United Airlines To Increase Retiree Contributions for Health Benefits
Officials for United Airlines on Wednesday said that the company plans to shift some of the cost of health care benefits to its 35,000 retired U.S. employees, the Wall Street Journal reports. United said that shifting a portion of the cost of health benefits to retirees is necessary for the company to meet its goal of exiting bankruptcy by midyear (Carey, Wall Street Journal, 1/15). United has reapplied, after being denied in December 2002, for a $1.6 billion federal loan guarantee to help the company exit Chapter 11 bankruptcy protection (Maynard, New York Times, 1/15). The company would not say how much it plans to save by shifting more health costs to retired workers. However, Pete McDonald, the executive vice president of operations for UAL, said that the amount would be "material to our reorganization" (Wall Street Journal, 1/15). McDonald added, "This change will bring the medical benefits provided to current retirees more in line with those available to future retirees and offered by other large U.S. corporations" (AP/San Jose Mercury News, 1/15). In 2002, United spent $339 on retiree health care benefits, according to the Journal.
The Association of Flight Attendants, which represents about 20,000 currently employed workers, "castigated" the company for proposing what it called "devastating" changes in retiree benefits that are "not necessary for United's successful reorganization," the Journal reports (Wall Street Journal, 1/15). Greg Davidowitch, the head of AFA's United branch, said, "This is the kind of thing that destroys relations between workers and management." Robert Roach, a general vice president with the International Association of Machinists union, said, "Imposing an unnecessary financial burden on seniors with fixed incomes is reprehensible and ignores the decades of hard work they contributed to United Airlines" (AP/San Jose Mercury News, 1/15). The machinists union represents roughly 20,000 United employees. An unnamed United spokesperson said that United made it "clear" to flight attendants who retired last year that the company "couldn't guarantee that retiree medical benefits wouldn't change in the future" (Wall Street Journal, 1/15).
At an auto industry conference on Tuesday in Dearborn, Mich., Ford Motor Vice Chair Allan Gilmour and UAW President Ron Gettelfinger urged the federal government to help the nation's businesses pay for employees and retirees' health care benefits, the Wall Street Journal reports. Gilmour, who has been asked by Ford's CEO William Ford to lead a "national dialogue" on rising health care costs, said that such costs have added $700 to the cost of each vehicle Ford sells in the United States. He added, "If we cannot get our arms around this issue as a nation, our manufacturing base and many of our other businesses are in danger." He said that he is looking at various universal health systems in foreign nations, focusing on how they control costs, the Journal reports. Gettelfinger said that that he supports implementing a universal health care system in the United States (Shirouzu, Wall Street Journal, 1/14).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.