Chicago – United Airlines parent UAL Corp. cleared a path for exiting bankruptcy Wednesday when a bankruptcy judge overruled labor unions’ objections to a management incentive plan and United reached settlements with other creditors.
If the judge confirms the plan Friday, which United officials and creditors expect, the airline can exit bankruptcy Feb. 1 after nearly three years in Chapter 11.
United is the largest carrier at Denver International Airport and employs more than 5,000 people in Denver.
Attorneys for United worked throughout the day to resolve creditors’ objections, but U.S. Bankruptcy Court Judge Eugene Wedoff stopped short of confirming United’s reorganization plan, asking United to document the plan’s latest version. He could confirm it Friday.
Then, “we’re going to need to execute our business plan,” said United chief financial officer Jake Brace. “We have the foundation we need.”
The resolution comes after some creditors, including the Air Line Pilots Association, the International Association of Machinists and the Association of Flight Attendants, objected to a management equity incentive plan that will give millions of shares of stock to executives after employees took pay and benefit cuts.
Wedoff said United’s incentive plan is reasonable when compared with other companies’ plans.
“It may well be that we have a culture in this country that overcompensates management,” he said. “United can’t stand against that tide and expect its managers to accept that. (If it does) it will suffer the consequences.”
United flight attendant Jeff Heisey, in court Wednesday, called the judge’s decision “a disappointment.”
“If there’s money to be had, it should be shared with the employees,” he said.
Machinists union spokesman Joseph Tiberi said: “The gap between the working class in America and the corporate elite has grown wider.”
Separately, the leadership of the Association of Flight Attendants reached a tentative agreement with United, signaling its acceptance that it has lost its pension plan after a year-long battle to try to keep it.
“Ultimately, decisions have not gone our way,” said flight-attendants union spokeswoman Sara Nelson Dela Cruz. “The political climate today does not provide us with a climate that is labor-friendly.”
Staff writer Kelly Yamanouchi can be reached at 303-820-1488 or kyamanouchi@denverpost.com.
