Machinists union sues United Airlines over pensions

Thu Jul 29, 2004

WASHINGTON, July 29 (Reuters) - Machinists at United Airlines (UALAQ.OB: Quote, Profile, Research) sought a court order on Thursday to force the bankrupt carrier to resume pension payments, saying the company cannot continue a "slash and burn" approach to restructuring.

The International Association of Machinists (IAM) claimed in a suit that company executives breached their fiduciary responsibility by skipping a $72 million contribution this month and announcing last week that the airline would not make nearly $500 million in payments scheduled this fall.

"Clearly, they failed," Robert Roach, the union's general vice president of transportation, said in a statement. "The IAM has a responsibility to utilize all possible measures to protect the interests of our members. We will not fail."

The suit, filed in U.S. District Court in Chicago, also asks the court make United find the money "from any available source" to fund employee retirement accounts.

United's pension plans cover about 120,000 active and retired employees. The airline owes those plans about $4.1 billion over the next five years.

"United Airlines must get the message that they cannot abandon employee benefits at will," said Randy Canale, president of United's machinists chapter. "They will not be allowed to continue their slash-and-burn approach to restructuring without realizing serious consequences."

A company spokeswoman could not immediately be reached for comment. The airline said last week it was deferring pension payments to cut costs and attract investors to underwrite its bankruptcy exit financing.

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