TAZ MAN
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Ex-United pilots weigh future without pension
With United Airlines on a mission to end its pension plans, local retired pilots are left asking, "Where's the money?"
14,000: The estimated number of active and retired pilots at United Airlines
$2.9B: The amount that United pilots' pension plan is underfunded
$8.3B: The amount that all ur of United's pension plans are underfunded (flight attendants, machinists/ground workers, ramp workers/ticket agents and pilots)
$1.5B: Loss to pilots' pension, even if federal agency takes over pension plan
Source: Pension Benefit Guaranty Corp.
BY APRIL TAYLOR
January 30, 2005
In the 35 years he worked as a pilot for United Airlines, Ken Bradley of Williamsburg survived bomb threats, engine failures, emergency landings - even the hijacking of a Boeing 727 flight out of Denver by a man with a pistol and hand grenade back in April 1972. Bradley was the co-pilot on the flight.
The latest fear he faces is a heavy blow to his upper middle class way of living - Bradley, 64, stands to lose the bulk of his pension, as United Airlines moves toward ending its employee pension funds.
"Everything my wife and I planned on was based on my pension," said Bradley, who said he is fighting debt and searching for another source of income.
Bradley retired four years ago as a senior airline captain with United Airlines - federal law requires pilots to retire at 60. Bradley has been flying since he was 16. The retired life that Bradley said he worked hard all his life for is now shaky.
"We've been very fortunate in our lives, but we don't think it's right at this stage of life to have your old-age security ripped away from us, and that's exactly what's happening."
Bradley said he might go back to work, for his son, who is in the building industry, to make up for the pension he's about to lose.
Giving up his home is a possibility. He's also wondering how much longer he'll be able to help support his 86-year-old mother who has Alzheimer's.
"I've helped support my parents for 25 years. You start to think 'how much of that can't I do anymore?' "
Bradley also lost retirement funds that were in company stocks.
"That was going to pay off my debt mortgage," he said. "My mind is focused on survival and not knowing what's going to happen, or when it's going to happen." United Airlines, the nation's second largest air carrier, filed for bankruptcy protection in December 2002. The decision to end all of its pension plans, the company says, is critical if it is to secure the loans it needs to get out of bankruptcy.
"We're open to discussing any solutions there may be to resolving the pension issue, but right now we still believe that this is necessary for United in order to exit bankruptcy and be a competitive, sustainable enterprise," said United spokesperson Jean Medina.
UAL Corp., the holding company of United, last week reported a fourth-quarter 2004 operating loss of $493 million, compared to a $134 million operating loss in the fourth quarter of 2003.
"We're in a very difficult environment," said Medina. "Fuel prices remain at record-high levels, and air fares are at 10-year lows."
United sponsors four pension plans that cover nearly 119,00 workers and retirees, based on data by the Pension Benefit Guaranty Corp., an agency established in 1974 under the Employee Retirement Income Security Act to secure pension benefits for workers.
The company is about to become the first major legacy carrier to terminate its pilots' pensions. If United succeeds in killing its pension plans, it would be one of the nation's largest pension defaults ever.
In mid-December, the pilots union entered a tentative agreement with United to terminate the pilot pension plan this spring in exchange for other benefit perks, including larger contributions to a new retirement plan and other benefits. It left retired pilots like Bradley and Victor Shumaker of Williamsburg the most vulnerable.
"That left the retired guys out in the cold," Shumaker said.
Of United's four pensions - for flight attendants, machinists/ground workers, ramp workers/ticket agents and pilots - the pilots' pension plan carries the biggest liability.
At the end of 2004, the PBGC asked a federal court to allow it to take over the retirement plan for Untied Airline's 14,000 active and retired pilots.
The claim would be the third largest by the agency, which is already struggling under a $23 billion deficit from other claims.
With so many legacy carriers in shaky financial states - and struggling to compete with low-cost carriers and to meet escalating fuel costs - industry experts are wondering who will follow United's lead.
