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May 11, 2005
Ruling Allows United to Drop Pension Plans

A federal bankruptcy judge has ruled that United Airlines can terminate its four employee pension plans covering 134,000 people, the New York Times reports.

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The ruling means that the Pension Benefit Guaranty Corporation will assume responsibility of the plans, relieving the airline of $3.2 billion in pension obligations over the next five years. United's pension plans are underfunded by $9.8 billion, according to the newspaper.

The newspaper says it would be the largest pension default since the government began guaranteeing pensions.

"It's a hammer blow to thousands of retirees who will have to somehow make do with lower pension checks," says Joseph Tiberi, a spokesman for the International Association of Machinists and Aerospace Workers. "The promises United made to them are worthless."

The company said terminating the pension plans was a necessary step so it could emerge from bankruptcy.


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