US airline payout angers workers

Unions representing workers at United Airlines have reacted with anger to the US carrier’s plans to pay a $250m (£123m) dividend to its shareholders.

Thousands of staff took pay cuts to help the airline rebuild its finances after it went into bankruptcy in the aftermath of the 9/11 attacks.

Union officials said the investor payout betrayed the efforts of staff to revive the airline’s reputation.

But United said staff owning shares would benefit themselves by about $20m.

Employees hold about nine million shares in United’s parent company – UAL Corporation – through retirement accounts.

The fragile financial state of US airlines – whose combined losses between 2001 and 2006 totalled about $35bn – has meant few have had the resources to pay investor dividends.

United was forced to cut a quarter of its workforce and cut costs by $7bn before it emerged from bankruptcy protection at the start of 2006.

Its prospects have improved since then, with lower debts and growth in the business generating more cash.

But unions argue that much of this success is due to the sacrifices of staff and that rewarding investors at a time when high fuel prices are squeezing profits is irresponsible.

“Workers are fed up,” said Greg Davidowitch, president of the Association of Flight Attendants’ United branch, comparing managers’ actions to those of “unscrupulous real estate agents”.

United said the shareholder payout had been facilitated by an agreement with its lenders, allowing it to reward investors without also having to increase repayment of bank loans.

“This shareholder distribution underscores our commitment to creating value for our investors,” said its chief executive Glenn Tilton.

“We compete for shareholders just as we compete for customers.”

Analysts said other airlines could come under pressure to reward investors at a time when the industry’s resurgence is threatened by soaring fuel prices and a slowing economy.

See Related Article:

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published.