Broken promises:

United Airlines won its bid to terminate its four employee pension plans this evening, clearing the way for the largest pension default in corporate history. The airline’s unions denounced the decision by a federal bankruptcy court and vowed they could go on strike against United over the move. After a lengthy hearing in a Chicago courtroom packed with company employees and retirees, Judge Eugene Wedoff of the United States Bankruptcy Court sided with United in its contention that it could not emerge from bankruptcy protection with its pension plans in place. United has been operating in Chapter 11 bankruptcy since December 2002. The ruling potentially will save United billions of dollars a year in pension contributions. The airline plans to switch from conventional retirement programs, called defined benefit plans, to defined contribution programs like 401(k) plans…

Late last month, the Pension Benefits Guaranty Corporation, a federal agency, agreed to assume control of United’s four union pension plans. The agency said the plans, covering pilots, flight attendants, mechanics and other workers, were underfunded by $9.8 billion, an even bigger deficit than the airline estimated at the end of 2004. For United’s retirees, the takeover will mean reductions in payments, because the government’s insurance has limits. The government estimated last month that the pension agency would cover about $6.6 billion of United’s shortfall. The remainder, about $3.2 billion, will be borne by United’s retirees, in the form of benefit reductions…The four pension plans cover about 121,500 employees and retirees.