UAL Corp., the parent of United Airlines, is the latest company to retreat from defined-benefit pension plans.

Under an agreement with the Air Line Pilots Association, the bankrupt airline giant will terminate the pilots’ defined-benefit plan, according to The Wall Street Journal. In exchange, when UAL exits bankruptcy protection next year, it will issue $550 million in convertible notes to the union’s 6,600 active pilots, which they could then sell to cover some of the “lost” pension money, according to the paper.

It’s very unusual for a union to agree to such a lucrative giveback, and the agreement still awaits the approval of the union membership. But as United and other airlines fight for survival, reality seems to have set in with the pilots union, which also agreed to a 15 percent pay cut, reported the Journal. Last year the union agreed to a 30 percent cut.

Stephen Presser, the union’s investment banker, told the paper, “I’ve never seen this way of settling a pension termination,” referring to the issuance of the convertible notes. “It’s a robust capital-market solution to an otherwise unsolvable pension problem.” Capt. Mark Bathurst, chairman of the Air Line Pilots Association branch at United, said that the convertible-note provision “will be the cornerstone in making the contract acceptable” to the members.

It’s not only financially shaky companies that are backing away from defined-benefit plans. Earlier this month, IBM rocked the pension world when it announced that beginning in 2005 it will no longer offer its pension plan to new employees. And in a new study by consultancy SEI Investments of CFOs at North American companies, more than one-third of 100 CFOs surveyed expect to close their plans to new entrants within the next year.