But Not The Four Months It Asked For

Once again, United Airlines has gone to the federal well and come up with less than it had hoped. After being turned down for $1.6 billion in loan guarantees by the Air Transportation Stabilization Board, United asked a Chicago federal judge for four more months before creditors could file competing reorganization plans.

Friday's hearing before Judge Eugene Wedoff was by no means a total disappointment to UAL. Instead, Wedoff granted the airline changes in its debtor-in-possession financing that will give United $500 million more to work with as it continues reorganizing.

But much of the hearing focused on United's prediction that it will probably have to terminate its employee pension funds. As ANN reported last week, United has stopped contributing to employee pensions while in bankruptcy and believes the funds are too much of a burden to continue as it emerges from Chapter 11 protection.

But Judge Wedoff said he considers the latest UAL statement on pensions a "correction" of earlier statements, according to Reuters. Last month, UAL executives said the company's debtor-in-possession financing "prohibited" company contributions to the pension plan. That touched off a panic (and not a few threats) among employees and retirees, not to mention a gasp of horror from the Pension Board Guaranty Corporation. Now, the airline says its decision to stop pension payments while in Chapter 11 wasn't required by creditors. Instead, United leaders say the decision was based on sound financial practices.

But that didn't do anything to mitigate the fury of both employees and federal pension officials. A lawyer for the PBGC told Wedoff Friday that United was "thumbing their nose at the entire system" by halting contributions, according to Reuters.

If United does abandon its pension contributions, it wouldn't be the first airline to do so. That dubious honor belongs to US Airways, which ended the contributions during its bankruptcy. Delta, also riding the thin red line of bankruptcy, has demanded changes in its pilot pension fund.

FMI: www.united.com