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Ben Stein Rips Into United Management

NY Times columnist (and actor of "Bueller.  Bueller.  Bueller." fame) Ben Stein eviscerated United Airlines’ management in a column yesterday, basically accusing them of screwing over employees for their own financial gain.  Discussing the employee ownership fiasco at the airline, he says:

So here it is in a nutshell: employees are goaded into investing a big
chunk of their wages and benefits in UAL stock. They lose that. Then
they lose big parts of their pay and pensions. They become peons of
UAL. Management gets $480 million, more or less. "Creative
destruction?" Or looting?


…Management is using competition, higher fuel costs and every other cost
complaint to cut the pay and pensions of its own employees while
enriching itself.

Nothing you haven’t heard before, but it’s well worth a read.

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  1. The problem with Stein’s piece is that — probably for dramatic effect — he portrays UAL employees as innocent lambs being led to slaughter. That, of course, is ridiculous. They (or at least their union leaders) deserve equal credit for leading UAL down the path to financial destruction.

    That said, this windfall deal for UAL management IS appalling. They should get zippo. The only stock options they should get would be based on stock appreciation AFTER the company is IPO’d. ate

  2. This really smacks of someting-D-O-O economics. Anyone?

  3. I agree with IAH-PHX…Stein simplifies what actually happened. We can only guess, but if United’s unions hadn’t gone after (among) the richest contracts in the industry, the airline may (and I stress MAY) have been in better shape. Likely for a couple of weeks.

    That said—and I do wish he’d write a column about the employees & their union—management has acted in an impresively greedy manner, as if driving the company into bankruptcy (and then out of it more then 3 years later) deserves some sort of reward. As I’ve mentioned here numerous times—United’s fare sales come on the backs of employee pensions and taxpayers. It’s a disgusting system—one that the current system seems to perpetuate.

  4. Yeah, so many people bemoan excessive executive compensation, but usually feel powerless to do anything about it. Here you have a bankruptcy judge who, presumably, could do anything he wanted regarding the issue and for whom “fairness” should be the top consideration, and he still approves a windfall.

    As an investor, I also don’t like the precedent this sets. Tilton and his team clearly did better for themselves by going Chap. 11 than they would have had they pulled off some miracle to avoid bankruptcy. In other words, you have now incentivized management to not worry too much about losing all the shareholders’ money. That can’t possibly be a good thing for owners.

  5. The “innocent lambs going to slaughter” will be the airline passengers who fly after all professional, competent pilots have left a decimated industry for lower risk, higher paying real estate jobs (buying foreclosures), to be replaced by 25 year old kids who are pretty good at Microsoft Flight Simulator, so long as everything on the plane works as it should (if not – hey, that’s what insurance is for).
    Do some internet prowling on what really happened in Greece about 6 months ago on Helios Airlines and you’ll understand what I’m talking about – German Captain, Greek Copilot, neither speak good English and thus can’t communicate with each other. Copilot misses pressurization set to manual on preflight (by some maintenance fool). Plane fails to pressurize after takeoff. Cabin altitude horn goes off in cockpit at 10,000 feet cabin altitude. With airplane on autopilot, linked to route and still climbing, captain gets out of his seat to pull the circuit breaker to stop the horn, and passes out from hypoxia. At 14,000 feet cabin altitude, pax oxygen masks deploy, and passengers get to breath for 12 minutes. Plane continues to climb on route, copilot passes out, all people on aircraft soon die from hypoxia, as airplane climbs to 30,000+ feet cruise altitude and flies programmed route to destination, then to (missed approach) holding fix and enters holding until it runs out of gas, then crashes. Until they died, I bet the passengers were very happy with their cheap fares which hired cheap labor at a cheap airline. Think about it!!

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