United defends pension-ending deal as 'landmark' DAVE CARPENTER Associated Press CHICAGO - Entering a critical phase in its bid to get out of bankruptcy, United Airlines on Monday defended its plan to hand off employee pension fund obligations to the government's pension insurer as a "landmark achievement" in its restructuring. Unions, however, continued to raise the possibility of striking the carrier if it dumps the pensions and has labor contracts rewritten to further reduce pay and benefits without their consent. The latest sparring came on the eve of a Tuesday hearing in U.S. bankruptcy court on the controversial pension deal. If approved by a judge, the result will be the largest pension default in U.S. history, with United workers losing about a quarter of their total pensions once they are shifted to the Pension Benefit Guaranty Corp. In a 300-page court filing Monday, United emphatically stated its case for terminating the defined-benefit pensions. It reiterated that eliminating the pensions is a necessary step that would save it billions - more than $4.4 billion of funding contributions over six years and $1.7 billion in potential claims against it. The pensions currently are underfunded by an estimated $9.8 billion. "The global settlement between United and PBGC is a landmark achievement in United's restructuring," the company, a unit of UAL Corp., said in the filing. "The agreement ... also will provide significant momentum for United's emergence from Chapter 11 and its continuing efforts to become a competitive, sustainable enterprise - and create greater clarity and certainty for its customers and employees." The Elk Grove Village, Ill.-based carrier also renewed its criticism of the Association of Flight Attendants for warning of a possible strike over the pension issue, saying it has no legal right to do so. "Regrettably, AFA tries to cow this court into not approving the agreement by threatening a strike," United said in the filing. "AFA is wrong and irresponsibly so." The flight attendants maintain a strike would be allowable if United terminates its pensions - a claim legal experts are not in agreement about. They are calling for United's management team to be replaced. "We're not going to let this management take us down this path," said Sara Nelson Dela Cruz, a spokeswoman for the flight attendants union. "We'll strike to save our airline if that's what it takes." Two other unions are preparing for a potential strike if United breaks its labor contracts - a process it is set to begin on Wednesday at a separate hearing that could last a week or more. The International Association of Machinists is conducting a strike authorization vote, with results to be announced Wednesday. The Aircraft Mechanics Fraternal Association, representing United mechanics, already voted overwhelmingly in January to approve a strike if its contract is terminated. Airline analyst Ray Neidl of Calyon Securities said a strike would be "suicidal." He said United has little choice but to take on its unions over pension and labor costs. "If they don't do it, they're not going to get the financing to get out of bankruptcy," he said. "They're at the point where they need movement." United has been in Chapter 11 bankruptcy since December 2002 and has been unprofitable since mid-2000. Labor is not the only challenge facing the airline this month. After losing a federal appeals court ruling on Friday, it also risks having as many as eight 767 jets repossessed if it can't resolve deadlocked negotiations with aircraft lessors over how much it must pay to keep using the planes. The ruling by the Seventh Circuit Court of Appeals reversed a November restraining order by Bankruptcy Court Judge Eugene Wedoff preventing repossession of 14 of United's 460 aircraft. United has since rejected six of those leases, leaving eight in dispute. United now must decide whether to appeal the ruling, and whether to resume full payment in order to keep using the disputed aircraft. Spokeswoman Jean Medina said the company is exploring all its legal and business options and still hopes to reach a negotiated agreement. "In the meantime, our customers can continue to book with confidence on United and to expect the same quality of service," she said. ON THE NET www.united.com Roger EWROPS