Judge approves end of United pension plans
By DAVE CARPENTER
AP Business Writer
May 11, 2:17 AM EDT
http://hosted.ap.org/dynamic/stories/U/UNITED_AIRLINES?SITE=AZTUS&SECTION=HOME&TEMPLATE=DEFAULT
CHICAGO (AP) -- United Airlines gained a significant financial victory with court approval to dump its four pension plans but faces a tough challenge to win back the support of angry employees.
It also prompted a renewed warning from some members of Congress that taxpayers may someday have to bail out the deficit-riddled government pension agency, which now will assume an additional $5 billion in pension obligations from United.
"Taxpayers had better buckle up because we will be in for a bumpy ride of bailout after bailout, as more and more corporations dump their pension plan obligations on the PBGC," said U.S. Rep. Jan Schakowsky, D-Ill., referring to the Pension Benefit Guaranty Corp. that already is operating at a more than $23 billion deficit.
The agreement approved by Judge Eugene Wedoff would give the PBGC $1.5 billion in notes and convertible stock in a reorganized UAL Corp., United's holding company. The agency, which called the agreement a "matter of last resort," must still formally sign off on the termination before it takes effect.
Tuesday's ruling, following a step taken successfully by US Airways Group Inc. in February, clears the way for similar actions elsewhere.
United's biggest competitors would be under the most pressure to follow suit. American Airlines, the largest U.S. carrier and a unit of AMR Corp., has said it will keep its pension plans but is concerned about No. 2 United gaining a financial advantage with the elimination of its pensions.
Wednesday, May 11, 2005
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