United Creditors Slam Management Stock Plan, Saying Proposal Is Improper

CHICAGO (AP) -- Creditors for United Airlines on Monday asked a federal bankruptcy judge to block the carrier's plan to give management and other salaried employees at least $96 million in stock and other equity as part of its restructuring plan.

United's unsecured creditors committee in a court filing said the proposal is improper because it treats salaried employees the same as union workers, who were given future stock and convertible notes in exchange for new labor contracts that slashed wages and benefits.

The committee said the salaried employees, unlike unionized workers, have no contract to protect their salaries and benefits. It added that the stock proposal was "buried" in an amendment to United's plan of reorganization.

"The plan is not a platform to give gifts to non-creditors to the detriment of bona fide unsecured creditors," the court filing says.

United granted the salaried employees a $1 billion claim, which would be converted into $40 million to $80 million in future stock, and agreed to pay them a $56 million convertible note, the filing says.

United granted the salaried employees a $1 billion claim, which would be converted into $40 million to $80 million in future stock, and agreed to pay them a $56 million convertible note, the filing says.

United spokeswoman Jean Medina said the salaried employees, though not covered by collective bargaining agreements, "contributed their share of savings" to the company's restructuring efforts.

"United has proposed that they also should participate proportionately in the equity distribution," she said.

She said each stock plan under the union's collective bargaining agreements similarly "reflect the economic contributions each group made."

Creditors are scheduled to vote on the carrier's reorganization plan in January. United, a unit of Elk Grove Village-based UAL Corp., hopes to emerge in February from more than three years in Chapter 11 bankruptcy.