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United Plans To End Employee Pensions

April 19, 2005

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United Airlines, struggling to emerge from bankruptcy, is near the end of its financial rope. Having cut operational costs as much as possible, the airline is now eyeing the elimination of the employee pension plan, and replacing it with the less costly option of a 401 (k) retirement plan.

Company officials say it has come down to the defined-benefit pension plans as to whether the airline makes it or not. They say jettisoning the pensions would save United $625 million a year, more than a quarter of the $2 billion in savings needed to get back on its feet.

United CEO Glenn Tilton told the Chicago Tribune that there is no other way to save the amount of money needed to survive. With the cuts, he says, United could be flying high again by this fall.

How do the unions feel about this? So far, they have issued no formal declarations. But the company's move against the pensions comes after unions have negotiated away previously won contract provisions.

And there is increased speculation that the company plans to ask for more sacrifice from its employees, even returning to bankruptcy court next month in an effort to overturn existing contracts with machinists, flight attendants, and others.

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