(July 15, 2011) — United Continental Holdings Inc., the parent of United Airlines, will begin making payments on a $500 million bill to the Pension Benefit Guaranty Corporation (PBGC).

The deal stems from when United Airlines was in Chapter 11 bankruptcy protection. The airline ended its pensions in 2005, and handed the responsibility over to the PBGC. When the pension agency took over United’s four pension plans, guaranteeing a total of $6.6 billion, the plans were underfunded by $9.8 billion.

The note — which came as a result of the company reaching a $3.5 billion profitability threshold — carries an 8% annual interest payment to PBGC and will mature in June 20, 2026.

The federal agency, which assumes the pension liabilities of companies in bankruptcy, has been pummeled in recent years by the economic downturn, which has caused a rising number of corporate bankruptcies and pension failures. In November 2010, the PBGC revealed that its total deficit had increased 4.5% to $23 billion in the year to September 30, up from $22 billion the previous year.

“This financial position is the result of inadequate plan funding and misfortunes that have befallen plan sponsors. In part, it is a result of the fact that the premiums PBGC charges are insufficient to pay for all the benefits that PBGC insures, and other factors,” the government’s pension insurer said last year. The PBGC said at the time that its total obligations increased by $11.5 billion to $102.5 billion, yet it had $79.5 billion in assets to pay those obligations. “The deficit — the difference between our assets and liabilities — is not an immediate cash crunch, since we have the assets to pay for the foreseeable future,” PBGC spokesman Jeffrey Speicher told aiCIO.