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."

FMI: www.united.com