Machinists Sue UAL Over Pensions
It's getting ugly. The controversy brewing between bankrupt
United Airlines and its unions over pensions has now spilled over
into open court. The Machinists Union is suing the world's
number-two carrier for stopping payments to the pension plan.
In the suit, the International Association of Machinists and
Aerospace Workers accuses United's top three executives of
breaching their fiduciary duty by halting contributions to the
pension fund while the airline is in bankruptcy.
News of the suit came as the second part of a one-two punch for
United. Even as the lawsuit was being filed, United posted a $247
million loss for the second quarter. That makes it 16 straight
quarters United has written the books in red ink.
United's financial continued
struggle in bankruptcy court has led to speculation among analysts
that it's going to shut down four pension funds. United admits the
pension funds are being reviewed, but also acknowledges the threat
of terminating the funds has caused "significant agitation" among
its employees.
Now, the Machinists are talking tough. "United Airlines must get
the message that they cannot abandon employee benefits at will.
They will not be allowed to continue their slash-and-burn approach
to restructuring without realizing serious consequences," said
Machinists District 141 President Randy Canale. He's also a UAL
board director who boycotted Thursday's regular meeting because of
the rising tensions over the pension fund.
"The Machinists Union believes their actions to be in violation
of the pension plans’ funding requirements, IRS regulations
and the Employee Retirement Income Security Act (ERISA). Our
complaint asks the court to compel funding of the plans," Canale
wrote in a letter to members of his local. "On advice of counsel, I
am not attending Board of Director discussions regarding pension
issues. I will not violate the law for United Airlines.
"Pensions are not a perk the company can just withhold without
consequence," he wrote. "Our pensions are deferred compensation
earned by our members with decades of hard work and dedicated
service to the company.
"United Airlines’ parasitic attempts to restructure by
destroying employee wages, benefits and morale will not succeed. By
repeatedly attacking their employees and retirees, UAL management
has jeopardized the future of the airline," Canale contended in his
letter. "Without employee support, this company will not emerge
from bankruptcy."