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Judge Allows United to Terminate Its 4 Union Pension Plans
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Judge Allows United to Terminate Its 4 Union Pension Plans
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United Airlines won its bid to terminate its four employee pension plans this evening, clearing the way for the largest pension default in corporate history.
The airline's unions denounced the decision by a federal bankruptcy court and vowed they could go on strike against United over the move.
After a lengthy hearing in a Chicago courtroom packed with company employees and retirees, Judge Eugene Wedoff of the United States Bankruptcy Court sided with United in its contention that it could not emerge from bankruptcy protection with its pension plans in place. United has been operating in Chapter 11 bankruptcy since December 2002.
The ruling potentially will save United billions of dollars a year in pension contributions. The airline plans to switch from conventional retirement programs, called defined benefit plans, to defined contribution programs like 401(k) plans.That shift has significant implications for the airline industry, which has lost more than $30 billion since 2000. Airline industry analysts have predicted that if United succeed in terminating its pension plan, other airlines might also file for bankruptcy protection in efforts to bring their pension costs down to United's levels.
In fact, Delta Air Lines disclosed today that it might have to seek bankruptcy protection if it is not able to renegotiate terms of more than $600 million in loans or if its cash reserves dwindle. It also said it expected a significant loss for 2005. The disclosure, made in a filing with the Securities and Exchange Commission, set off a 10 percent decline in Delta stock.
Late last month, the Pension Benefits Guaranty Corporation, a federal agency, agreed to assume control of United's four union pension plans. The agency said the plans, covering pilots, flight attendants, mechanics and other workers, were underfunded by $9.8 billion, an even bigger deficit than the airline estimated at the end of 2004.
For United's retirees, the takeover will mean reductions in payments, because the government's insurance has limits.
The government estimated last month that the pension agency would cover about $6.6 billion of United's shortfall. The remainder, about $3.2 billion, will be borne by United's retirees, in the form of benefit reductions.
As part of its agreement with United, the pension agency will receive corporate securities valued at $1 billion or more from the airline's parent company, the UAL Corporation.
The four pension plans cover about 121,500 employees and retirees.
Re: Judge Allows United to Terminate Its 4 Union Pension Plans
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The airline's unions denounced the decision by a federal bankruptcy court and vowed they could go on strike against United over the move.[/quote]
I hope the union has a large strike fund that will pay workers if a strike cause the complete collapse of Untied as an airline.
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The government estimated last month that the pension agency would cover about $6.6 billion of United's shortfall. The remainder, about $3.2 billion, will be borne by United's retirees, in the form of benefit reductions.[/quote]
Our tax money at work. I think we might have to hold our breath and hope the some other airlines don't follow suit. And that GM & Ford Motor Co. don't follow them. Going to be hard to collect taxes from unemployed people and retirees that have reduced benefits isn't it. Can't blame the woes of industry on gov. this time, but the expectation will be for our gov. to bail them out.
If this happens and job loss happens to the extent it could those illegals might be out of a job. If that takes place the ripple effect is bound to set in. With so much lower income being generated all the welfare programs in place now might have to be adjusted downward.
Is it possible that failure by United Airlines could go down in history as the beginning of the starting point of reducing America to the level of 3rd world countries? Or will some realization start seeping in that as resources are being gobbeled up by others we have to find ways to compete?
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"The only thing that makes life possible is permanent, intolerable uncertainty, not knowing what comes next."
Ursula K. Leguin
Re: Judge Allows United to Terminate Its 4 Union Pension Plans
Yes and now this government made sure these people, everyday workers can not go bankrupt themselves on their United Airlines credit cards are whatever. Which is basically what United did to people that worked for them for decades... Makes you feel all warm and fuzzy in side knowing who government puts first.
Point/Counterpoint
05-10-2005, 22:51
Judge Allows United to Terminate Its 4 Union Pension Plans 
