A number of people reached out to us after reading our article about American Airlines and pointed out that other airlines had similar issues.
One of those people was Julia, a retired United Airlines employee.
“United Airlines has done exactly the same thing to its employees.” Julia said. “After 36 years I spent working for United they took a bankruptcy and simply told us to go home. Or…if we took early retirement they made promises to us regarding our future pass privileges and health insurance – ALL OF WHICH THEY HAVE RESCINDED DRASTICALLY !!!”
United Airlines – The ESOP Story
United Airlines ill fated experiment with ESOP began in 1995.
United Airlines ill fated experiment with ESOP began in 1995.
ESOP, for those who may not be familiar with the term, means employee ownership. United Airlines employees paid out a portion of their wages in return for part ownership of the airline.
“We lost all our ESOP money that had been taking from our paychecks for over 5 yrs…” Julia said, “It simply vanished.”
Although it showed promising signs at the beginning, by the time the year 2000 had rolled around, staff morale was dropping fast and employees had gone from being fully engaged with management and helping with the airline, to hindering it.
It should be pointed out that the flight attendants’ union was never pro the ESOP scheme.
It’s difficult to say with certainty exactly why the ESOP failed, but suffice to say both it’s implementation and planning appeared to miss the mark of successful ESOPs with other companies (e.g Southwest Airlines).
Cancelled Pension Agreements & Insurance Let Down
On May 11th, 2005 the largest pension plan default in US history occurred.
“Oh yes…” Julia continues. ” After United took their bankruptcy they dumped their retirement program so now we are paid by the PBGC, a government insurance program. We lost, in some cases, thousands of dollars a month in retirement pay because the PBGC doesn’t pay us what United’s Program was designed to pay us. Yet United had millions in their retirement bank at the time… they just turned it over to the PBGC.”
Bankruptcy court ruled that United Airlines could default their pension obligations and turn the management of pensions over to the Pension Benefit Guaranty Corporation.
The end result of this was the loss of thousands upon thousands of dollars for retirees.
It affected pension plans for:
- Flight Attendants
- Ground Service Workers
And then there were the issues regarding Health insurance.
“We were promised that we would only have to pay $16.00 a month for our health insurance FOR LIFE.” Julia continues, “I am now paying $124.00 a month.”
Free airline passes for retirees after 25 Years
The next thing Julia wanted to talk about was what happened with the flight standby agreement.
“From the time I started working for United Airlines,” Julia said, “36 years before they took their bankruptcy it was always written in regulations that if we retired with 25 years’ service to the company we would have free airline passes for the rest of our lives and priority boarding over current working employees. That was always the way it was… suddenly now that has all changed. We now pay for passes and come AFTER current employees,, making it nearly impossible to get on a flight standby. They now say… ‘Well, passes are a privilege not a benefit’.”
Here’s the thing…
The airline had promised employees free airline passes for life. Also the process was that retirees would have priority over existing employees.
In January of 2012 this policy changed and retirees started coming in after current employees.
“Really????? then why was it written in regulations for 40-50 years and always honored as such for all those years?” Julia questioned. “Why do you think we all stayed working here for 3 and 4 decades? We could have made a lot more money somewhere else in a different field. All the while the revolving door of CEOs have been robbing the company blind with gigantic golden parachutes, huge stock options and even bigger salaries.”
Retirees are understandably upset by this as it was the promise of perks like this that encouraged them to work through the tough times the airline experienced over the years.
United Airline CEOs
Newly appointed CEO, Oscar Munuz, replaced previous CEO Jeff Smisek who abruptly resigned on September 8, 2015 after investigations into corruption prompting an internal investigation.
“They just fired the last CEO because he was doing such things as: He put on a special flight [for a supplier] between where he worked and his home town so HE could commute by United Airlines to and from home.” Julia said. “He is also the one who changed the retirees’ pass benefits, among other grievances, yet when he got fired he got to keep his priority boarding passes and millions in severance pay.”
In many of these cases with large companies it appears that what was taken from employees in the past, through the hard times, is forgotten in the good times.
United Airlines Today
So what does Julia think of United Airlines now?
We are now in what can only be called golden times for airlines.
In October 2015 United airlines reported a third-quarter net income of $1.7 billion dollars.
“You know today..it is hard for me to say the name ‘United Airlines’ without getting physically sick to my tummy.” Julia said. “I had dinner the other night with 2 retired flight attendants and they feel the same way. The skim and graft and greed all got started back when Stephen Wolfe became President. He also bankrupted a couple of other airlines while he walked away personally with millions..yes plural..millions of dollars from the airlines.”
“I don’t know…its a wacky world out there today.” Julia said. “And only the CEO’s and presidents are benefiting, big time, off the backs of the workers and employees. It really is criminal! There was a lot of other crap that went on the last few years. I’m just thankful I got to work for the airline when it was a great place to work and the benefits were great and honored.”
Did you or do you work for United Airlines and want to share your story? Leave a comment.
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