UAL chief defends actions to shareholders, protesting pilots

While jets took off at nearby O'Hare International Airport, about 100 United Airline pilots and flight attendants Thursday were on the ground staging an informational picket outside UAL Corp.'s annual shareholder meeting in Elk Grove Township.

Inside the meeting, many of the roughly 250 shareholders clashed with Chief Executive Officer Glenn Tilton as he defended his post-bankruptcy leadership amid massive losses during a punishing recession, rising oil prices, and an evaporating cash reserve.

Matalynne Wandel of Chicago, a shareholder for 18 years attending her first meeting, demanded Tilton's resignation.

"You've failed in three attempts to merge (this airline)," said an angry Wandel, first addressing Tilton and then turning to the board of directors. "When will he be held accountable? When will he be dismissed?"

Wandel referred to talks of United merging with Continental Airlines, which foundered and led to Continental joining the Star Alliance. The unions are upset that the arrangement would lead to United giving up routes and those crews to other international carriers.

The annual meeting, required by the publicly traded company, was filled with union workers, shareholders, and employees, many who demanded answers on improving safety and ensuring a future. Shareholders balked at service improvements and ticket prices.

Corporate finances and long-standing pay cuts have riled the unions, said Jerry Leber, first officer of Airbus 320 and a spokesman for the Air Line Pilots Association.

"They've just squandered cash," Leber said.

That's not how Tilton sees it.

"Over the last several quarters, we have raised hundreds of millions of dollars to bolster our liquidity - in fact, we raised almost $500 million in just the most recent quarter," Tilton said. "This cash has not come just from traditional borrowing alone. We have raised substantial cash through more creative means as well."

Tilton later said that a "cafeteria-style" of services could be available to passengers, who wish to buy what they want. This would include Red Carpet Club, ordinarily reserved for more loyal customers, which could offer one-day specials for anyone for a fee, among other offerings.

"We have a lot for sale we haven't historically sold before," Tilton said.

Tilton noted that last week United said it would begin discussions with Boeing & Airbus regarding new acquisitions to replace an aging fleet.

Pilot Tom Hooper told shareholders that in 23 years he never had to refuse to fly an aircraft, until recently. When he refused to fly one plane, company executives questioned him.

"I don't feel they were safe," he told shareholders, adding that the company questioned his judgment while he said he has such authority to refuse to fly an aircraft under the Federal Aviation Authority.

Joe Kolshak, senior vice president of UAL operations, defended the safety of the planes as well as the training of pilots and other crew. He said the company needs to ask questions and must unify the system when pilots refuse to fly certain planes. The company's inquiries were needed to build information about the concerns.

"It's not about you. It's about what created your refusals," Kolshak told Hooper.

Other news from the meeting includes:

* United's safety director Michael Quiello said United has been replacing the speed sensors on its 152 Airbus SAS jets . Work is expected to be completed by March 2010.

* Tilton was critical of Obama's Administration for earmarking billions for a national train system, but nothing for the struggling airline industry. The administration thinks the airline industry will just "muddle through," Tilton said. "But it needs infrastructure investments. It warrants infrastructure improvements." While United has good relationships with local governments, it feels it has an "uphill discussion" on getting help from the federal government, he said.

"We create wealth and we don't keep it," Tilton said referring to the airline industry's role in moving the economy.

* Tilton also asked the new administration to work with Congress, the Department of Transportation and the FAA to partner with the airlines on a plan to move from a ground-based to a satellite-based system so more flights could safely occupy the same airspace. This means the on-time performance would still happen even with triple the capacity, Tilton said.

* Tilton said that he and Air Transport Association President James May sent a letter to President Obama about "unchecked speculation" in oil trading. After all, the volatile prices of oil, especially as it continues to rise this week to over $70 a barrel, has been detrimental to the airline industry. They urged the administration to work with Congress to enact reforms to rein in excessive commodity speculation and provide more transparency on who is trading and who is gaining from it.

* United said it will unveil work at O'Hare next week that is a prototype for a major ground safety initiative.