- The Washington Times - Friday, August 20, 2004

CHICAGO (AP) — A bankruptcy judge refused to block United Airlines’ interim financing plan yesterday, rejecting union arguments that United didn’t try hard enough to come up with an alternative plan that would continue company contributions to employee pension funds.

The hearing came a day after the release of court papers in which United warned it “likely” that it will have to terminate those pension funds to secure the loans it needs to get out of bankruptcy.

Such a default by the nation’s second-largest airline would be the largest ever by a U.S. company, affecting about 119,000 employees and retirees.

U.S. Bankruptcy Judge Eugene Wedoff approved United’s amended financing plan, which gives United an additional $500 million and allows the airline an additional six months to pay it off, through June 2005.

The judge also approved a 30-day extension for United to work on its restructuring plan with its creditors and unions before it would lose its exclusivity, which would open the process up to outside parties.

“It’s very clear that the proposed financing does not prohibit contributions” to United’s pension plan, Judge Wedoff said in approving the financing plan. He said the financing plan improves United’s chances of getting out of bankruptcy, which is in the best interest of employees and retirees.

The judge made no ruling on whether it would be legal for United to terminate its pension plans.

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