Source: Reuters

WASHINGTON, June 30 (Reuters) - The U.S. government on Thursday assumed control of pension plans covering flight attendants and other workers at bankrupt United Airlines, officials said.

The Pension Benefit Guaranty Corp. said the plans covering attendants and administrative employees are underfunded by more than $4 billion and cover more than 70,000 current and former workers. The agency has already assumed control of the pension plan for airport ground workers and expects to take over the pilots' plan once legal issues are resolved.

United Airlines is owned by UAL Corp.

Flight attendants at United threaten Friday strike

Source: Chicago Tribune
Author: Mark Skertic

United Airlines flight attendants could begin random walkouts Friday if the airline goes ahead with its decision to turn over their pension plan to the federal government.

"We're continuing our fight to save our plan," Sarah Nelson Dela Cruz, a spokeswoman for the flight attendants, said Wednesday. She said a strike campaign could be one of the tactics used to achieve that.

The announcement comes as airlines are preparing for the busy Independence Day weekend. If the union follows through with threats not to board aircraft, it could cripple United's system, because federal regulations stipulate that planes must have flight attendants.

The federal Pension Benefit Guaranty Corp. on Thursday will assume administration of the pension plan covering United's flight attendants and another covering management, administrative and public-contact workers.

Shedding the pension plan will change the terms of the union's contract with the airline, opening the door to a strike, Dela Cruz said.

In a message on the union's Web site, strike co-coordinator Ellen Boone urged members to "remain focused on our efforts to save our pensions and reject any assertions by the company or any other group that our actions are in vain."

A United spokeswoman said that "any actions to disrupt our operations would be illegal and would only punish our customers and employees."

"The AFA is the only union whose leadership has yet to negotiate a replacement plan for the employees they represent," said Jean Medina. "We are prepared to meet with the AFA at any time to negotiate a replacement pension plan, as we have with all the other unions."

Even the threat of a strike could hurt United, which lost $93 million in May.

"Some business travelers are going to say that if they're making these noises, I'm not booking," said Michael Boyd, president of the Boyd Group, a Colorado-based airline consultant.

"I'd question how much support this really has. Because most know that if they do this, they won't have to worry about their pensions. They won't have an airline.

"They have every reason to be angry," Boyd said of the flight attendants. "It's an awful thing that's happening to them. But the solution isn't to kill the airline."

The union has been fighting efforts to kill its pension plan on several fronts. It appealed an order by a U.S. bankruptcy judge in Chicago that allows the pension agency to assume control of its retirement plan.

It also has appealed a decision by a federal judge in Washington denying the union's request for an injunction to prevent the plans from being taken over by the agency.

The agency has taken over the ground workers' plan, but assumption of the pilots' pension program has been delayed by litigation over the date the move to the pension agency takes effect.

Last week, the U.S. House of Representatives approved an amendment that would prevent the agency from spending any money to take over United's pensions. However, its chances of becoming law are considered remote because of opposition in the Senate and by the White House.

The carrier announced late last year that it was unlikely to attract the financing it needs to leave bankruptcy protection if it remained saddled with its nearly $10 billion in unfunded pension obligations. Since reaching the deal on its pensions and obtaining other concessions from workers, United has said it expects to exit bankruptcy this fall.

Elk Grove Township-based United has said it plans to replace its company-sponsored plans with less expensive retirement benefits, such as a 401(k). Such plans often are less appealing to workers because the payout amount isn't guaranteed.

Most United workers and retirees opposed shifting their pensions. The day the government takes over the plans, workers stop accruing benefits. For many, that will mean thousands of dollars less in retirement than they had anticipated.

Those fears were somewhat lessened when United agreed to give its unions convertible notes that could be sold when the airline emerges from bankruptcy. The notes could be used to raise cash, which the unions plan to distribute to members to offset some of the pension losses.

The only group United has not reached such a deal with is the flight attendants. The prospect of issuing similar notes to the group has come up in discussions, but the union is focused on preserving its pensions, Dela Cruz said.