Robert Clayman, attorney for the Association of Flight Attendants, complained that the deal is unfair because it gives a potential windfall to a select employee group even though all workers have endured job cuts and benefits reductions, the Chicago Tribune reported.
“In a [bankruptcy] case that’s been predicated on shared sacrifice, one has to question whether that’s appropriate,” Clayman told the newspaper following a court hearing on the disclosure statement of United’s bankruptcy reorganization plan.
United proposes reserving 18.75 million shares of stock, or 15% of the 125 million shares the airline plans to issue post-bankruptcy, for its cadre of executives.
Compensation packages that include some form of equity are common at large companies, said Jake Brace, United’s chief financial officer. “What we’re talking about is consistent with the marketplace, consistent with best practices in other organizations,” Brace said.
In a statement filed with the court this week, Fruman Jacobs, attorney for the unsecured creditors committee, said the group has several concerns it is working to reconcile with the company. Among them: the management equity plans and the scope and duration of planned restrictions on the trading of UAL stock post-bankruptcy.
United’s attorneys told Bankruptcy Court Judge Eugene Wedoff that it has resolved more than a dozen objections to its disclosure statement. Among those that dropped objections was the Pension Benefit Guaranty Corp.(PBGC), the government-run pension insurance program that is assuming control of United’s plans (See PBGC Has Issues with UAL Exit Plan ). In return, the agency is set to receive about $500 million in convertible stock, as well as notes worth up to $1 billion.
The pension agency has objected to provisions in the airline’s plan that would restrict the sale of large numbers of shares.
The airline and agency are in talks to resolve the issue, said John Menke, attorney for the pension agency.