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Firm: United owes $994M to pensions Source: NEWSDAY BY JAMES BERNSTEIN STAFF WRITER December 1, 2004 A Washington, D.C.-based pension consulting firm appointed by bankrupt United Airlines in September said in a court filing yesterday that the airline must pay $994 million in skipped contributions to employee pension plans and in benefits accrued by the plans. Chicago-based United's decision several months ago to skip pension contributions as long as the airline remains in bankruptcy sparked a furor among unions and some in Congress, who charged the carrier was reneging on promises to workers. The motion filed in U.S. Bankruptcy Court by Independent Fiduciary Services Inc. was an apparent victory for United pension holders. Independent Fiduciary oversees plans for flight attendants, mechanics and bag handlers, about 107,000 people. Independent Fiduciary's motion will go before Judge Eugene R. Wedoff, who is overseeing United's bankruptcy case. Wedoff will rule on Independent's assertion the pension funding contributions are entitled to so-called "administrative priority status." United said it disagrees with Independent's findings. But conferring such status would mean the pensions are to be paid before any unsecured creditors' claims. Independent has asked Wedoff to hear the motion Dec. 17, said Andy Irving, the pension firm's senior vice president and general counsel. "The pension contributions that are the subject of our motion represent funding that the company committed to pay by maintaining the pension plans and the union contracts for the two years since United filed its bankruptcy petition," he said. "Therefore, these pension contributions should be treated as expenses associated with continuing to operate the company, like fuel." Jean Medina, a United spokeswoman, said "We believe these payments are not administrative expenses and are not entitled to priority status. We believe they are general unsecured claims." Sara Nelson Dela Cruz, a spokeswoman for the Association of Flight Attendants, which represents about 20,000 United employees, said the union "applauds any efforts to preserve" the pension plans. She said she could not comment further until union attorneys read the motion. Independent Fiduciary was hired in September in an agreement between United and the U.S. Labor Department, which stepped in after the airline said it would skip contributions while in Chapter 11. Labor officials wanted an independent organization overseeing pension plans. |
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