Machinists union sues United over pensions

The union representing United Airlines ramp workers and customer-service agents sued the company’s top executives Thursday over a decision to halt contributions to employee pension funds while United is in bankruptcy.

The lawsuit filed by the International Association of Machinists and Aerospace Workers is the latest development in an escalating controversy over United’s announcement about the pensions last week. The company says the move is necessary to conserve cash and more easily attract the financing needed to emerge from bankruptcy.

Managers of the airline also met Thursday in Washington with the Pension Benefit Guaranty Corp., which sent United CEO Glenn Tilton a warning letter calling the decision to stop contributions “inconsistent” with pension and tax laws and demanding more information.

The union lawsuit names Tilton, chief financial officer Jake Brace and chief operating officer Pete McDonald along with the airline’s pensions and welfare plans committee.

The lawsuit seeks the amount United owes the pension plans plus a court order that they carry out the funding obligation.

“The defendants had a responsibility to compel United to meet its funding obligations,” said Robert Roach Jr., general vice president of transportation for the union, which represents more than 20,000 current United employees. “Clearly, they failed.”

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United spokeswoman Jean Medina said the airline had just seen the lawsuit and would issue a comment later.

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The lawsuit was filed the same day United’s parent, UAL Corp., announced a $247 million net loss for the second quarter — its 16th straight quarter in the red. However, the company did claim a $7 million operating profit excluding restructuring and other items.

UAL’s loss amounted to $2.25 per share, compared with a loss of $623 million, or $6.26 per share, for the same period in 2003. Revenues were $4.04 billion, up 30 percent from $3.11 billion a year earlier.

The company said the slight operating gain is evidence of its restructuring progress during 19 months in bankruptcy and noted that United planes were a record 86 percent full in June.