=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SFGate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/chronicle/archive/2004/08= /21/BUGCL8BVQD1.DTL --------------------------------------------------------------------- Saturday, August 21, 2004 (SF Chronicle) United gets its way in court/Union pension plan arguments rejected in favor= of airline Micheline Maynard, New York Times Chicago -- A federal bankruptcy court judge has given United Airlines another 30 days to come up with a restructuring plan, but he warned the airline and its warring unions on Friday to cooperate on a solution or he would consider allowing alternative offers for United. Judge Eugene Wedoff also approved a bankruptcy financing plan arranged by United in July after its bid for federal loan guarantees was rejected for the third time. At the daylong hearing, there were intense and detailed exchanges between Wedoff, United's lawyers, and those for its unions and creditors, regarding the airline's intentions for its employee pension plans. United said this week that it would most likely have to terminate its fo= ur employee pension plans and replace them with less-generous programs, citing a shortage of cash. Such an action has never been taken by an airline, short of liquidation. United was more conciliatory Friday, saying it hoped that it could salva= ge the plans and that even if they had to be replaced, workers would receive benefits like 401(k) retirement programs. United's unions were not reassured, however, and bankruptcy experts said the company would probably replace the retirement plans before returning to solvency. Last month, United skipped a $72.4 million pension payment and subsequently said it would not make any more pension contributions while it remains under bankruptcy protection. It filed for bankruptcy in December 2002 and had hoped to use a package of loan guarantees as the basis for a restructuring. The rejection by the federal Air Transportation Stabilization Board on June 28 sent it scurrying to find other sources of cash. Two of United's unions and the federal Pension Benefit Guaranty Corp., which oversees pension programs, filed objections to the debtor-in-possession financing that United lined up in July. They contended that United had improperly promised to terminate its pension plans so that it could land the financing package, which would have favored lenders over employees. United's lawyers acknowledged on Friday that the decision to halt pension contributions was made by management in early July and was not prompted by a request from the lenders. The lead lawyer for United, James Sprayregen, told Wedoff that United based its business case for the debtor-in-possession financing on the assumption that it would not finance its pensions while it remained in bankruptcy. "When we approached lenders, we did not include the pension contribution= s" Sprayregen said. The acknowledgment led Wedoff to deny motions by the Association of Flig= ht Attendants, the International Association of Machinists and Aerospace Workers and the pension agency seeking a rejection of the financing package. ------------------------------------------------------------------= ---- Copyright 2004 SF Chronicle