Pensions & Investment Daily - November 30, 2004

Independent Fiduciary Services, independent fiduciary for United Airlines, today filed a motion with U.S. Bankruptcy Court in Chicago seeking to collect at least $260 million in contributions and as much as $994 million from the airline on behalf of its pension plans, which total $6.9 billion. IFS asked the court to categorize the contributions UAL has refused to pay since July as "administrative expenses" so they have a high priority in the airline's Chapter 11 bankruptcy proceeding. Although the airline informed the court earlier this month that it wants to reject all of its collective bargaining agreements and terminate its defined benefit plans, IFS argued that United continued its pension plans and maintained its collective bargaining agreements in the first two years it was under bankruptcy protection. Thus, federal pension law requires United to honor the commitments it made to its employees, IFS maintained. "If the airline had ceased operations, fired its employees, rejected its bargaining agreements or terminated its pension plans on the petition date, United might not be obligated to make any further contribution at all," said Samuel W. Halpern, IFS executive vice president. "But that's not what United did; in fact, because it did precisely the opposite, the airline must now be prepared to follow through on its commitments," ….