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Unions win a round vs. United

Ruling signals it won't be easy to cut pensions

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

While it won't halt United's 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 that 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 yesterday morning.

"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.

"We will continue to make the information briefs available."

Faced with $4.1 billion in obligations to its existing pension program over the next five years, United wants instead to create a defined benefit plan to which it would contribute an amount equal to about 5 percent of each employee's salary.

Although it has already slashed more than $2.5 billion in annual labor costs, UAL wants to eliminate the pensions and another $1 billion in expenses to help attract new financing and exit bankruptcy -- a restructuring now in its 22d month.

Joseph Tiberi, a spokesman for the International Association of Machinists and Aerospace Workers, hailed yesterday's ruling and criticized United for having called the motion "ridiculous" a day earlier.

"Instead of making public statements calling their employees absurd, the IAM hopes United will heed the judge's admonition to work closely with all its employees and all stakeholders to develop a viable business plan that will allow the company to exit bankruptcy," Tiberi said.

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