Source: Denver Post
Author: Kelly Yamanouchi

Despite Reaching Wage Deals, The United Airlines Parent Says It Must Cut Pensions In Order To Stay Aloft

Chicago - After a weekend of negotiations, United Airlines parent UAL Corp. managed to avoid going to trial Monday to impose pay cuts and other labor savings on some of its employees.

But the bankrupt airline told a judge here that it is beginning discussions with unions on pensions it still says it can no longer afford. United employs nearly 62,000 people, including 6,000 in Denver. Many of them are unionized.

"We still believe we need to terminate all our (pension) plans," chief financial officer Jake Brace said to a swirl of news reporters in the hallway of the U.S. Bankruptcy Court here. Cameras weren't allowed in the court.

UAL attorney James Sprayregen told Judge Eugene Wedoff in a seventh-floor courtroom that the company had reached initial agreements with some of its unions on pay cuts. Those agreements avoided an already-scheduled week-long trial aimed at forcing the cuts.

Wedoff, who was pointed in a hearing last week, said he was pleased to hear of the agreements. It bodes well for a reorganization of the company, he said.

Leadership of the Association of Flight Attendants meets today to approve its tentative agreement with the company.

However, the agreements reached with the flight attendants and mechanics unions don't deal with the pension issue.

On Jan. 21, UAL plans to propose a schedule - including deadlines, and a possible trial date - for negotiations on its pension plans.

As with the recent labor negotiations, the idea would be to set a schedule leading up to a trial as a deadline for negotiations to reach agreements on the pension issues.

"It is helpful to have deadlines in any sort of a negotiation," Brace said after Monday's hearing.

Termination of the pension plans would deal with two different sets of federal laws - the Employee Retirement Income Security Act and bankruptcy law. Brace said if the company can't reach agreements on the pension issue, the trial that would ensue could deal with both sets of laws.

Meanwhile, United is in negotiations with the Air Line Pilots Association union to fashion an agreement after one was thrown out by the court last week. It was rejected because of legal problems with wording that could have allowed the pilots' agreement to influence negotiations between United and other unions on pension terminations.

"We do intend to do everything we can" to resolve the issues raised by the court, Sprayregen said.

Brace said the preference is for a permanent deal with the pilots union.