United Airlines lost nearly $250 million dollars last quarter. And it’s hoping to make some of that up by “possibly” getting rid of its pension plan.
United Airlines is out of cash and, it appears, out of options. In a bankruptcy court filing today, the company said it “likely” would be necessary to terminate and replace its employee pension plans. And that isn’t good news for its 62,000 workers and another 60,000 retirees.
“It’s not only hurtful, it’s disconcerting for the future of our airline and whether or not it’s worth staying here,” said Sara Nelson Dela Cruz, a United flight attendant.
It’s the latest bad news for united employees.
Last month, the company announced it would no longer contribute to its pension plans. And now it might ditch them altogether.
One possible sign: Earlier this week, the company fired the three executives charged with protecting employees’ retirement interests, and named itself as trustee to oversee the pension plans.
In today’s filing, the company said that given the magnitude of further cost reductions needed to create a viable business plan and attract exit financing, termination and replacement of all our defined benefit pension plans likely will be required. That sent shock waves throughout the industry.
“United Airlines has a legal obligation to make sure they are funding the pension promises it has made,” said Bradley Belt, executive director of the Pension Benefit Guarantee Corporation, based in Washington, DC.
If United Airlines terminates its pension plan, the pension funds will be taken over by the Pension Benefit Guarantee Corporation. The PBGC will pay out pensions up to $44,000 per year. Anything above that, will be lost, as will any retiree medical benefits.
“For someone who is at retirement age, you’re losing anything above the guaranteed amount from the PBGC. For someone who still has several years to work, you’re no longer accruing anything toward your future security. And for someone who has just started working here, it means probably starting to look for another job,” explained Dela Cruz.
But where are you going to go? The entire airline industry is in trouble, and this could set a dangerous precedent for all of the major airlines. Which means many airline workers might have to kiss their golden retirement plans good bye.
“You sacrifice pay, you sacrifice benefits, you sacrifice work rules to have the security of those pensions. Now that is unilaterally being taken away by this management,” Dela Cruz added.
Published: Aug 19, 2004