United hopes to reach consensus with unions over pension plan terminations
CHICAGO — If United Airlines reaches a pact with its unions, the airline will terminate its combined $6.96 billion defined benefit plans and replace them with defined contribution plans, said Jean Medina, United spokeswoman. She said the company needs to have the concessions in place by mid-January to obtain exit financing for its Chapter 11 bankruptcy proceedings and to establish a new business plan.
Attorneys for United Airlines said the carrier will try to come to agreement with its unions, according to a motion filed with the U.S. Bankruptcy Court in Chicago. United's parent company, UAL Corp., Elk Grove Township, Ill., is proposing that the unions remove any terms in their collective bargaining agreements that require the airline to maintain pension plans, the motion said.
United CEO Glenn Tilton said in a Nov. 4 recorded message to employees that the airline needs to "achieve additional savings totaling $2 billion annually, including the termination and replacement of our pensions." He said the savings would come equally from non-labor cost reductions, pension replacements and labor costs, and "when we have completed this restructuring, we will have cut our costs by $7 billion a year on average."
"The company's demands are disastrous," Greg Davidowitch, president of United's flight attendants' Master Executive Council, said in a Nov. 5 statement. The "demands from flight attendants are not fair, equitable, nor necessary for a successful reorganization."
Dave Kelly, spokesman for United's pilots' union, said the union would have no comment on the matter until its governing body meets Nov. 15-16.
Separately, UAL will ask a bankruptcy judge at a Nov. 19 hearing to further extend the time in which the company has the right to file a Chapter 11 reorganization plan without the threat of other parties filing competing plans. The company is seeking that exclusive right, which currently expires at the end of November, through Jan. 30.