CHICAGO (AP) -- United Airlines' flight attendants are threatening to stage intermittent strikes if the company ends their contract and imposes additional salary and benefit cuts.þþMeanwhile the United pilots' union expressed outrage at a move by the government's pension agency to begin assuming responsibility for their pensions, which occurred Thursday.þþThe move saddles the Pension Benefit Guaranty Corp. -- already operating at a $23 billion deficit -- with another huge financial burden. The agency estimated it will be responsible for about $1.4 billion of the plan's $2.9 billion in underfunded assets, making it the third-largest claim in the history of the insurance program.þþThe labor strife and taxpayer burden come as United moves into its third year of Chapter 11 bankruptcy protection.þþ``United flight attendants have spoken loudly and clearly,'' said union leader Greg Davidowitch of the Association of Flight Attendants, announcing that 88 percent of members had approved taking unauthorized strike actions. ``They will not allow their employer to exploit the bankruptcy process and strip them of their rights. They are ready to fight.''þþUnited said the actions contemplated by the union are prohibited by both the Railway Labor Act and federal bankruptcy law.þþ``We regret that the AFA continues to take actions which are simply not helpful to United, its tens of thousands of employees, or its customers,'' spokeswoman Jean Medina said. ``We remain committed to considering all workable options and alternatives that will still provide the long-lasting savings United needs to exit Chapter 11 successfully.''þþThe two sides remain in talks over a new contract, and no action would be taken until the matter is resolved in bankruptcy court. Hearings on United's motion to terminate the existing contract are scheduled to begin Jan. 7 if no agreement has been reached.þþNegotiations also continue between United and unions representing mechanics, baggage handlers and public contact workers.þþThe pension agency will be taking over the pensions of more than 14,000 active and retired pilots, many of whose benefits will now be sharply reduced from what they were promised from the bankrupt airline -- a unit of Elk Grove Village, Ill.-based UAL Corp.þþThe PBGC already was facing the required takeover of United pension plans in 2005. By acting at year's end instead of in May, when the pilots' pensions were to have been terminated, the agency said it can avoid the annual increase in mandated benefit payments and save as much as $140 million in additional payouts.þþThe action follows a tentative contract agreement between United and its pilots union earlier this month, part of United's effort to slash labor costs heavily for the second time in its two-year bankruptcy restructuring.þþFacing $4.1 billion in required pension contributions by the end of 2008, United said earlier this year it would terminate all its existing employee pensions and replace them with much less expensive defined-contribution funds, similar to 401(k) plans.þþUnited issued a statement saying the PBGC's decision ``changes nothing with respect to our need to terminate and replace all four of our defined-benefit pension plans.'' The company says it requires an extra $725 million in labor cost savings to emerge from bankruptcy ``as a sustainable, profitable enterprise.''þþThe pension agency had objected to the tentative deal with pilots, who dropped their opposition to the pensions' elimination in exchange for additional financial considerations. But it might have little recourse if the deal is approved in bankruptcy court.þþ``The decision to take over a pension plan is never made lightly, especially in situations where participants won't get everything the company promised but failed to fund,'' executive director Bradley Belt said. ``I hope the plight of participants in airline pension plans puts an exclamation point on the need for Congress to strengthen the funding rules for defined benefit plans.''þþThe pilots' union deplored what it called an ``ill-timed attempt to retaliate'' against it, and suggested it might be an ``outrageous ploy'' designed to undermine the contract ratification vote currently under way among its members.þþ``ALPA will vigorously oppose any effort by the PBGC to take over the plan before May 1, 2005 or to single out the pilot group for punitive and vindictive treatment in the United bankruptcy,'' said a statement by the leadership group of the Air Line Pilots Association's United branch.þþThe PBGC planned to file a formal objection to United's pilots plan in bankruptcy court by Friday, spokesman Randy Clerihue said.þþ
Source: NY Times
