http://www.msnbc.msn.com/id/7804770/
Rumors are that the Flight Attendants are looking to strike tomorrow and the Mechanics will be honoring the strike as well. There was a blurb on the evening news (I caught only the end) that made mention of UAL having most of their 767’s repossessed. I don’t know if that is immediately or if that will happen shortly.
United gets approval to shift pension plans
Decision clears way for biggest
corporate-pension default everThe Associated Press
Updated: 8:43 p.m. ET May 10, 2005CHICAGO – A federal bankruptcy judge approved United Airlines’ plan to terminate its employees’ pension plans on Tuesday, clearing the way for the largest corporate-pension default in American history.
The ruling, which carries broad implications for U.S. airlines and their workers, shifts responsibility for United’s four defined-benefit plans to the government’s pension agency.
That will save cash-strapped United an estimated $645 million a year, part of the $2 billion in annual savings it says it needs to line up enough financing to emerge from Chapter 11 bankruptcy as soon as this fall.
But the cost will be painful to its employees, who stand to lose thousands of dollars annually off their pensions when they are assumed by the Pension Benefit Guaranty Corp.
The PBGC, the government’s pension insurer, initially opposed United’s plan. But it agreed to drop that resistance last month in exchange for up to $1.5 billion in notes and convertible stock in a reorganized UAL Corp., United’s holding company.
Should United be able to shed pension liabilities?
United’s pensions are underfunded by an estimated $9.8 billion, of which the PBGC would guarantee only about $5 billion. The previous largest U.S. pension default was Bethlehem Steel’s $3.6 billion in underfunding in 2002.
Judge Eugene Wedoff said the settlement, while disputed, does not violate any law or United’s collective bargaining agreement and he noted that employees at companies such as United could end up with fewer or even no benefits if no arrangement is made and the company goes broke.
“The least bad of the available choices here has got to be the one that keeps an airline functioning, that keeps employees being paid,” Wedoff said.
United Chief Financial Officer Jake Brace said the ruling is crucial for United to come out of bankruptcy.
“It’s not a good outcome. It’s unfortunately a necessary outcome,” he said. “This is not in any way a joyous day. It is an important step in our restructuring and in making our airline successful and viable for the long term.”
United’s controversial move risks provoking action by employees who already have agreed to sharp cuts. Unions have raised the possibility of striking if United dumps the pensions.
The Association of Flight Attendants, which threatened unspecified labor actions if the pensions were struck, will meet to decide its next step, said spokeswoman Dianne Tamuk.
“We feel sold out,” by the action, she said. Tamuk, 49, said her pension will be reduced from $1,700 a month to $800 a month by Wedoff’s ruling.
United’s effort to dump its pensions has been watched closely by the rest of the airline industry, where record fuel costs, the lowest fares since the early 1990s and stiff competition have caused network carriers to lose billions of dollars. Tuesday’s ruling, following a step taken successfully by US Airways Group Inc. in February, clears the way for similar actions elsewhere.
United’s biggest competitors would be under the most pressure to follow suit. American Airlines, the largest U.S. carrier and a unit of AMR Corp., has said it will keep its pension plans but is concerned about No. 2 United gaining a financial advantage with the elimination of its pensions.
On Wednesday, flight attendants for American will gather in Washington to lobby for federal pension reform that would allow carriers to extend the amount of time they have to replenish underfunded plans and provide relief to airlines that seek, through collective bargaining, to preserve rather than terminate their pension obligations.
No. 3 Delta Air Lines Inc., which has said it is in danger of being forced to file for Chapter 11 bankruptcy, faces $3.1 billion in pension payments over the next three years.
An overflow crowd of current and former United workers showed up at bankruptcy court Tuesday, with more than 100 packing the courtroom and dozens more listening to piped-in proceedings in a separate courtroom.
Unions representing United’s flight attendants, mechanics and ramp workers have expressed their ire at both the airline and the government’s pension insurer, PBGC, for agreeing to drop its opposition to United’s plan last month.
Attorney Jeffrey Cohen said the PBGC, which might have been unable to halt United’s plan in any case, made the agreement as “a matter of last resort.” Disputing the flight attendants’ contention that the deal violated its mission, he said the agency concluded that cutting a deal was in the best interest of not only those with pensions at United and other companies but also for taxpayers who fund the pension insurer.
In addition, he said, “We think it helps clear a path to the exit door” for United to leave bankruptcy.
Lawyers for United’s unions spoke ardently earlier Tuesday against the proposal.
Robert Clayman, an attorney for the Association of Flight Attendants, drew loud applause and cheers from employee spectators in both the courtroom and auxiliary court with an emotional appeal to preserve the pensions and workers’ secure retirements.
“Without equity there is no justice,” he said.
Jack Carriglio, an attorney for retired United pilots, said the airline should be ashamed of the agreement and warned of the consequences among angry employees.
