United Pensions

[asarjfo]

United Airlines and the Pension Benefit Guaranty Corp. reached an agreement that will allow United to terminate all of its defined benefit pension plans. According to PBGC, under terms of the agreement, which still must be approved by the US Bankruptcy Court, the agency would terminate and become trustee of the company's four pension plans and its claims against the company would be settled. PBGC estimates that United's pension plans are underfunded by $9.8 billion on a termination basis, $6.6 billion of which is guaranteed by PBGC. United has said that it must terminate and replace its pension plans for its unions in order to exit Chapter 11, and PBGC earlier this year said it would involuntarily terminate the plans for the carrier's active and retired pilots and ground workers (ATWOnline, March 14). "We believe that this agreement, under the circumstances, is in the best interests of the pension insurance program and its stakeholders," PBGC Executive Director Bradley Belt said. "The PBGC has an obligation to reduce its losses for the protection of workers and retirees, other companies that pay insurance premiums, and taxpayers. By reaching a settlement now, we further that goal." In a message to staff, United reiterated that it would like to reach consensual agreements with its unions on the replacement and termination of pensions plans, but thus far it has been unable to do so. The airline and PBGC plan to submit the agreement to the court as soon as possible for approval prior to a May 11 hearing

 

[FlyBoeingJets]

Reuters
UAL Settles Pension Claims
Wednesday April 27, 11:17 am ET

CHICAGO (Reuters) - United Airlines (OTC BB:UALAQ.OB - News) has agreed to pay up to $1.5 billion to settle claims by federal pension insurers in bankruptcy court and clear the way for the government to assume control of its underfunded employee retirement accounts, court documents showed on Wednesday.

The No. 2 U.S. airline, a unit of UAL Corp. (OTC BB:UALAQ.OB - News), and the Pension Benefit Guaranty Corp. reached an agreement on Friday for the agency to take over the airline's four major pension plans, which are underfunded by nearly $10 billion.

According to details of the agreement disclosed in court papers, the government said it would drop claims as an unsecured creditor in exchange for $1.5 billion that will be received once United emerges from Chapter 11 protection. United says fair value of the notes issued in the settlement will probably be less than the face value.

The deal requires court approval, and Judge Eugene Wedoff of the U.S. Bankruptcy Court for the Northern District of Illinois was expected to make a ruling on May 4.

United said that if the deal wins court approval, the carrier would include in its reorganization plan a stipulation that the PBGC would receive $500 million in 6 percent senior subordinated notes, $500 million in 8 percent contingent senior subordinated notes and $500 million in 2 percent convertible preferred stock.

United said the deal is one of the linchpins of its efforts to obtain $2 billion to $2.5 billion in financing commitments it needs to exit bankruptcy.


This is why Tilton and company make the big bucks

Getting the government to suck up $10 Billion in obligations for a $1.5 Billion settlement. Part of the settlement is convertible stock.

Should the US gov have stock in UAL????? Once again a government bailout. If I was a NWA or DAL guy I would be screaming "NO FAIR!"

 

[Jetjockey]

Should the US gov have stock in UAL????? Once again a government bailout. If I was a NWA or DAL guy I would be screaming "NO FAIR!"

Where my friend did you ever get the impression that life was fair?

 

[FlyBoeingJets]

Where my friend did you ever get the impression that life was fair?

No, I'm not one of those with the bumper sticker "Mean people suck". I'm just looking forward to the government having stock in UAL and all the others crying foul until every big carrier gets another hand out. Then all the little guys scream "Where's mine too". It won't end with UAL.