Benefits agency seeks United plan

Source: Rocky Mountain News
Author: Chris Walsh

The nation's pension-protection agency wants United Airlines to file a plan to emerge from Chapter 11 bankruptcy before the carrier tries to eliminate its retirement benefits.

The Pension Benefit Guarantee Corp. has asked a U.S. bankruptcy court to push back a May 11 hearing on whether United can terminate its four employee pensions, which the nation's second-largest carrier says it must do to emerge from bankruptcy.

United expects to exit bankruptcy this fall but has not filed revised business and reorganization plans detailing the carrier's plans. The airline - a unit of Chicago-based UAL Corp., which filed for bankruptcy in December 2002 - asked for an extension to file its plans.

It also filed documents this week reiterating the need to terminate all its pensions, which United says will save it more than $600 million annually as part of its drive to slash $2 billion in yearly expenses.

The PBGC said it is "premature" for the court to rule on the pension issue.

"United's last business plan is over six months old, it has not submitted a proposed plan of reorganization, and it has no imminent plans to emerge from bankruptcy," the PBGC wrote in a court document filed Thursday. "Obviously, this court cannot make (its) determination until United is much closer to emerging from bankruptcy."

United, the largest carrier in Denver, said it is "disappointed" in the PBGC's action.

"We plan to oppose the -PBGC's attempt to change the trial date, particularly since all parties agreed to this schedule in January," United spokeswoman Jean Medina said.

The PBGC, which has moved to take over two of United's pension plans, said it would not necessarily oppose the termination of all the benefits after seeing the carrier's business plans.

On Friday, the union representing United flight attendants filed a motion opposing the airline's efforts to push back the exclusivity period to file its plans.