UAL Corp., Chicago, might not terminate its pension plans if it can find financing that would allow it to make payments, the corporation's attorney said in court today. James H.M. Sprayregen of the law firm of Kirkland & Ellis, representing UAL's United Airlines, also told Chief U.S. Bankruptcy Court Judge Eugene R. Wedoff that failing to make pension contributions is not a "de facto termination." "We think it is in the best interest of the PBGC (and others) to give us time to come up with a solution rather than force precipitous action (regarding pension contributions). … Payments can be made up," Mr. Sprayregen said. UAL defended its proposed financing agreement, which doesn't provide for pension payments. The PBGC and the International Association of Machinists, which oppose United's contribution deferral, were expected to respond to United's arguments in court later this afternoon.
As explained in the court, the financing proposal by Bank One and other lenders requires the company to maintain certain liquidity levels under its proposed business plan, which does not provide for pension contributions. As clarified by the judge, UAL can deviate from the proposal to make payments if it has liquidity beyond the specified levels or if it receives consent of the lenders.