A union representing aircraft maintenance workers at United Airlines is disputing $5.9 million in bills submitted by lawyers helping the company reorganize in bankruptcy court.
The International Federation of Professional and Technical Engineers plans to ask in a court filing Friday that the payment be denied to Kirkland & Ellis, the Chicago law firm serving as United’s lead counsel.
At least one Kirkland partner billed at a rate of $950 an hour, according to a document provided by the union to the Tribune. Work by legal assistants was billed at up to $165 an hour.
Kirkland & Ellis has billed more than $54 million since Elk Grove Township-based United sought protection from creditors in December 2002, the document states.
Though the carrier is not expected to emerge from bankruptcy reorganization until the fall, United already has become the most expensive airline bankruptcy on record.
The union objected only to the law firm’s bills from July 1 through Sept. 20 of last year. It noted that the bills come at a time when United employees “have sacrificed greatly in terms of pay and benefit concessions” to keep the financially strapped carrier flying.
Airline officials “should exercise the same level of due diligence in reviewing their professional costs” as they have in seeking cutbacks in personnel expenditures, the union said.
James Sprayregen, a Kirkland & Ellis partner working on the United case, said the union didn’t give any basis for rejecting the firm’s fees.
“We’re more confused by the objection than anything,” he said. “We’re trying to figure out what the objection is.”
Sprayregen said the firm’s rates are determined largely by the market.
Separately, United Airlines Chief Executive Glenn Tilton said he expects the U.S. airline industry to shrink in much the same fashion as the telecom business.
“Just as telecom is plagued with overcapacity and commoditization, so is the airline industry, which must follow and consolidate,” Tilton said Thursday, citing the proposed combinations of Verizon Communications Inc. and MCI Inc., and SBC Communications Inc. and AT&T Corp.
“The market has no space, in my opinion, for six network, hub-based legacy carriers,” Tilton told investors at a J.P. Morgan-sponsored conference in New York.
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Tilton didn’t indicate which carriers he expects to combine but said he expects fewer to be flying in years to come.
American, Continental and Northwest Airlines are the country’s strongest financially.
“Everybody agrees that consolidation is something that’s required for the improvement of the health of the whole group, but everybody wants someone else to do it,” said Brian Hayward, a Zacks Independent Research analyst.