Union Threatens Strike Over Deal To End United Airlines' Pension Plan
From: Yahoo News
A flight attendant's union threatened to strike after a US bankruptcy court judge approved a deal to terminate United Airlines' pension plan.
The decision, which marks the largest pension default in US history, will enable a US government insurance program to take over United's four pension plans.
It will save the airline hundreds of millions of dollars, but will dramatically lower pension benefits for thousands of employees and retirees.
The federal Pension Benefit Guaranty Corporation originally opposed the move but agreed to assume a 6.6 billion dollar pension shortfall after United offered 1.5 billion in notes and convertible stock from the reorganized company.
The deal was opposed by all four of United's unions, but Judge Eugene Wedoff of the US Bankruptcy Court for the Northern District of Illinois said it was the "least bad among a number of unfortunate choices."
The airline's pension plans, which cover 121,500 employees and retirees, have just seven billion dollars in assets to pay 16.8 billion dollars in benefits.
Calling United's management a bunch of "liars, thugs and thieves" flight attendant union president Greg Davidowitch vowed to fight the decision.
"Over two thirds of our members will lose 50 percent of their benefits," Davidowitch said, adding that the decision has far-reaching implications.
"Other airlines for competitive reasons will be forced to declare bankruptcy in order to force the PBGC to assume their (obligations)," he said.
Several flight attendants cried in court when the decision was announced. The union has voted to authorize a series of labor actions ranging from strikes on individual flights, specific cities or a system-wide strike.
Such strikes could potentially spark chaos for United as it gears up for the busy summer flying season.
United's chief financial officer said such actions would be illegal and said the deal is necessary for the long-term success of the troubled airline.
"We fought for 18 months to try to preserve our pension plan," Jake Brace said. "This is a big step in our restructuring."
