AFA Influenced Substantial Changes to KERP

Date: February 6, 2003
Source: AFA Article

Today, February 6, 2003, in bankruptcy court, United amended its motion to accept the Key Employee Retention Program. Amendments included:

• Trimming the eligible participant list of managers from 7500 to 320;
• Limiting the total funding for the KERP to 22 million from the previous unlimited sum;
• Limit the ten senior vice-presidents “entitled” to two years of severance pay to the three senior vice-presidents who report directly to Tilton;
• Elimination of amounts of bonuses for management when
  furloughed, which were not disclosed or limited;
• Changed provisions for senior officers who were furloughed with an indeterminate amount of pension credits to eleven individuals who are over age 50 and who would, in the event of their furlough, be treated as having attained age 55 for the purposes of the early retirement benefit computations. Additionally they would not receive any pension accrual credits beyond their termination date.

AFA has been instrumental in affecting fundamental changes to this program. Our objective has been to ensure that the court consider all of United’s expenditures when overseeing the financial future of our Company, and to ensure that the bankruptcy process is fair and equitable for Flight Attendants. Our objection to this program has forced the company to change their position before the court for a program that is generally accepted as part of the bankruptcy process, and would most likely be accepted by this court due to the “realities” of the case as seen by the court.

Therefore, AFA today withdrew our objection to this program with great reluctance. While we remain greatly disturbed by the fundamental unfairness of the KERP we also understand that there will be other opportunities for the Court to consider the balance of equities in this case.

AFA Members should be proud of the changes we influenced through our lone objection to this program.

Printed from the official United Master Executive Council website at www.unitedafa.org.