Flight Attendants Fighting Executive Compensation
January 11, 2006
AFA Objects to Bonuses and Reservation to Reject Contract Post-Bankruptcy
CHICAGO - As United Airlines seeks approval of its Plan of Reorganization (POR) at the confirmation hearings set to begin one week from today, many key creditors are objecting to portions of the Plan. The Association of Flight Attendants-CWA has filed an objection to United's POR due to additional bonus program, the Management Equity Incentive Plan (MEIP) and management's attempt to include a reservation of rights to reject the Flight Attendant Collective Bargaining Agreement after exit from bankruptcy. The full Objection is posted on www.unitedafa.org.
"In Medieval times, people guilty of this kind of greed would have been boiled in oil. Our more civilized society has substituted legal remedies where torture was once called for," said Greg Davidowitch, president of the AFA United Master Executive Council. "Now matters like this are left up to the court, not to the mob. The masses, however, still expect justice -- shared pain, shared sacrifice and shared success."
Rather than generating unity and momentum for a new United Airlines, management has engendered an "us versus them" mentality. In the beginning of the bankruptcy, executives promised to "equitably share the pain of United's restructuring." Unfortunately, the record reflects an entirely different reality. Employees have been forced to sacrifice annually over $4 billion in pay, pensions, work rules and healthcare while executives have richly rewarded themselves. With total disregard for the welfare of others or the success of the airline, management will have further widened the gap between a select group of managers and the thousands of employees who have made United Airlines a success.
United explains in its POR Disclosure Statement that the purpose of the MEIP is "to provide the Reorganized Debtors' management with incentives to maximize future stockholder value [and to] align their interests with the interests of stockholders." Then, incredibly, they also state that "awards under the [MEIP]… will not be based on performance conditions." The bonuses would be rewarded to 400 members of management for not giving up their employment during the bankruptcy - something they had already been handsomely rewarded for through millions of dollars in Key Employee Retention Program (KERP) bonuses.
"Clearly, this bonus scheme does not reflect either sound business judgment or good faith, much less respect for the enormous sacrifices Flight Attendants and other employees have made to keep United flying." Davidowitch stated. "If there is so much equity available to enrich current management, that equity rightfully belongs to those who have sacrificed to ensure United Airlines' survival. Current management's profiteering comes predictably at the expense of the dedicated workers who strive daily to ensure our airline's viability and success."
Current management's attempt to retain the right to reject the Flight Attendant Collective Bargaining Agreement after exit from bankruptcy is both without precedent or merit. United cites as one of the main reasons for this right the uncertain outcome of the restoration of the Flight Attendant Defined Benefit Pension Plan. The law does not provide for utilizing the bankruptcy code to reject a Union Contract outside of bankruptcy. It would appear that management is willing to stop at nothing from attempting to prevent Flight Attendants from having the retirement security they deserve.
More than 46,000 Flight Attendants, including the 18,000 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.