http://www.chicagotribune.com/business/chi-0409210270sep21,1,5507014.story?coll=chi-business-hed

Lawmakers hit United on pension plan

112 oppose default in letter to Tilton

Associated Press

September 21, 2004

WASHINGTON -- More than 100 lawmakers have signed a letter being sent to United Airlines' chief in opposition to its plan to terminate its pension plans to survive bankruptcy.

"While we understand that the airline faces difficult challenges in emerging from bankruptcy, the employees and retirees have already agreed to job reductions and significant concessions in their wages and benefits," said the letter to Chief Executive Glenn Tilton. "We strongly believe it is unfair to insist that their retirement security be sacrificed as well."

United is in talks with its unions, seeking an additional $500 million in cuts. United says its tentative plan to end employee pension plans would save it $4.1 billion in the next five years. That's on top of the $655 million in yearly cost savings the Elk Grove Village-based airline identified two weeks ago, and $2.5 billion in wage and benefit cuts it made a year ago.

The letter by Democratic Reps. George Miller of California and Jan Schakowsky of Illinois, has attracted signatures from 104 House members and eight senators, including two Republicans. It will be sent later this week.

Asked about the letter, United spokeswoman Jean Medina said: "We're working closely with all of our stakeholders to study potential alternatives to termination and replacement of United's pensions. We're committed to allowing that process to move to completion."

The letter noted that Congress passed legislation earlier this year to provide pension plan relief to airlines.

"Members of both political parties supported this relief, because we believed, based on representations by you and other airline executives, that this action was necessary to preserve the pension funds," the letter said. It added that lawmakers "urge you to honor the promises you have made to your employees and their families."

Concern about financial woes at the nation's airlines, and the impact on travelers, workers and retirees, has been heightened in this election year and has triggered several White House meetings. United, the nation's second-largest carrier, has said it will not decide whether to dump its underfunded retirement plans until late this year, well after November's election.

US Airways filed for bankruptcy protection last week, and has asked the court for permission to avoid payment on several of its retirement plans. Another struggling carrier, Delta Air Lines, agreed not to terminate its pilots' pension plans before February, even if it filed for bankruptcy protection. Its pilots' union agreed to let Delta use retired pilots to cover staffing shortages.

The government's pension insurance program said last week it will cover some of the retirement benefits for employees of United and US Airways, should the airlines terminate the plans. But the Pension Benefit Guaranty Corp., which already is facing a $9.7 billion deficit as of March 31, had strong words for the airlines. "Bankruptcy should not be the path of least resistance to deal with your pension obligations," said Executive Director Bradley Belt.