“A strike is a real prospect if that agreement is approved,” he said. “Also, this will have a grave impact on United employees’ morale.”
By: Hand87_5 - 11th May 2005 at 17:37
Perhaps in the article I posted above? 😉
I guess I missed it 😀
By: Whiskey Delta - 11th May 2005 at 17:35
Btw I just read that a judge allowed UAL to cancel the pension plan!!!
Perhaps in the article I posted above? 😉
By: Hand87_5 - 11th May 2005 at 17:12
Maybe that’s the goal : get rid of an extra charge.
Btw I just read that a judge allowed UAL to cancel the pension plan!!!
By: greekdude1 - 11th May 2005 at 17:07
Are they all the same model?
They retired the last -200 series at the end of March, so they are all -300’s with a mix of ER and non ER models. Last night I thought about something. If these few 767-300’s do get repo’d, I’m assuming they own the -200’s that they have stored in the desert. Wouldn’t an option be to recall the -200’s parked in the desert and use them if needbe? Assuming of course they have not been canabalized at this point.
By: Whiskey Delta - 11th May 2005 at 14:40
Are they all the same model?
By: Mark L - 11th May 2005 at 10:19
So if I’m reading that right, UAL will lose 6 of their 14 767’s.
At my count UAL have 37 767s, so I guess they are all spread out with different leasing companies?
By: Hand87_5 - 11th May 2005 at 09:54
Another case of failed social-romanticism paired with management scam.
An other case of mismanagement which lead the employees to pay the bill.
By: Distiller - 11th May 2005 at 09:23
Another case of failed social-romanticism paired with management scam.
By: Whiskey Delta - 11th May 2005 at 06:45
So if I’m reading that right, UAL will lose 6 of their 14 767’s.
By: US Agent - 11th May 2005 at 06:29
There was a blurb on the evening news (I caught only the end) that made mention of UAL having most of their 767’s repossessed. I don’t know if that is immediately or if that will happen shortly.
United faces loss of leased planes
Court defeat spurs airline to seek deal
By Mark Skertic, Tribune staff reporter. The Associated Press contributed to this report
Published May 10, 2005
subscriber link
United Airlines said Monday that it is negotiating a deal that would allow it to keep eight planes that a federal appeals court has ruled could be taken back by the aircraft’s leaseholders.
A three-judge panel of the 7th U.S. Circuit Court of Appeals in Chicago called United’s argument for keeping the planes “thin to the point of invisibility” and said the leaseholders could move immediately to take back the aircraft, on which United has stopped making payments.
The panel’s ruling, issued Friday, involved 14 aircraft, though United has rejected leases on six of them. The remaining eight are Boeing 767s, aircraft generally used on international routes.
United said it was disappointed with the decision and “respectfully disagrees with it.” The focus now is striking a deal that would allow the carrier to keep the planes, said spokeswoman Jean Medina.
“That remains our intent, and we believe this group of mainly public-market financiers shares that goal,” Medina said. “While we are exploring all our legal and business options to ensure that this decision does not disrupt our ongoing operations, we intend to focus our energies on attempting to reach a mutually satisfactory agreement that provides for our continued use of these and other aircraft.”
The same leaseholders control about 175 of the roughly 460 planes in United’s fleet, and the decision could affect the airline’s efforts to renegotiate lease terms for each of the planes. Losing even some of them could cripple the airline’s efforts to emerge from bankruptcy this year, because it would reduce the amount of revenue generated.
The leaseholders have become known as the Chapman Group, named for the law firm representing them, Chapman & Cutler. The airline has argued that the leaseholders were violating antitrust laws because they were attempting to work together to renegotiate leases instead of doing it individually.
In November, when leaseholders and United were unable to come to terms, U.S. Bankruptcy Judge Eugene Wedoff issued a temporary restraining order barring the group from seizing the planes. In December, he found the leaseholders in contempt of court for refusing to turn over communications between them and their trustees and attorneys.
The appeals panel overturned both decisions and ordered the injunction vacated. The leaseholders did not engage in anti-competitive behavior, wrote Judge Frank Easterbrook.
“It does not matter, whether, as United suspects, the lessors are engaged in strategic behavior,” Easterbrook found.
The decision is important because it clarifies the court’s position on aircraft financing, said James Spiotto, an attorney with Chapman & Cutler.
“It’s up to United to come up with something here, if they want the aircraft,” Spiotto said. “Obviously, pricing has gone up significantly during the course of this bankruptcy, and that’s something people are well aware of.”
By: greekdude1 - 11th May 2005 at 06:15
I have 3 trips pending on United in the new few months, not to mention over 200,000 MP miles in my account. 
By: steve rowell - 11th May 2005 at 06:05
They’re in more strife than a pregnant Nun, let’s hope they don’t fade into history as some of the other great Airlines have like TWA and Pan Am
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May 11, 2005 at 2:41 am