Machinists Sue UAL Over Pensions

It's getting ugly. The controversy brewing between bankrupt United Airlines and its unions over pensions has now spilled over into open court. The Machinists Union is suing the world's number-two carrier for stopping payments to the pension plan.

In the suit, the International Association of Machinists and Aerospace Workers accuses United's top three executives of breaching their fiduciary duty by halting contributions to the pension fund while the airline is in bankruptcy.

News of the suit came as the second part of a one-two punch for United. Even as the lawsuit was being filed, United posted a $247 million loss for the second quarter. That makes it 16 straight quarters United has written the books in red ink.

United's financial continued struggle in bankruptcy court has led to speculation among analysts that it's going to shut down four pension funds. United admits the pension funds are being reviewed, but also acknowledges the threat of terminating the funds has caused "significant agitation" among its employees.

Now, the Machinists are talking tough. "United Airlines must get the message that they cannot abandon employee benefits at will. They will not be allowed to continue their slash-and-burn approach to restructuring without realizing serious consequences," said Machinists District 141 President Randy Canale. He's also a UAL board director who boycotted Thursday's regular meeting because of the rising tensions over the pension fund.

"The Machinists Union believes their actions to be in violation of the pension plans’ funding requirements, IRS regulations and the Employee Retirement Income Security Act (ERISA). Our complaint asks the court to compel funding of the plans," Canale wrote in a letter to members of his local. "On advice of counsel, I am not attending Board of Director discussions regarding pension issues. I will not violate the law for United Airlines.

"Pensions are not a perk the company can just withhold without consequence," he wrote. "Our pensions are deferred compensation earned by our members with decades of hard work and dedicated service to the company.

"United Airlines’ parasitic attempts to restructure by destroying employee wages, benefits and morale will not succeed. By repeatedly attacking their employees and retirees, UAL management has jeopardized the future of the airline," Canale contended in his letter. "Without employee support, this company will not emerge from bankruptcy."

FMI: www.united.com, www.iam141.org