United Airlines likely to end pension plans

UAL Corp.'s United Airlines, trying to attract financing to exit bankruptcy, said it probably will terminate and replace all its pension plans.

Ending the plans may be necessary because of "the magnitude of the further cost reductions needed to create a viable business plan," United said in a Bankruptcy Court filing in Chicago. The retirement funds will be the subject of a court hearing today.

United's filing was a response to objections by unions and a federal agency to a company plan to skip about $575 million in pension contributions due this year. UAL is looking to conserve cash after a federal board in June rejected its request for a loan guarantee to help raise exit financing. That scuttled UAL's plan to emerge from bankruptcy in the middle of this year.

The airline said in its court filing yesterday that it will consider alternatives to ending the pension plans as long as those measures provide enough money for United to operate and to finance its emergence from bankruptcy. Chicago-based UAL has been under Chapter 11 protection since 2002.

The Pension Benefit Guaranty Corp., the federal agency that objected to United's decision to skip contributions, said it would be liable for $6.4 billion if the airline ends its plans. It would be the largest such failure in the agency's 30-year history.

The agency has said United's plans cover about 119,000 workers and retirees.