Fury over bonus for United Airlines bosses

Workers at America's second-biggest airline are furious over a controversial proposal to reward top executives with bonuses worth millions of dollars for steering the cash-strapped carrier out of bankruptcy while its employees have had to agree to heavy pay cuts.

Employee unions are lobbying Chicago's bankruptcy court to block a plan by United to give 400 senior executives a 15 per cent stake in the company worth about $285m ((pounds sterling)160m) in newly issued stock.

United's largest union, the International Association of Machinists, called the management stock plan "grotesque" in light of the billions of dollars in pay and benefits that workers have given up during the airline's restructuring.

United, which is based in Chicago, collapsed three years ago and hopes to exit from bankruptcy next month.

Its executive pay plan follows three years of painful cost-cutting.

Workers, most of whom are unionised, have agreed to pay and benefits cuts totalling more than $3bn a year for five years.

United terminated all of its employee pension plans to reduce its debt and thousands of workers have been laid off.

Eight airlines are operating in Chapter 11 bankruptcy protection in the US after rising fuel prices and increasing competition led them to incur $30bn losses since 2001.

As a result, airlines have cut labour costs, eliminated more unprofitable routes and reduced their capacity.

The painful restructuring is similar to what is happening in the American car industry, where companies are trying to force labour unions to accept reduced pay and benefits for employees in the face of operating widening losses.

In both cases, unions have pointed out that while the majority of employees are being forced to take cuts in their pay, management teams are receiving generous bonuses for overseeing the difficult restructuring process.

Last month the United Auto Workers union (UAW) objected to a plan by Delphi, the bankrupt car parts maker, to reward its executive team with bonuses and stock potentially worth more than $500m.

In a filing with the Securities and Exchange Commission, the UAW described Delphi's executive compensation programe as "grossly excessive" and said that it would impede the union from reaching an agreement with the bankrupt car supplier on wage and job cuts for its hourly workers.

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