United pilots to demand pension deal

By David Kesmodel, Rocky Mountain News
October 21, 2004

UAL Corp. will announce it is ending its pension plans in a few weeks. When it does, its pilots union will insist on getting a better replacement benefit than other workers get, said the union's leader.

The pilots won't accept any management demand that all labor groups get the same 401(k) plan "when the pilots are harmed so disproportionately" in a pension termination, said Captain Mark Bathurst, who also serves on UAL's board.

His comments came in two recent memorandums to pilots at United Airlines, UAL's operating unit.

The carrier has said it likely will scrap its pensions so it can emerge from bankruptcy. It also has said it plans to seek further wage cuts from workers because its outlook has worsened amid rising fuel prices and weak ticket pricing.

Pilots would face a far bigger hit, on average, than other rank-and-file workers in a pension termination because many have qualified for benefits that exceed caps on payments from the nation's pension insurer.

"We are about to face a difficult and unhappy choice," Bathurst said in a message to pilots this week. "Over the next few weeks, management will come to us and say they tried everything we suggested, but they still have a problem. They will say they must terminate and replace our pensions and reduce wages and benefits."

Denver's dominant carrier has begun talking about ideas for replacement retirement plans with at least one of its unions, the Aircraft Mechanics Fraternal Association.

The replacement plans would have to be less-generous than the pensions under federal law.

Jean Medina, a United spokeswoman, declined to comment on Bathurst's argument that United pilots should gain a more lucrative replacement plan than others.

"All that is premature to speculate on," she said.

Joe Tiberi, a spokesman for United's largest union, the International Association of Machinists, said he wouldn't comment on replacement scenarios.

"We're still trying to find solutions so we can retain current pension benefits for our members," he said.

United must give a formal notice of at least 60 days of its intent to end pensions to the Pension Benefit Guaranty Corp., which insures failed plans, and get bankruptcy-court approval.

Medina said there's no timetable for a decision.

"We do believe it is likely we will need to terminate the plans," she said.

The pension agency says Chicago-based United's four pension plans are underfunded by $8.3 billion. It says it would cover $6.4 billion. The rest, $1.9 billion, would represent the loss for plan participants.





kesmodeld@RockyMountainNews.com or 303-892-2514