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View Full Version : United has another problem


jfrenaye
09-16-2005, 09:52 PM
CHICAGO (AP) - The Internal Revenue Service filed a claim in federal bankruptcy court Friday saying United Airlines' parent company owes more than $114 million in excise taxes for missed contributions to its pension plans.

The filing adds to the many financial claims that UAL Corp. (UALAQ) still needs to resolve before it can emerge from Chapter 11 bankruptcy in February as targeted.

Cash-strapped UAL announced in July 2004 that it would not make any more contributions to its four defined-benefit employee pension plans. After skipping more than $1 billion in required contributions, it reached an agreement to unload the plans on the Pension Benefit Guaranty Corp., the government's pension insurer - a move saving the airline an estimated $645 million a year.

The $114.1 million owed reflects interest and penalty fees as well as funding deficiencies, the IRS filing said.

United spokeswoman Jean Medina said the company was in the process of reviewing the filing.

UAL's deal with the PBGC drew criticism from workers, unions and others, especially United's flight attendants. The Association of Flight Attendants argued that the pension termination violated its labor contract and threatened random strikes to protest the move.

A federal judge in Chicago in July rejected an appeal from the AFA that challenged the court's May ruling that allowed the company to terminate the pension plan.

Earlier this week, Delta Air Lines Inc. (DAL) and Northwest Airlines Corp. (NWAC) joined the parent companies of United and US Airways in Chapter 11. The moves were prompted by near-record fuel prices, heavy debt and pension obligations combined with intensifying competition from low-cost carriers.

stephen_s
09-16-2005, 11:35 PM
"Just when you thought it was safe to get out of bankruptcy."