Bankruptcy Filing Terms Possibility "Likely"

It's what United employees have feared all along. The world's second-largest airline says it may terminate its employee pension fund as it struggles to emerge from bankruptcy.

In papers filed with the Chicago bankruptcy court on Thursday, United executives said it was "likely" that the pension plan would be abandoned and something different would be offered in its place.

The filing by United came just one day before a federal hearing on the company's pensions. Last month, United hinted it wouldn't contribute to the plans while in Chapter 11 bankruptcy. That decision is being protested by the Pension Benefit Guaranty Corporation, a federally-backed agency charged with insuring pension plans nationwide. If United goes ahead with terminating its four employee pension funds, it would be the biggest such default by an airline in US history.

In its federal court filing, United blamed the Air Transportation Stabilization Board's refusal to grant the airline $1.6 billion in loan guarantees and skyrocketing fuel prices for its action.

Such a move could sink the PBGC, unless Congress and the Bush administration step in to prop it up. The PBGC says United's pension plans are underfunded to the tune of $8.3 billion.

FMI: www.united.com