The New York Times, January 1, 2005

U.S. Asks Bankruptcy Court to Deny United Pension Plan

By MARY WILLIAMS WALSH

The government moved in bankruptcy court late Thursday to oppose an agreement that United Airlines recently struck with its pilots' union on the looming termination of the pilots' pension plan.

In a motion filed in federal bankruptcy court in Chicago, the Pension Benefit Guaranty Corporation accused United of attempting to circumvent the federal pension law with the agreement, and of offering its active pilots relief "at the expense of the federal government, its other employees and creditors."

When any company defaults on its pension obligations, the assets and liabilities of the defunct plan go to the pension agency, which pays the retirees their benefits within certain limits. The agency argued in its motion that Congress had created a legal framework for this process because it "foresaw the possibility of abuse of the pension insurance program," and that United's agreement with its pilots constituted such abuse and should be rejected by the court.

It was the second time in two days that the federal government has gone to court to try to stop the airline, a unit of the UAL Corporation, and its pilots' union from terminating the insolvent pension plan according to their own terms. Earlier on Thursday, the pension agency filed a complaint in the United States District Court in Chicago, asking the court to terminate the plan immediately and make it the sole trustee.

If United is able to delay the termination until next May - one provision of the agreement - the active pilots would qualify for a higher level of insurance coverage. Some retired pilots might get lesser amounts, however.


Copyright 2005 The New York Times Company