The PBGC is asking a federal court to terminate United Airlines Inc.'s pension plan for ground employees and grant the agency responsibility for the plan, according to today's filing in U.S. District Court in Alexandria, Va. The agency requested March 11 as the termination date, at which time the PBGC would become trustee of the plan. Court papers said the PBGC determined the plan "has not met the minimum funding standard required" under the Internal Revenue Code. The ground employees' plan has $1.2 billion in assets and $4.1 billion in benefit promises, according to the PBGC. Agency officials estimate the PBGC would cover about $2.1 billion of the $2.9 billion shortfall.
The court filing added that terminating the plan "is necessary to avoid an unreasonable increase in the liability of the PBGC insurance fund." The agency notified the airline of its intent Thursday and notified the roughly 36,000 plan participants today.
Jean Medina, United spokeswoman, said airline officials are "studying the PBGC's actions and are evaluating options." She said United officials continue to believe it's necessary to terminate and replace all of its defined benefit plans and will "continue to work in good faith with our unions to resolve both our need for long-term cost savings and our pension issues."