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Airlines Look Longingly For Pension Relief

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United gets a multi-billion dollar break from a federal bankruptcy court, laying nearly $10 billion USD off its books.

A federal judge in Chicago allowed United Airlines to dump $9.9 billion in pension liabilities from its business. It’s the largest pension default in US history.

A federal agency, the Pension Benefit Guaranty Corporation, will cover $6.6 billion of the write-off. The rest of the liabilities simply vanish, and will never be paid out.

Current law requires a business experiencing problems to begin making up for pension shortages within five years. United could not meet that timeframe, and the recent court ruling was the result.

US Congressmen from Georgia want to extend that timeframe to 25 years with new legislation.

The decision by the federal court, one it characterized as the best option despite its impact, will be carefully reviewed by other airlines. As precedent, more carriers may be tempted to file for relief under bankruptcy provisions and rid themselves of pension burdens.

David Utter is a staff writer for WebProNews covering technology and business. Email him here.

Airlines Look Longingly For Pension Relief
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