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Posted on: Saturday, September 25, 2004

Court rejects legal brief on United pension plan

By Melissa Allison
Chicago Tribune

CHICAGO — A U.S. Bankruptcy Court judge refused yesterday to accept a United Airlines' legal brief arguing that killing the airline's pension plans would not cause as much pain as many have anticipated.

Retired flight attendant Shari Morris, at Denver International Airport, protested United Airlines' attempt to eliminate pension programs back in February, when the airline made its intentions known.

Associated Press

The unions representing United's workers and the federal agency that insures pensions had challenged United's "informational brief," filed Thursday, and asked Judge Eugene Wedoff to strike it from the record of the airline's bankruptcy case.

Wedoff agreed, saying the brief was not part of a motion requiring a court decision.

Douglas Baird, a bankruptcy professor at the University of Chicago Law School, said Wedoff was correct in striking the brief.

"You can't just say, 'Oh, judge, here's something for you to read,' " he said. "This is a case where United was using a brief as a press release."

The information in the brief could show up in future motions, particularly if the Elk Grove Township, Ill.-based carrier decides to kill its pension plans and needs the data to support its decision, which would require court approval.

The company was disappointed by the judge's decision, United spokeswoman Jean Medina said.

"We believe the information is important to share, so we will continue to do so with our employees, retirees and other stakeholders," she said.

United has said in recent weeks that it is likely to terminate its four pension plans, which the government estimates are underfinanced by $8.3 billion. The Thursday court filing tried to show that the funds are not in such dire shape and that retirees and employees would receive greater benefits than they might have expected if the plans were terminated.

The unions were up in arms about the 100-plus page brief, and the unions representing United's machinists and flight attendants filed an emergency motion asking the court to strike it from the docket. The federal Pension Benefit Guaranty Corp. joined the unions' motion.

All three parties applauded the judge's decision to throw it out.

"Of course, the PBGC is very pleased about Judge Wedoff's decision to disallow this filing," said spokesman Jeffrey Speicher.

If United's plans were terminated, they would represent the largest liability ever for the pension board, which has said it is concerned that other airlines might follow suit.

Meanwhile, the airline's unions are fighting to keep the pensions alive for employees who have given up roughly $2.5 billion in wages and benefits.