CHICAGO--(BUSINESS WIRE)--Nov. 6, 2002--Paul Whiteford,
Chairman of the United Master Executive Council (the UAL-MEC),
the governing body within the Air Line Pilots Association,
International, AFL-CIO, which represents the pilots of United Airlines
sent a strongly worded letter to State Street Bank & Trust Company,
Trustee of the United Airlines Corporation ESOP urging the Trustee to
stop selling and begin buying back UAL shares sold in the last few
weeks.
Text of letter follows:
The UAL-MEC was exceedingly disturbed when it learned of the
decision of the ESOP Committee to cede its fiduciary responsibilities
to you, although we understood the reasons it has acted in that way.
The ESOP unmistakably requires that all ESOP assets must be
invested exclusively in shares of UAL stock. Our views in this regard
are unequivocal: we do not want you to sell our ESOP stock, and you
are doing so against our express request to the contrary. We have
asked our attorneys to orally communicate our concerns to you, and
we understand that they have done so, Whiteford says in the letter.
In light of the pilots recent agreement to provide the company with
$2.2 billion in labor savings, the Company's renegotiated debt
payments, ALPA strongly feels that United's application to the Air
Transportation Stabilization Board (ATSB) has been significantly
strengthened, and the sale of UAL stock is not in the long-term best
interest of the ESOP members.
The entire text of the letter is as follows:
To the Trustee of the UAL Corporation ESOP:
I am the elected Chairman of the United Master Executive Council
(the UAL- MEC), the governing body within the Air Line Pilots
Association, International, AFL-CIO, which represents the pilots of
United Airlines. As you know, the UAL- MEC represents the largest
shareholder group of UAL Corp. and largest group of participants in
UAL Employee Stock Ownership Plan (the ESOP).
On behalf of the pilots of United Airlines and thousands of pilot ESOP
participants, I hereby request that you reconsider your decision to
sell our ESOP stock, that you stop selling our ESOP stock and that
you take immediate steps to repurchase every share of UAL stock
that you have sold.
The UAL-MEC was exceedingly disturbed when it learned of the
decision of the ESOP Committee to cede its fiduciary responsibilities
to you, although we understood the reasons it has acted in that way.
The ESOP unmistakably requires that all ESOP assets must be
invested exclusively in shares of UAL stock. Our views in this regard
are unequivocal: we do not want you to sell our ESOP stock, and you
are doing so against our express request to the contrary. We have
asked our attorneys to orally communicate our concerns to you, and
we understand that they have done so.
As you know, the UAL-MEC has been engaged in a continuous effort
over the past six months to accomplish an out-of-court restructuring
that will avoid bankruptcy through a combination of labor cost
savings, strategic initiatives and incremental lending guaranteed in
part by the federal government. To that end, the Company has
-- installed a new Chief Executive Officer and senior management
team with a singular focus on avoiding bankruptcy;
-- reached agreement in principle on an historic arrangement with
its labor groups to provide $6 billion in labor savings over
the next five and a half years;
-- implemented a program to achieve approximately $8 billion in
non-labor savings and improvements to profitability over the
same period;
-- supplemented its application for a federal loan guarantee to
describe a detailed recovery program that includes commitments
for substantial non-labor cost reductions, strategic
initiatives to increase profitability and commitments for
financial support from the Company's financial and strategic
partners; and
-- concluded final agreements with the UAL-MEC and two other
unions with respect to the labor savings program (and expects
to conclude the remaining agreements within days).
We believe that a successful recovery program based on these elements is
well within reach if all stakeholders remained focused on avoiding
bankruptcy.
The successful implementation of a recovery program without a bankruptcy
filing is the best possible result for every stakeholder at United. It will
protect our Company, our unique corporate governance structure and the
value of our ESOP holdings. Indeed, much of the unprecedented employee
commitment to avoid bankruptcy is based on our desire to preserve the
value of employee ownership and maintain the unique corporate
governance that we negotiated and paid for in the 1994 ESOP transaction.
Under these circumstances, we are dismayed that you continue to sell our
ESOP stock - apparently with little or no regard for the actual recovery
process unfolding at the Company. Your stock sales have created
unnecessary confusion, distraction and roadblocks for every participant in
the process. You have materially eroded the value of our corporate
governance and continue to do so every day. You are giving away the
economic value of our ESOP stock for next to nothing. And you are limiting
our ability to participate in a successful recovery program through any
subsequent increase in the value of our stock. In short, you have undone
weeks of work on a recovery plan by betting as heavily as you can that
United is headed to Chapter 11.
Your actions have been shortsighted and irresponsible. The damage you
have caused to the process is immeasurable and unforgivable. I, again,
urgently request that you take immediate steps to repair this damage by
halting further stock sales and repurchasing UAL stock in amounts sufficient
to recover our full governance rights and ESOP stock value.
I request the courtesy of a prompt response in order that we might consider
our options.
Very truly yours,
Paul R. Whiteford
Chairman, UAL-MEC
cc: UAL-MEC
Mr. Glenn Tilton
Mr. Randy Canale
CONTACT: Sloane & Company, N.Y.
Elliot Sloane, 212/446-1860