United Airlines Faces Largest Corporate Pension Default in History

As a result of the settlement, employees of United will receive smaller pensions that they were once promised. The Association of Flight Attendants described the settlement as QUOTE “morally criminal.” Several of United’s unions have threatened to strike if their pensions end.

The Center for American Progress [SEE NOTE BELOW] noted on Monday that the federal Pension Benefit Guaranty Corporation agreed to allow the airline to shed $10 billion in pension commitments just as President Bush signed legislations making it harder for citizens to declare bankruptcy. (DN!)

The point isn’t so much that United Airlines should or should not be able to declare bankruptcy and slough off promised benefits – maybe that really is what’s necessary for the company to become a “competitive enterprise for the long term.” The bankruptcy judge will decide.

The point is UAL is dumping $9.8 billion in retirement obligations on the federal government – in other words, on taxpayers – so it can get on stable financial footing. Besides hurting taxpayers, UAL’s failure to meet its commitements will adversely affect UAL workers. And last week, President Bush signed legislation that will make it more difficult for those same workers to file for bankruptcy and receive the same privilege as United Airlines – that is, of being able to start over when faced with an unforeseen financial crisis.

In General, the legislation will make it harder and more expensive for millions of average Americans to be forgiven trifling sums – most of which would barely make a mark on the $30 million per year credit card industry profits.

During the debate over the bill, Americans were repeatedly accused – despite directly contradictory evidence – of “abusing bankruptcy laws.” We’ll see who speaks up about UAL’s “abuse.”