Judge OKs UAL Plan To Terminate Existing Pension Programs

MAY 11, 2005 -- United Airlines parent UAL Corp. won a showdown with disgruntled unions in bankruptcy court when the presiding judge ruled the company could unload heavily underfunded employee pension plans on the federal government.

"If UAL is successful, every legacy carrier has a pension problem that is not fixable outside of bankruptcy," said Seabury Group analyst and managing director Scott Gibson, speaking last month during the TravelCom Expo in New York.

Specifically, the ruling allows the federal Pension Benefit Guaranty Corp. to terminate UAL's existing defined-benefit pension plans and assume responsibility for $6.6 billion of UAL's pension liabilities.

Expect to see a "ripple effect" throughout much of the corporate welfare dependent airline industry.

¶ 9:19 AM