Machinists Sue UAL Over Pension Payments

Saddled with high fuel costs and lower air fares, the corporate parent of United Airlines announced its 16th consecutive quarterly loss yesterday and one of the airline's unions sued over the carrier's decision to halt contributions to its employee pension funds while it remains in bankruptcy protection.

The International Association of Machinists and Aerospace Workers, which represents United's ramp workers and customer service agents, accused United's senior executives in the lawsuit, filed in U.S. District Court in Chicago, of breaching their fiduciary duty.

United, which has a hub at Dulles International Airport, said last week that as part of its new agreement with lenders, it would not pay into its pension plans this year.

The lawsuit named Glenn F. Tilton, the airline's president and chief executive; Frederic F. Brace, chief financial officer; Peter D. McDonald, chief operating officer; and the UAL Corp. board of directors' Pension and Welfare Plans Committee. The union is seeking judgment against the three executives for the amount owed to the plans. The suit also asks the court to require the three executives to secure funding for the plans.

"United Airlines must get the message that they cannot abandon employee benefits at will," S.R. "Randy" Canale, president of the union's District 141, said in a prepared statement. "They will not be allowed to continue their slash-and-burn approach to restructuring without realizing serious consequences."

Canale, who is also on the UAL board, declined to attend a scheduled board meeting yesterday.

UAL spokeswoman Jean Medina said the union's claims were "baseless."

"We think it's unfortunate that the IAM has decided to personalize this by naming individual officers when it was a corporate decision to work to secure exit financing," Medina said.

United managers met yesterday with officials from the Pension Benefit Guaranty Corp., the federal agency that insures pension payments. Sources familiar with the meeting said both sides had to schedule another session since United's senior officers were not present because of the airline's board meeting.

The pension agency this week sent a letter to United objecting to the airline's failure to make the legally required pension payments and demanding to know how it intended to meet its obligations as it seeks to emerge from Chapter 11 bankruptcy protection.