Compliance December 6, 2004

DoL Backs United Fiduciary in Pension Payments Call

December 6, 2004 (PLANSPONSOR.com) - Labeling the matter of United Airlines' support for its pension plans "a critical issue", the US Department of Labor (DoL) told a bankruptcy judge that the air carrier must be forced to make its minimum pension payments.
Reported by

>The DoL said in court documents that it supports an earlier request made by Independent Fiduciary Services (IFS), the independent fiduciary in the case, to force the airline to pay up to $1 billion in contributions to its four underfunded pension plans, which cover 120,000 workers and retirees (See  UAL Fiduciary to ask Court for $1B in Pension Contribs ), Dow Jones reported.

>If the court agrees with IFS and labels those payments as “administrative priority expenses,” the company would have to transfer the money before emerging from US Bankruptcy Court reorganization, according to Dow Jones. United, of Chicago, says the payments should be classified as a general unsecured claims and has already vowed not to make additional pension payments because it needs to retain cash as it searches for exit financing.

>United has said that it has pension obligations of $949.2 million for 2003 and 2004, though IFS puts the amount at about $1.1 billion due to a difference over how the figures are calculated. The matter is expected to be addressed at a hearing later this month.

>UAL filed for bankruptcy in December 2002.

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