Examiner to Probe United Airlines Benefits Cut Dispute

March 2, 2004 (PLANSPONSOR.com) - A Chicago US Bankruptcy Court judge has appointed an independent examiner to investigate whether United Airlines reneged on a promise not to cut health-care benefits for workers who retired before July 1, 2003.

Bankruptcy Judge Eugene Wedoff made the move at the request of United’s flight attendants’ and machinists’ unions. The unions assert that United did go back on the benefits pledge and thousands of workers retired early because of that representation, the Associated Press reported.

After hearing arguments from both sides, Wedoff said the court-appointed examiner will investigate whether United had already decided to reduce the benefits by the July 1 deadline and whether it used fraudulent and deceitful practices to essentially push workers out the retirement door. Wedoff’s examiner would then decide whether affected employees were entitled to any relief.

United, which has been restructuring and cutting costs in bankruptcy for the past 14 months, maintains that it never formally made such a commitment, AP said.

Wedoff also pushed back the exclusivity period for United to file its reorganization plan by 30 days — less than the four months the airline requested but leaving open the possibility of additional extensions.

“United’s retirees have lost faith in the airline’s management,” said Randy Canale, president of District 141 of the International Association of Machinists and Aerospace Workers, which represents 20,000 active ramp and stores, food service, security guards and public contact employees, according to the AP. “An independent examiner is necessary to investigate United’s attack on its retirees.”

United says it intends to emerge from Chapter 11 bankruptcy by the end of June.