UAL Corp. to 'put on a show' at trial

THE BALTIMORE SUN

United Airlines parent UAL Corp. is preparing to "put on a show" this week by calling 41 witnesses and presenting more than 400 exhibits at a trial aimed at rejecting current union contracts, one bankruptcy expert says.

The airline has the burden of proving that it needs new, lower-cost contracts to survive, said the expert, Douglas Baird, a professor at the University of Chicago's law school. The trial begins Friday in Chicago.

United faces discontented employees who do not necessarily agree to the cuts in pay and benefits the company seeks.

"This is not a nuns-versus-Nazis kind of dispute," Baird said. "Here you've got two sides with legitimate claims. United is saying, look, we can't keep losing money forever. And the flight attendants are saying, look you've got to pay us enough."

In papers filed late last week, United disclosed that it intends to call a number of its executives and managers, including chief executive Glenn Tilton and Chief Financial Officer Frederic Brace. It also filed to call expert witnesses and others with information on labor agreements as well as the airline's operations.

"They will be there to provide testimony supporting why we believe we need these savings in our labor contracts," United spokeswoman Jean Medina said.

By contrast, the unions representing United's machinists and mechanics filed papers indicating they intend to call only six and four witnesses respectively. The mechanics union indicated it would file just 18 exhibits.

United's exhibit list starts with two rejection letters from the Air Transportation Stabilization Board for federal loan guarantees. The company also plans to present updates on its business plan, memos on employee retirement benefits and hundreds of other documents.

If United reaches tentative agreements with all of its unions, it can avoid Friday's trial. However, it has not yet reached agreements with its flight attendants, machinists and mechanics. United employs 62,000, with the vast majority of them unionized.

Baird said, "United has got to cut a deal with all of its unions, or it's dead in the water" because the company cannot force employees to work on terms they don't agree to.

The flight attendants have authorized the use of intermittent strikes if they cannot reach agreement on cuts and their contract is rejected by the court.

If no settlement is reached and the trial is held, U.S. Bankruptcy Judge Eugene Wedoff could rule immediately on United's request, but he is not required to do so.

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