Chicago – A federal court on Tuesday rejected an appeal from United Airlines’ flight attendants challenging a ruling that allowed the company to terminate its pension plan.
A three-judge panel of the 7th U.S. Circuit Court of Appeals said it found “no reason” to reverse a bankruptcy judge’s approval for United to transfer its plans to the Pension Benefit Guaranty Corp., the government’s pension insurer.
The Association of Flight Attendants argued that the termination violated its labor pact.
The appellate judges said the union, which includes 19,000 flight attendants at United, “will have its day in court” because it is fighting the PBGC in court in Washington, D.C.
“Everyone knows termination of the Flight Attendant Pension Plan is wrong. The PBGC must be held to answer for its actions,” AFA United president Greg Davidowitch said in a statement.
United spokeswoman Jean Medina said AFA leaders should “step up” and negotiate a replacement for members like the airline’s other unions have done.
United’s five other unions also saw their plans turned over to the PBGC as a result of that May ruling in bankruptcy court.
Transferring pension obligations to the government is estimated to save the airline about $645 million annually.
Elk Grove Village, Ill.-based UAL Corp., United’s holding company, announced in July 2004 that it would stop contributing to its defined-benefit employee pension plans. The agreement with the PBGC came after it skipped more than $1 billion in required payments.
The PBGC dropped its opposition to United’s pension termination in April in exchange for up to $1.5 billion in notes and convertible stock in a reorganized UAL.
