Illinois-based United Airlines on Thursday reached an agreement with employee unions that will reduce retiree health benefits, "eliminating one of the biggest issues facing the airline" as the company reorganizes under federal bankruptcy court protection, the New York Times reports (Maynard, New York Times, 6/11). The agreement will affect 27,000 retirees, their spouses and dependents, and 7,500 mechanics who reached an agreement with United last month. Neither United nor the unions have released the details of the agreement (AP/Dallas Morning News, 6/10). The agreement will save United an estimated $50 million per year in health and life insurance costs. United awaits a decision on an application to the U.S. Air Transportation Stabilization Board for $1.6 billion in loan guarantees that would allow the company to move out of bankruptcy. United applied for similar guarantees in December 2002 but did not receive them, which forced the company to file for Chapter 11 bankruptcy protection. The unions have protested plans by United to reduce retiree health benefits since the company first proposed them in January (New York Times, 6/11). However, the unions accepted the agreement because they "held little leverage in bankruptcy court and faced the likelihood of unilateral changes" by the court, according to the AP/Morning News (AP/Dallas Morning News, 6/10). United officials on Thursday had planned to ask the U.S. Bankruptcy Court in Chicago to impose the reductions in retiree health benefits in the event that they could not reach an agreement with the unions.
Some Details
United spokesperson Jean Medina said that the
agreement will require retirees to contribute more to the cost of their
health care; change the level of coverage available to retirees; and end
limited life insurance for retired pilots, flight attendants, customer
service workers, ramp workers, engineers and flight control technicians.
United officials said that they will file the agreement in bankruptcy
court on Monday (Griffin, Denver Post, 6/11). Union members
do not have to approve the agreement because retirees are not covered
under collective bargaining agreements (New York Times,
6/11).