UAL expected to ask court to void contracts, pensions

April 12, 2005|By Mark Skertic | Mark Skertic,CHICAGO TRIBUNE

United Airlines is moving forward on plans to eliminate employee pension plans because no alternative to save the carrier the same amount of money has been found, chief executive Glenn F. Tilton said yesterday.

After months of exploring alternatives, no other solution will save the billions of dollars that could be realized by ending the pension benefits, Tilton, CEO of parent UAL Corp., said.

"Our view hasn't changed, it remains the same," he told reporters after an address to the City Club of Chicago.

He said the airline still hopes to emerge from Chapter 11 bankruptcy this fall. The goal can be met even if fuel remains 50 percent more expensive than it was a year ago, Tilton said.

"We are hard at work to make certain that the work that we do is adequate to satisfy the lenders that the restructuring we put in place will be able to accommodate whatever the fuel price happens to be," he said.

Pensions remain the biggest stumbling block to reaching the $2 billion in savings that United says is crucial to its survival.

The airline has reached labor peace with its pilots union and several small labor groups. But three months after notifying U.S. Bankruptcy Court that it was talking with several other unions to cut pay and benefits, no new deals have been reached.

The airline's insistence that ending pension benefits is necessary to reach the $2 billion goal has been a stumbling block to reaching consensus with several labor groups. The airline has proposed replacing pension benefits with less costly retirement plans, such as a 401(k).

United was expected to notify the bankruptcy court in Chicago last night that it has been unable to reach revised deals with its unions representing flight attendants, mechanics and machinists. The notice is the first step necessary for United to ask the court to throw out the contracts. A May 11 trial has been scheduled on the request to throw out the contracts, including pension obligations.

The Chicago Tribune is a Tribune Publishing newspaper.

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