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 the termination violated its labor contract.
The appellate court 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 its members like the airline's other unions have done.
United's five other unions also saw their plans turned over to the PBGC as of 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 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 last April in exchange for up to $1.5 billion in notes and convertible stock in a reorganized UAL Corp., United's holding company.
Earlier this month, the PBGC backed off its opposition to a stipulation in United's plan to exit bankruptcy early next year that required a five-year waiting period before it can sell that stock. The pension agency withdrew its objection, along with other creditors, after United agreed to revise its disclosure statement - a key part of its exit plan.
The airline sought Chapter 11 protection from creditors in December 2002.
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