AMFA Calls United Airlines Financing Agreement Barring Pension Contributions `Shameful'.

LACONIA, N.H. -- O. V. Delle-Femine, national director of the Aircraft Mechanics Fraternal Association (AMFA), reacted sharply to today's announcement that United Airlines parent company UAL Corp. (OTCBB:UALAQ.BB) reached an interim financing agreement that bars the firm from making pension contributions while the agreement is in force.

"It is shameful that management is seeking to take away even more from those who have already given the most--the employees and, most scurrilously, the retirees of UAL, current and future. UAL first demanded increases in contributions for promised medical insurance from those who have the least from which to pay for such coverage, and now is threatening the very source of funds needed to pay for medical insurance and the other needs of life itself," he said.

"The company cannot amend the plan to reduce accrued benefits. Accrued benefits include all benefits for current retirees and terminated vested participants. For active participants, this means benefits attributable to all service to date cannot be reduced. The only way accrued benefits can be reduced is if the plan is turned over to the Pension Benefit Guaranty Corporation (PBGC) and either the accrued benefits exceed the PBGC guaranty levels, or the PBGC ultimately cannot meet its obligations.

"The company can amend the plan to reduce or eliminate future benefit accruals. This would not impact retirees or terminated vested participants, but would reduce future accruals and the ultimate benefits for active employees. It's not clear at this juncture whether a change to reduce future accruals would require bargaining, or if the bankruptcy status would allow the company to do this unilaterally.

"From a funding perspective, there are major implications if the company does not fund its 2004 minimum contribution by September 15, 2004. The implications of delays up to that date are minor."

Earlier this week, executives of United Airlines met with national and local AMFA leaders at AMFA's invitation to discuss United's recent deferral of its $72.4 million quarterly contribution to employee pension plans. Union officials voiced concern that the deferral will cause severe long-term problems with the pension plans if United is unable to make required payments.