By James F. Peltz, LA Times Staff Writer
United Airlines, moving closer to a cost-cutting change feared by employees and retirees, said it probably would cancel its pension plans in hopes that the move would help the carrier emerge from bankruptcy proceedings.
“This is not good news,” said Redondo Beach resident John Givens, 58, a former United reservations director and union official who retired last year.
United, a subsidiary of UAL Corp., already has stopped making contributions to its four pension plans. They are $8.3 billion short of what would be needed now to fully fund future retiree obligations, according to the Pension Benefit Guaranty Corp., a federal agency that insures corporate pension plans and stands to inherit United’s obligations if the airline scraps its plans.
The pension agency estimates that under federal law it would be liable for $6.4 billion of the four plans’ total deficit — leaving a $1.9-billion shortfall for recipients. That would make it the largest pension-plan failure.
In a Bankruptcy Court filing Wednesday, United said that because it was so short of cash, “termination and replacement of United’s defined-benefit pension plans likely will be required” if it hopes to raise the new financing it needs to get out of bankruptcy.
“Let there be no mistake: United would like nothing more than to keep the pension plans intact,” the filing said. But doing so would require more than $500 million in pension payments over the next two months alone, “and dig an even deeper hole for United.”
No final pension decision has been made, the carrier said, adding that it “remains willing to consider any alternative to pension termination.”
Once again, although it’s management that made the bad decisions, it’s damn sure not management that’s going to pay for them.
And the beat goes on.
Filed under: Pensions/Retirement |