- The Washington Times - Tuesday, January 14, 2003

CHICAGO, Jan. 14 (UPI) — Pilots at bankrupt United Airlines Tuesday sharply criticized UAL Corp.'s approval of a sale of stock from the employee stock ownership plan.

A federal bankruptcy judge approved sale of shares from the plan, which has plummeted in value since the nation's No. 2 airline began hitting financial turbulence. The judge ordered United to tell the trustee of the plan, State Street Bank & Trust of Boston, how many shares it can sell. United responded with a letter authorizing the sale of 12.86 million shares.

"ALPA opposes the sale," said Dave Keller, senior communications specialist for the management executive council of the Air Line Pilots Association's United chapter. "We stand by our position: State Street does not have the right to sell these stocks from under United employees."

The ESOP was formed in 1994 in exchange for monetary and other concessions from pilots and machinists. In exchange, the unions were given seats on the airline's board of directors and members were given the opportunity to participate in the ESOP.

Before the bankruptcy filing, employees owned 55 percent of the airline. State Street began selling off its stock in September and the employee equity share is down to 28 percent.

United stock has gone from as much as $80 a share in January 2000 to $1.35 at Tuesday's open on the New York Stock Exchange. It traded for as little as 64 cents shortly after the bankruptcy filing Dec. 9.

Bankruptcy Court Judge Eugene Wedoff had issued an order early in the bankruptcy proceedings blocking the sale of any United stock by State Street to prevent jeopardizing the $1 billion in tax benefits United enjoys as a result of the ESOP. State Street wants to dump all of the 32.5 million shares it holds in employee accounts. Another hearing is set for Wednesday.

United Chairman Glenn Tilton said in a recorded message to employees the company would present its reorganization plan Jan. 30. He said employees should remain "open and ready for change that is inevitable."

"Our prosperity does not lie in our impressive past," Tilton said.

United plans to create a low-cost carrier while making its main operations more competitive.

ALPA criticized United for taking so long to put its reorganization plan together and characterized a "term sheet" United presented the union as a "wish list … for those who would love to see our agreement gutted."

Last week, pilots, flight attendants, meteorologists and dispatchers agreed to significant wage cuts, ranging from 9 percent to 29 percent. Wedoff then imposed a 13 percent cut retroactive to Jan. 1 on members of the International Association of Machinists and Aerospace Workers, who had been balking at concessions.

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