to provide $131 million in concessions to be null and void. In retaliation, the company asked the bankruptcy court last Monday to reject its collective bargaining agreement with the flight attendants in its entirety.

"Renewal of exclusivity is only justified," the union's brief points out, "where there is good faith progress toward re-organization. Now, instead of making good faith progress, management has: committed fraud against the Court and its creditors." The brief concludes: "In light of these failings, termination of exclusivity will best facilitate moving the case forward to a fair and equitable resolution."

More than 46,000 Flight Attendants, including the 21,000 Flight Attendants at United, join together to form AFA, the world's largest Flight Attendant union. AFA is part of the 700,000 member strong Communications Workers of America, AFL-CIO. Visit us at www.unitedafa.org.

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