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Last Updated: Thursday, 15 July, 2004, 06:04 GMT 07:04 UK
United Airlines defers on pension
United Airlines aircraft in new livery
United is urgently seeking extra cash
Bankrupt United Airlines has said it is deferring $72.4m (39m) in quarterly pension payments as it seeks to "manage resources and preserve its options".

UAL Corp, the airline's parent, said the move would enable it to organise its funds to exit bankruptcy.

In late June the company failed in its attempt to get a $1.1bn US government handout.

And earlier this month it increased some of its fares by 5% after a surge in crude oil prices raised fuel costs.

United, which filed for Chapter 11 protection in December 2002, has until September 2005 to make the pension payment.

'Financial sense'

The deferment does not have any impact on payments to current retirees, but has caused concern among staff.

The decision was greeted with a warning from one union representing 27,000 workers.

The International Association of Machinists said it would "fight any attempt by United Airlines to impose a permanent solution to what may be a temporary, even self-correcting problem".

But the Air Line Pilots Association said the decision made "financial sense".

However, Bill Warlick, senior credit analyst for Fitch Ratings, said the payment was small enough not to affect liquidity at United.

He warned that United's move could be a signal that further pension actions might be needed "including potentially the termination of the plans".




SEE ALSO:
United Airlines increases fares
01 Jul 04  |  Business
United Airlines loan plea fails
28 Jun 04  |  Business
United Airlines in new loan plea
23 Jun 04  |  Business
Oil price rises hit airline fares
12 May 04  |  Business


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