United, Flight Attendants Agree on Plan

United Airlines settled some key remaining issues as a confirmation hearing on its reorganization plan began Wednesday, announcing that flight attendants had agreed to a replacement pension plan and are dropping their lawsuits against the company.

Also, bankruptcy judge Eugene Wedoff overruled unions' objections to a controversial management stock plan that would set aside 8 percent of the equity the company plans to issue - down from 15 percent in its first proposal - for about 400 salaried and management employees.

Wedoff said the plan is within the range of other companies' plans and that it would be difficult for the court to decide whether it is excessive.

"It may very well be that we have a culture in this country that overpays management ... but United is just one enterprise that functions in that environment," Wedoff said.

Attorneys for two unions complained in court that the amount being given to top managers is excessive.

Sharon Levine, attorney for the International Association of Machinists and Aerospace Workers, called the plan to give roughly $45 million to the top eight executives "simply inappropriate under these circumstances."

She said that "lining management's pockets" would set a bad precedent for other airlines.

United attorney James Sprayregen defended the plan as a common practice that is important for attracting and retaining management.

No significant roadblock appeared evident to the reorganization plan. If Wedoff signs off on the plan as expected, United and parent company, Elk Grove Village-based UAL Corp., will be cleared to exit Chapter 11 in early February after more than three years in bankruptcy.

The flight attendants' pension plan includes a 3 percent company match, and a 2 percent direct contribution, both effective Jan. 1, according to a statement from the Association of Flight Attendants.

The direct contributions increase a half-percent in 2007 and again in 2008 for a total of 6 percent, the union said. The agreement also includes a $20 million convertible note for United's 17,000 flight attendants.

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