The termination of United Airlines pilots' pension plan was upheld by a U.S. District Court judge in Chicago, according to court documents provided by the PBGC. The court's decision affirmed a 2005 ruling by the U.S. Bankruptcy Court in Chicago allowing the PBGC to take over the pilots' plan as part of United parent UAL Corp.'s plan for emerging from Chapter 11 bankruptcy protection. In February, United appealed that decision, claiming the bankruptcy court was not within its jurisdiction when it ruled to permit the termination.
"The court concludes that the termination of the pilot plan is necessary to avoid an unreasonable increase in PBGC's liability," U.S. District Court Judge Joan Lefkow ruled. The PBGC had estimated it would lose roughly $84 million through June 2005 alone if the plan had continued to operate. While that amount represents only a small percentage of the plan's total assets, liability increases of much smaller amounts have been seen as grounds for termination in the past, Ms. Lefkow ruled.
The PBGC has estimated the plan terminated effective Dec. 30, 2004, has $2.8 billion in assets and $5.7 billion in liabilities, and the agency expects to be liable for about $1.4 billion.
United spokeswoman Jean Medina was not available for comment at press time. Dave Kelly, spokesman for the United arm of the Air Line Pilots Association, had no immediate comment on the ruling.