"In an industry that's seen a lot of changes it shakes the confidence of other airline workers who are under pension plans," said George Novak, an aviation industry analyst at the Aviation Institute at George Washington University. "You have these pilots or other employees saying, 'how safe is my pension?"
Bradley is skeptical that the deficit-laden PBGC would be able to take on the airlines' pension claim. If the agency runs out of cash, it's the taxpayers who'll ultimately get stuck, he said.
Shumaker flew with United for 33 years, and he agrees with Bradley. Shumaker took mandatory retirement at age 60 in March 2002.
"All the other airlines will follow United," he said. "A cascading effect will shut down the PBGC."
The agency's plan is to assume responsibility for about $1.4 billion of United's $2.9 billion pilot pension shortfall, so pilots still would be facing a $1.5 billion loss in retirement benefits.
United established the airline industry's first employee pension program Jan. 1, 1941. By the end of 2003, the nation's six largest legacy carriers had pension funds with shortfalls of $20 billion.
"We're kind of at somebody else's mercy, and that's not a good feeling," said Shumaker. "It's stressful. From one month to the next, I don't know whether or not I'm going to have a check or not."
Both Bradley and Shumaker declined to give salary figures. Many United pilots are entitled to pension benefits of more than $100,000 a year.
The PBGC agency's limit for a pilot retiring at 60 is $28,848 a year, though pilots who already are retired or near retirement could be eligible for more than that, PBGC officials said. For a 65-year-old retiree, the agency's payment cap is roughly $44,388 a year. "If this pension gets dumped, the maximum payoff (from PBGC) is probably going to be about $30,000-$35,000 a year, but we can't depend on that," said Shumaker.
"I based my retirement decisions on the fact that United Airlines would continue to operate and that the pension would remain," Shumaker continued. "My wife and I have really hunkered down, paid off just about everything we could pay off. We take no vacations, waiting to see what happens. Right now, I'm driving a 5-year-old car with 90,000 miles on it. I'm not about to buy a new one."
Both Bradley and Shumaker said they are anxious and angry.
"I did everything you're supposed to do in America," said Shumaker. "I tried to do everything right - went to college, served my country, did everything United Airlines asked me to do, saved my money and in the end I get hit in the face."
Bradley spent his life flying commercial planes and can rattle off the several dozen models of general aviation planes that he knows how to fly. He met his wife, Susan, a flight attendant for United, on a flight from Los Angeles to New York City.
In his 35 years with United, he's been based in Chicago, Los Angeles, Denver and in Washington, D.C., out of Dulles International Airport. He also worked in management for many years with United.
"There are more than 5,000 retired United pilots, some of whom, like me, will lose up to 75 percent of their pensions," he said. Bradley describes himself as a hardheaded Irishmen who had to become independent at an early age in life.
"It's not like anybody's ever handed anything to me," said Bradley. "I've worked all my life for this to have someone yank it away from me."
Novak said pilots like Shumaker and Bradley had a "reasonable expectation" when they retired.
" It's something that was part of their contract," he said. "The industry fell out beneath their feet, and they are suffering for it."
As for the pilots, Novak says "It makes working at the air carriers less glamorous and less secure, but it's the changing face of air carriers - and employment expectations in general."
Shumaker calls it a "nightmare."
"And we're on the leading edge of this nightmare," he said. "All I know is that I'm about to lose 75-80 percent of my income, and if that happens, I won't be the last."
With United Airlines on a mission to end its pension plans, local retired pilots are left asking, "Where's the money?"
14,000: The estimated number of active and retired pilots at United Airlines
$2.9B: The amount that United pilots' pension plan is underfunded
$8.3B: The amount that all ur of United's pension plans are underfunded (flight attendants, machinists/ground workers, ramp workers/ticket agents and pilots)
$1.5B: Loss to pilots' pension, even if federal agency takes over pension plan
Source: Pension Benefit Guaranty Corp.
