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Mon, Feb 23, 2004

Bankruptcy Court Orders Examiner to Investigate United Airlines

Union: Airline's Attempt to Defraud Thousands of Retirees Out of Medical Benefits Under Scrutiny

Bankruptcy court Judge Eugene Wedoff ruled in support of a motion filed by United Airlines flight attendants, represented by the Association of Flight Attendants-CWA, AFL-CIO, to appoint an examiner to investigate United's plan to change retiree medical benefits for workers who retired before July 1, 2003.

Flight attendants contend United intentionally misled thousands of workers into ending their careers or retiring early, defrauding them out of their retirement benefits. AFA's arguments were supported by the International Association of Machinists and Aircraft Mechanics Fraternal Association in court.

"The employees and retirees who have sacrificed billions of dollars annually to see United succeed deserve to know the extent of management's deception in baiting employees to retire with false promises of secure and reasonably priced medical benefits," said United Master Executive Council President Greg Davidowitch. "We hope that this ruling encourages United management to drop their ill-conceived plan, make good on their agreements with employees, and move forward with the business of the airline."

The court strongly encouraged that the US Trustee appoint an examiner by Feb. 24 and the examiner will be required to report back to the bankruptcy court by March 19. The scope of the investigation aims to determine if United decided to use the bankruptcy code to pursue changes to retiree medical benefits prior to July 1, 2003. This date was significant because United established it as the retirement deadline by which an employee would have to retire to secure medical benefits. United had not notified retirees that it intended to pursue changes to these benefits prior to that date.

Robert Clayman of Guerrieri Edmond and Clayman, Council for AFA said, "This ruling means that the examiner will seek to determine who knew what, and when they knew it."

Judge Wedoff said that there is substantial urgency in resolving this issue because the ultimate success of the airline depends on management and employees effectively working together. To that end, he stated that the appointment of an examiner is "well worth the investment in arriving at a prompt conclusion" to the issue.

United management signed a letter of agreement in May 2003 to ensure that flight attendants retiring before July 1, 2003 would have access to health care benefits that were less costly and more comprehensive than those that would be in place for those who retire after that date. Based on that agreement, over 2,500 flight attendants retired before the July 1 deadline, only to find out just six months later that United intends to double-cross them and cut their benefits. These changes would force retirees to pay hundreds of dollars more per month of their modest pensions just to continue reduced health insurance.

FMI: www.afanet.org, www.unitedafa.org

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