Wed, Jan 12, 2005
Bankrupt Carrier Says It Has To Axe Pensions To Keep
Flying
United Airlines and its unionized
workers came to terms on yet another round of pay and benefit
concessions, staving off at the last minute a federal court trial
scheduled for this week. But UAL Corp., United's parent, says it'll
still have to axe all employee pension funds if the airline is to
survive.
"We still believe we need to terminate all our (pension) plans,"
chief financial officer Jake Brace said in the hallway of the US
Bankruptcy Court in Chicago, IL, Monday. He was quoted in the
Denver Post.
If United has its way, the pension issue, long a thorny one
between the airline and its workers, will go to trial in bankruptcy
court on January 21st. As that deadline looms, the airline figures
there will be a lot more substance to the negotiations because
neither side wants their pension fight to go to a judge for
decision.
There's no argument that United is
treading treacherous waters in trying to terminate its employees'
pensions. Friday, the bankruptcy judge nixed the airline's
agreement with pilots on terminating their retirement plans -- at a
savings to United of about $180 million a year. But that agreement
drew heavy fire from creditors and from the quasi-governmental
agency that will have to pick up the pieces of United's pension
plan -- the Pension Benefit Guaranty Corp.
But United spokeswoman Jean Medina said the airline is adamant.
"We still believe we need to terminate all four pension plans to
achieve the savings the company needs to emerge from
bankruptcy."
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