CHICAGO, July 29 (AP) - One of United Airlines' labor unions sued company executives on Thursday for halting contributions to the company's pension plans while the airline remains in bankruptcy protection.þþThe International Association of Machinists and Aerospace Workers, which represents more than 20,000 ramp workers and customer-service agents, accused the top three United officials of a breach of fiduciary duty in connection with the pension decision announced last week.þþThe lawsuit came on the same day that United's parent, UAL, reported a $247 million net loss for the second quarter - its 16th consecutive quarter in the red - though it did eke out a $7 million operating profit excluding restructuring costs and other items.þþThe suit, filed in Federal District Court here, comes amid speculation among unions and the industry that United may ultimately terminate its four employee pension funds, a move that would dump billions of dollars in future pension obligations onto the government's pension insurance program. þþUnited, which is forgoing $600 million in pension payments in 2004 alone, says no such long-term decision has been made. But it says that the pensions are under review.þþIts cutoff of required pension payments drew a warning letter this week from the Pension Benefit Guaranty Corporation, which takes over failed plans and pays benefits to retirees that are sometimes reduced substantially. Officials of the government program met with United representatives Thursday morning in Washington, although both sides declined to discuss the session publicly.þþThe suit names United's chief executive, Glenn F. Tilton; the chief financial officer, Frederic F. Brace III; the chief operating officer, Peter D. McDonald; and the airline's pensions and welfare plans committee. It seeks the amount United owes the pension plans plus a court order that they carry out its funding obligation.þþA United spokeswoman, Jean Medina, said the airline thought the claims were baseless.þþFor the second quarter, UAL's loss amounted to $2.25 a share, compared with a loss of $623 million, or $6.26 a share, in the period a year earlier. Revenue was $4.04 billion, up 30 percent from $3.11 billion.þþThe company said the slight operating gain was evidence of its restructuring progress during 19 months in bankruptcy, and it noted that United planes were a record 86 percent full in June. But Mr. Brace called the overall financial performance ÿunacceptable,ÿ in part because of jet fuel price increases that will cost United $900 million more this year than it expected.þþÿEven though we are experiencing strong traffic,ÿ Mr. Brace said, ÿthe pricing environment prohibits us from recouping these high costs.ÿþþMr. Tilton reiterated that United ÿmust generate the cash flow and liquidity that the financial markets are willing to support.ÿþþ
Source: NY Times
