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United loses pension ruling

By Associated Press
Published September 25, 2004

CHICAGO - A federal bankruptcy judge ruled against United Airlines on Friday in a procedural dispute, siding with unions who said the company submitted unsubstantiated claims about how employees would be affected if their pension programs were terminated.

While it won't halt United's controversial bid to shed its pension obligations, the ruling suggests that parent company UAL Corp. may have a rough time winning court approval to eliminate the programs.

Judge Eugene Wedoff granted an emergency motion filed by United's machinists and flight attendants, striking late Thursday's 91-page filing from the record.

In the filing, United said its pension plans are in far better financial condition than previously estimated and that the impact of terminating them would be less than initially feared. It said its four pension plans are underfunded by $2.7-billion, as opposed to the $8.3-billion estimated by the pension agency.

The unions' motion had key backing from the Pension Benefit Guaranty Corp. - the government agency which would have to make good on billions of dollars in retirement benefits owed to United workers and ex-workers if the airline succeeds in terminating the plans.

The agency strongly objected to the filing, telling the court it was "procedurally improper, gives potentially opposing parties no realistic opportunity to respond and serves no legitimate purpose."

Wedoff agreed with that reasoning at a hearing Friday.

"We are pleased with the judge's decision," pension agency spokesman Randy Clerihue said.

But United spokeswoman Jean Medina said the company was disappointed. "We still believe the information is important for all of our employees and retirees and other stakeholders," she said.

[Last modified September 25, 2004, 00:59:56]

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