An informational brief from United Airlines that said terminating its pension plans "is likely to be the best of a bad set of options" was ordered stricken from the record in U.S. Bankruptcy Court during a hearing today on the airline's Chapter 11 bankruptcy protection case. Chief Judge Eugene R. Wedoff granted a joint motion filed by the machinists and flight attendants union to strike the brief, filed by United parent UAL Corp. on Thursday.
"In terms of the propriety of an informational brief," Mr. Wedoff said, it is not appropriate for the debtor to set forth its position "on a matter that is in dispute," such as the status of the airline's pension plans.
United owes $563 million in pension contributions for the rest of this year and faces $4 billion in pension obligations through 2008. United plans had $6.96 billion in assets and $12.65 billion in liabilities as of Dec. 31, according to UAL's 10-K filing.
Separately, Mr. Wedoff set Oct. 27 as the starting trial date on the machinists' union request for a Chapter 11 trustee for the airline. "It is my sincere hope" that the hearing may be able to be avoided, Mr. Wedoff said. "That type of conflict has the potential of creating ill will that would be hard to overcome."
Jake Brace, United's executive vice president and CFO, concurred with the judge, adding: "We are not the moving party, the unions are. ... Our door remains open" to the unions.
Sharon Levine, a director with the law firm Lowenstein Sandler, represents the machinists union, referred questions to International Association of Machinists spokesman Joseph Tiberi, who did not return a call seeking comment by press time. Sara Nelson Dela Cruz, spokeswoman for the Association of Flight Attendants, said that "ill will" between the airlines and labor unions speaks to the unions' call for new management.