UAL workers oppose moves to boost stock

UAL Corp. unions Wednesday took aim at the company's plan to benefit its shareholders.

The Union Coalition at United Airlines, a conglomeration of all but one of UAL Corp.'s airline unions, said the company's proposal tospend up to $500 million in "shareholder initiatives," such as stock buybacks, was tantamount to turning "a blind eye toward its employees."

These workers, the coalition said,saved the company during its three-plus years of bankruptcy reorganizationby undergoing pay cuts, layoffs, new work rules and pension termination.

"The sacrifices that were put in place under bankruptcy remain in place and we are still working under those sacrifices," said Sara Nelson, communication chairwoman for the Association of Flight Attendants-CWA. Company executives, she added, received newcontracts with pay increases, bonuses and stock.

"Ever since the bankruptcy, there has been absolutely nothing given to employees," said Steve Derebey, spokesman for the United chapter of the Air Line Pilots Association.

UAL did not return calls seeking comment. The company filed for Chapter 11 federal bankruptcy protection on Dec. 9, 2002, and did not emerge from bankruptcy until Feb. 1, 2006.

UAL announced Tuesday it was pursuing an amendment to its existing credit agreement, asking to pay down $350 million of its term loan debt, and to get the flexibility topay outup to $500 million in "shareholder initiatives" such as stock buybacks. A decision from lenders is expected next week.

UAL has reduced its total net debt by $2.7 billion in the 20 monthssince its reorganization. This includes a $1.6 billion reduction of on- and off-balance sheet debt in the first three quarters of this year. In the first nine months of 2007, UAL generated more than $2 billion in operating cash flow. As of Sept. 30, UAL owed $7 billion in long-term debt,plus $654 million in long-term debt maturing within one year.

"The last thing they'll be interested in doing is giving pay back to employees that they got through a legitimate process," said Michael Derchin, analyst with FTN Midwest Research of FTN Midwest Securities Corp. "I don't think this will be met well."

Because labor, Derchin said, was likely the largest costs item for UAL when it went into bankruptcy and is second only to oil today, cutting costs in that area was logical.