Bad, bad precedents:
A bankruptcy judge last night approved United Airlines' request to terminate its pension plans, clearing the way for the largest corporate pension default in history and setting the stage for a possible strike by the airline's flight attendants.
The federal Pension Benefit Guaranty Corp. will take over the airline's $645 million in pension payments and receive in exchange up to $1.5 billion in securities in the reorganized airline.
United's parent, UAL Corp., has been in bankruptcy protection since December 2002, and United executives have said the airline would have difficulty emerging unless it was able to eliminate its employee pensions. The decision means that employees could lose between 20 and 50 percent of the value of their pensions, according to estimates by labor leaders.
No airline labor group has ever gone on strike while its carrier was in bankruptcy. By eliminating the pensions, United has in effect nullified part of the workers' contract, but a question exists whether the law permits airline workers without a contract to go on strike while the company is reorganizing in bankruptcy.
United made a commitment to those workers that if they played by the rules, worked hard, and stayed with the company, they'd enjoy a livable pension in old age. The shareholders got no such guarantee, they knew their profits uncertain, that the company they were dealing with could go bankrupt. And the company, unfortunately, did poorly and is now in tough straits. But corporations should not be ripping pensions away from their employees, that simply shouldn't be allowed. And the idea that the workers can't go on strike at the very moment their retirement funds are being raided is nothing less than twisted.
Anyway, just another day in the life of the modern middle class.
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