On December 17 the union representing 14,000 active and retired pilots at United agreed to drop its opposition to the airline’s request for bankruptcy court approval for termination of its current pension plan. The pilots also agreed to take a 15 percent pay cut, according to the Chicago Tribune. In exchange, United would give pilots $550 million in stock equity in the company when it emerges from bankruptcy.

The Pension Benefit Guaranty Corporation (PBGC) has asked the court to immediately block the agreement and make the government agency trustee of the pilots’ pension plan. The pilots union called the PBGC court action “vindictive” and said it would “vigorously oppose any effort by the PBGC to take over the plan before May 1,” reported the Financial Times. ALPA charges that pilots will lose 39 percent of their pension if the PBGC takes over the plan before that date, and would receive a maximum benefit payment of $44,386 a year, said the Chicago Daily Herald.

A flight attendants union representative said it “would not allow the company to take advantage of the bankruptcy process and strip them of their rights,” reported the Herald. He said 88 percent of union members had approved strike action. United has asked the flight attendants for $138 million in concessions in addition to the $314 million the union gave last year.

A spokeswoman for United said a strike by airline unions is barred by the Railway Labor Act and federal bankruptcy law.

The bosses at United, who have already cut costs by $2.5 billion annually through an initial round of concessions, had said they need another $725 million.

In bankruptcy since 2002, United has asked a court to allow the company to tear up pension agreements involving 120,000 retirees and current workers and replace defined benefit retirement plans with 401(k) contribution programs. These are invested in the stock market and are vulnerable to the fluctuations of market swings. The action by United would dump about $8.3 billion in pension debt onto the PBGC, which reportedly has a $23 billion deficit. Since Congress created this agency in 1974, airlines have accounted for 20 percent of benefits claims filed with the agency.

Meanwhile, a judge approved a similar request by US Airways to throw out its contract with the International Association of Machinists (IAM), and tear up its pension plan with the IAM and flight attendants, if the Machinists reject the concessions the airline has demanded. US Airways has filed for Chapter 11 bankruptcy protection for the second time in recent years. The wage and benefits cuts it is seeking to impose on the Machinists amount to $300 million, part of the company’s drive to force take backs of about $1 billion. IAM members are voting this month on the company’s concession demands.  
 
 
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