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Union Seeks Trustee to Oversee Bankruptcy The International Association of Machinists and Aerospace Workers, claiming United Airlines executives have lost employees' trust, filed a motion in U.S. Bankruptcy Court on Wednesday asking a judge to appoint a trustee to oversee the airline's operations while it is in bankruptcy. While analysts say the machinists' motion is not likely to succeed, it could result in the eventual removal of United's current management and - in the most extreme scenario - eventual liquidation. The union's action comes a week after United's parent, UAL Corp., asked U.S. Bankruptcy Judge Eugene Wedoff to give the Elk Grove Village-based airline the sole right to submit a plan to exit bankruptcy through Dec. 31. Currently, creditors aren't allowed to offer competing proposals to bring the airline out of bankruptcy until Aug. 30. Machinists union officials say they are hoping their motion will result in United getting the proper leadership that will bring it out of bankruptcy protection and return it to profitability. "United's employees, creditors and customers deserve management that will operate effectively and within the boundaries of law," said Randy Canale, President of IAM District 141. "The immediate appointment of a trustee is essential to the recovery of United Airlines." United did not immediately return calls for comment on the motion. "The strategy to exit bankruptcy should be pretty simple," said Tom Rodenhauser, president of New Hampshire-based Consulting Information Services. "The fact United hasn't announced a strategy either means they haven't come up with a strategy or they are rejecting the strategy its consultants have come up with. I suspect it's the latter." Machinist vice president Robert Roach said no airline can exit Chapter 11 successfully without employee support. "This management team has placed UAL on a collision course with disaster," Roach said. United has been in bankruptcy proceedings for 20 months. Bill Brandt, president of Development Specialists Inc., a Chicago-based restructuring and management consulting firm, said the machinists' motion shows how bitter feelings have become between management and labor. The filing will serve as a catalyst to focus more attention on the management team. "They are safe for now," he said of management. "If others join in, then the viewpoint of the judge and other constituencies will begin to change." Wedoff has set a Sept. 10 deadline for interested parties to file objections to the Machinists motion. He has scheduled oral arguments for Sept. 17. Association of Flight Attendants spokeswoman Sara Nelson Dela Cruz said her union found the Machinists union's motion appropriate considering management's failure to come up with a bankruptcy exit plan and to fund the employee's pension plan. "The employees of United have been committed to United's successful reorganization," she said. "We have proven that through three concessionary agreements that resulted in $2.56 billion average annual labor savings. The employees have been the ones keeping the airline working. The problem is the senior management." Dela Cruz said her union is considering whether to file a motion backing the machinists. Conflict between United and its union escalated last month when UAL announced it wouldn't make pension payments while it remains in bankruptcy. The carrier had been scheduled to make more than $4 billion in required payments to the pension plans through 2008, including $725 million for 2004. The International Association of Machinists and Aerospace Workers filed two lawsuits in U.S. District Court recently, accusing United executives of breaching fiduciary duty over the pension plans. The union represents ramp workers and customer-service agents. On Monday, the Air Line Pilots Association said its members will "use every resource at our command and every legal means available to prevent the company from destroying the pilot pension program."
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