CHICAGO (AP) -- United Airlines is facing a critical hurdle in its bid to emerge from bankruptcy, with three of its largest unions threatening strikes depending on the results of key court hearings next week.
On Tuesday, a bankruptcy judge in Chicago is set to hear United's case for allowing the federal government's pension insurer to take over the carrier's defined-benefit pension plans. The Pension Benefit Guaranty Corp. agreed to drop its opposition to United's plan last month in exchange for $1.5 billion in future notes and preferred stock.
United, a unit of Elk Grove Village, Ill.-based UAL Corp., says it will save $645 million a year by dumping its four pension plans, which the carrier says is the last major issue it must resolve before exiting Chapter 11 bankruptcy.
But unions representing United's machinists, mechanics and flight attendants have threatened to strike if a bankruptcy judge approves United's proposal, which would result in the largest pension default in U.S. history. Workers would receive smaller pension payments if the PBGC takes over the plans.
United spokeswoman Jean Medina said Friday that the company believes a strike against it would be illegal under the federal Railway Labor Act, which applies to airline employees.
The carrier also faces the start of a bankruptcy court trial Wednesday if it can't agree on new contracts with its machinists and mechanics. It is seeking to rewrite the collective bargaining agreements to help save an additional $725 million in annual labor costs.
United reached a new labor agreement with its pilots' union early this year.
The International Association of Machinists and Aerospace Workers, which represents nearly 20,000 United baggage handlers and public contact workers, is doubtful it will reach an agreement with United before Wednesday's scheduled trial, spokesman Joseph Tiberi said Friday. Results of the union's strike-authorization vote are due Wednesday.
Richard Turk, a spokesman for the Aircraft Mechanics Fraternal Association, said it's unlikely union officials will strike a deal with the airline before the trial.
Sara Nelson Dela Cruz, a spokeswoman for the Association of Flight Attendants, said alternative plans they have presented to United have been rejected.
''They have the opportunity to seek a resolution that keeps the pension plan in place and they have failed to do so,'' she said. The flight attendants' union hoped that a strike could be averted with the replacement of the current management team, she added.
Medina said Friday that contract talks are ongoing and the carrier ''remains committed to reaching consensual agreements.''
CEO Glenn Tilton said last month United is targeting this fall for emerging from bankruptcy, but only if it is able to reduce costs enough to satisfy banks that have expressed interest in providing $2 billion to $2.5 billion in exit financing.
Morningstar Inc. analyst Chris Lozier said it's critical that United win the judge's approval to terminate its pension plans and that it avoid labor strikes.
''United has come a long way under bankruptcy, but it cannot afford to have a disruption in service for any period of time right now,'' he said.
