UAL Corp., Chicago, is asking the bankruptcy court overseeing its Chapter 11 reorganization to approve a voluntary distress termination of United Airlines' defined benefit plans, according to court papers filed Monday. The company said the cost savings this would provide would help it emerge from bankruptcy.
UAL filed the motion with the U.S. Bankruptcy Court in Chicago as a follow-up to a request in December seeking the right to reject the airline's collective bargaining agreements with labor groups in favor of reaching new pacts with the unions.
United's pension plans had combined assets of roughly $7.2 billion as of Dec. 31, according to the parent company's annual report. The plans were underfunded by about $6.4 billion at the same date, according to the report.
UAL re-filed the December request that seeks authority to reject the collective bargaining agreements "in case consensual agreements cannot be reached" with the unions, according to the new filing. The court has approved the airline's new labor agreements with the Air Lines Pilots Association, the Professional Airline Flight Control Association and Transport Workers Union of America. The groups agreed not to oppose termination of their pension plans. UAL reached an agreement with its flight attendants on all matters except pensions. The flight attendants on Friday threatened to terminate the tentative pact if the airline didn't solve remaining issues within 20 days.