Teamsters, Unlike Other United Unions, Don't Oppose Hedge Funds

Corrects article published at 1:25 p.m. ET to say the United board has 15 members.

The International Brotherhood of Teamsters said it hasn't decided yet which side to support as two hedge funds battle to add six directors to the board of United Airlines (UAL) . 

The Teamsters represent about 9,000 United mechanics. In not taking sides, the Teamsters are following a different path than three other unions -- the Air Line Pilots Association, the Association of Flight Attendants and the International Association of Machinists -- who have sided with management in the board fight. 

"Before the Teamsters Union supports either slate, we demand they make transparent their plans for the future of United Airlines," said David Bourne, director of the Teamsters airline division, in a prepared statement. 

"We want to know the board's approach to realign executive pay, improve passenger service and reach a fair contract for their mechanics," Bourne said. 

United is currently in contract talks with the mechanics, 93% of whom currently voted to reject a contract offer that contained pay raises that were largely mitigated by increases in health care costs. 

On Tuesday, the day the hedge funds went public, Teamsters were demonstrating outside a JPMorgan investor conference where Gerry Laderman, acting chief financial officer, spoke. 

The two hedge funds, Altimeter Capital and PAR Capital, said on March 8 they will run a slate of six nominees for the board, which has 15 members after United added three this week. A shareholder vote would be expected to occur at United's 2016 annual meeting, which has not yet been scheduled. The 2015 meeting took place in June. 

Sources familiar with the board battle said it's reasonable to assume that the two hedge funds would want to befriend the labor unions. Both the United pilots ALPA chapter and the IAM have representatives on the board. 

A Teamsters press release on Friday summarized the hedge funds' case for joining the board, saying, "The dissidents cited long-standing poor governance by the board and five years of underperformance relative to their peers," adding that "UAL reacted by adding three directors to their board." 

Even Teamsters President Jim Hoffa weighed in, declaring, "The Teamsters are staying neutral while we investigate which direction will result in the best contract for our members and strengthen the airline's long-term prospects." 

Hoffa said the Teamsters respect Gordon Bethune, the former Continental CEO whom the hedge funds have nominated to be board chairman, but noted that the union will "look at both slates."

 

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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