Ted facing labor problems before it even takes off

Monday, Feb. 9, 2004 | 10:39 a.m.

When the blue and gold jets named Ted begin arriving at McCarran International Airport on Thursday, they'll bring more than passengers flying on the cheap and a bid to turn around the fortunes of bankrupt United Airlines.

They'll also bring out a group of angry flight attendants.

The flight attendants say they and other United employees gave up millions of dollars in concessions to help keep the nation's No. 2 airline flying, only to see some of that money squandered in the marketing of a low-cost carrier many are skeptical will work.

They acknowledge that they are using the launch of Ted in Las Vegas as a vehicle for calling attention to their cause.

Ted, the low-cost subsidiary of United, will make its maiden run Thursday on a flight between Denver International Airport and Las Vegas. By the end of April, United plans to have 26 daily Ted round trips running between Las Vegas and Denver, Los Angeles, San Francisco and Washington's Dulles International Airport. Many of those flights replace existing mainline United service.

But a group of United flight attendants, including dozens based in Las Vegas, say the birth of Ted is tied to United reneging on a health insurance agreement it had with flight attendants who ended their careers and retired early last year to help United climb out of bankruptcy. In addition to about 2,500 who took early retirement, there are about 1,500 other previously retired flight attendants who would be affected by the action.

Flight attendants say United is using its bankrupt status as a smokescreen for changing an agreement it had for health benefits.

The Washington-based Association of Flight Attendants union, which represents United's 21,000 flight attendants nationwide, has organized an advertising, lobbying and passenger outreach campaign to tell how they believe United cut benefits and raised costs for the 2,500 people who took early retirement.

"United has spent millions marketing Ted as a new, innovative, happy airline, but it's not," said United AFA Master Executive Council President Greg Davidowitch in a statement. "These contract violations and double-cross tactics show that there is nothing new at United. Labor management relations are back to historical lows and the promise of a new United is gone. Through this attack on retirees, management has proven that what Ted really stands for is cheated."

The union said United management signed a letter in May guaranteeing that flight attendants retiring by July 1 would have access to health care benefits that were less costly and more comprehensive than those that would be in place for workers retiring after that date.

Davidowitch said under United's plan, retirees would soon have to pay up to $650 a month for less health care, more than 10 times what they now pay. He said many flight attendants took early retirement prior to July 1 with the understanding that their health-insurance costs would be locked in at a more affordable rate.

A spokesman for United Airlines could not be reached for comment today.

MaryAnne Houser, president of the AFA in Las Vegas, said local flight attendants would pass out leaflets at McCarran on Thursday at around the same time United's first Ted flights are scheduled to arrive and depart. Houser spent Sunday preparing for the demonstration.

"United has spent millions reconfiguring and re-equipping planes and because of the (passenger) loads on these flights, they'll fly with four flight attendants instead of three," Houser said. "They (United) are so far out to lunch on this that they have no idea what they're doing. For them to attempt to hide this under the umbrella of bankruptcy is inexcusable."

Houser said United employees have given back $2.8 billion in pay and benefits through 2009 -- $314 million by flight attendants -- as concessions to help United steer through bankruptcy.

A Colorado-based aviation consultant who follows the airline industry said the flight attendants' grievances and the cost of starting Ted are linked.

"They're right," Mike Boyd of the Boyd Group, Evergreen, said of the flight attendants.

"They (United) spent millions starting this silly sub-brand called Ted, which doesn't reduce fares and makes the airline less efficient to operate," Boyd said. "They they had the nerve to ask the flight attendants to take a cut in their health care benefits. They (flight attendants) are absolutely right about United squandering money. The only way to solve this may be for senior management to be removed."

Flight attendants also are planning demonstrations at United hub airports in Los Angeles, San Francisco, Seattle and Washington D.C. today.

Sara Nelson Dela Cruz, a spokeswoman for the AFA, said "a huge number" of the 4,000 United flight attendant retirees affected by the change in the benefit plan reside in Las Vegas because many who left the company moved to Nevada to retire.

The union also plans to file a motion in U.S. Bankruptcy Court to appoint an examiner to investigate the change in retirement benefits and the timing of the company's actions.

Union officials also spent several hours on Capitol Hill last week giving their side of the story to lawmakers. Houser said she made contacts with the offices of Reps. Shelley Berkley, Jon Porter and Jim Gibbons and had an appointment with Sen. Harry Reid postponed because of last week's ricin scare.