The U.S. agency that backs corporate pensions on Friday said it was moving to take over United Airlines' pension plan for ground employees, saying the plan operated by the bankrupt airline was only 30 percent funded.
The Pension Benefit Guaranty Corp. said it would guarantee payment of an estimated $2.1 billion in benefits out of the plan's $2.9 billion shortfall. The plan has more than 36,000 active and retired employees, the agency said. UAL Corp. (UALAQ.OB: Quote, Profile, Research) is the parent company of United Airlines.
A PBGC spokesman said the agency was petitioning in federal district court to take over the ground employees plan.
"The decision to end a plan is never an easy one," PBGC's director Bradley Belt said in a statement. But the agency also needed to protect itself against more losses, he said.
The PBGC is itself in the red, with a $23 billion deficit. By moving to assume United's plan now, the agency said it saved itself at least $225 million in extra losses.
The United plan had only $1.2 billion in assets to cover $4.1 billion in benefit promises, and the company has missed $363 million in legally required contributions, the PBGC said.
It noted that United's management had repeatedly stated its intention to terminate the plan. United says it needs to replace its pension plans to exit bankruptcy.
United said it was reviewing the PBGC's actions and evaluating its options.
The Pension Benefit Guaranty Corp. said it would guarantee payment of an estimated $2.1 billion in benefits out of the plan's $2.9 billion shortfall. The plan has more than 36,000 active and retired employees, the agency said. UAL Corp. (UALAQ.OB: Quote, Profile, Research) is the parent company of United Airlines.
A PBGC spokesman said the agency was petitioning in federal district court to take over the ground employees plan.
"The decision to end a plan is never an easy one," PBGC's director Bradley Belt said in a statement. But the agency also needed to protect itself against more losses, he said.
The PBGC is itself in the red, with a $23 billion deficit. By moving to assume United's plan now, the agency said it saved itself at least $225 million in extra losses.
The United plan had only $1.2 billion in assets to cover $4.1 billion in benefit promises, and the company has missed $363 million in legally required contributions, the PBGC said.
It noted that United's management had repeatedly stated its intention to terminate the plan. United says it needs to replace its pension plans to exit bankruptcy.
United said it was reviewing the PBGC's actions and evaluating its options.