BY APRIL TAYLOR
January 30, 2005
In the 35 years he worked as a pilot for United Airlines, Ken Bradley of Williamsburg survived bomb threats, engine failures, emergency landings - even the hijacking of a Boeing 727 flight out of Denver by a man with a pistol and hand grenade back in April 1972. Bradley was the co-pilot on the flight.
The latest fear he faces is a heavy blow to his upper middle class way of living - Bradley, 64, stands to lose the bulk of his pension, as United Airlines moves toward ending its employee pension funds.
"Everything my wife and I planned on was based on my pension," said Bradley, who said he is fighting debt and searching for another source of income.
Bradley retired four years ago as a senior airline captain with United Airlines - federal law requires pilots to retire at 60. Bradley has been flying since he was 16. The retired life that Bradley said he worked hard all his life for is now shaky.
"We've been very fortunate in our lives, but we don't think it's right at this stage of life to have your old-age security ripped away from us, and that's exactly what's happening."
Bradley said he might go back to work, for his son, who is in the building industry, to make up for the pension he's about to lose.
Giving up his home is a possibility. He's also wondering how much longer he'll be able to help support his 86-year-old mother who has Alzheimer's.
"I've helped support my parents for 25 years. You start to think 'how much of that can't I do anymore?' "
Bradley also lost retirement funds that were in company stocks.
"That was going to pay off my debt mortgage," he said. "My mind is focused on survival and not knowing what's going to happen, or when it's going to happen." United Airlines, the nation's second largest air carrier, filed for bankruptcy protection in December 2002. The decision to end all of its pension plans, the company says, is critical if it is to secure the loans it needs to get out of bankruptcy.
"We're open to discussing any solutions there may be to resolving the pension issue, but right now we still believe that this is necessary for United in order to exit bankruptcy and be a competitive, sustainable enterprise," said United spokesperson Jean Medina.
UAL Corp., the holding company of United, last week reported a fourth-quarter 2004 operating loss of $493 million, compared to a $134 million operating loss in the fourth quarter of 2003.
"We're in a very difficult environment," said Medina. "Fuel prices remain at record-high levels, and air fares are at 10-year lows."
United sponsors four pension plans that cover nearly 119,00 workers and retirees, based on data by the Pension Benefit Guaranty Corp., an agency established in 1974 under the Employee Retirement Income Security Act to secure pension benefits for workers.
The company is about to become the first major legacy carrier to terminate its pilots' pensions. If United succeeds in killing its pension plans, it would be one of the nation's largest pension defaults ever.
In mid-December, the pilots union entered a tentative agreement with United to terminate the pilot pension plan this spring in exchange for other benefit perks, including larger contributions to a new retirement plan and other benefits. It left retired pilots like Bradley and Victor Shumaker of Williamsburg the most vulnerable.
"That left the retired guys out in the cold," Shumaker said.
Of United's four pensions - for flight attendants, machinists/ground workers, ramp workers/ticket agents and pilots - the pilots' pension plan carries the biggest liability.
At the end of 2004, the PBGC asked a federal court to allow it to take over the retirement plan for Untied Airline's 14,000 active and retired pilots.
The claim would be the third largest by the agency, which is already struggling under a $23 billion deficit from other claims.
With so many legacy carriers in shaky financial states - and struggling to compete with low-cost carriers and to meet escalating fuel costs - industry experts are wondering who will follow United's lead.
"In an industry that's seen a lot of changes it shakes the confidence of other airline workers who are under pension plans," said George Novak, an aviation industry analyst at the Aviation Institute at George Washington University. "You have these pilots or other employees saying, 'how safe is my pension?"
Bradley is skeptical that the deficit-laden PBGC would be able to take on the airlines' pension claim. If the agency runs out of cash, it's the taxpayers who'll ultimately get stuck, he said.
Shumaker flew with United for 33 years, and he agrees with Bradley. Shumaker took mandatory retirement at age 60 in March 2002.
"All the other airlines will follow United," he said. "A cascading effect will shut down the PBGC."
The agency's plan is to assume responsibility for about $1.4 billion of United's $2.9 billion pilot pension shortfall, so pilots still would be facing a $1.5 billion loss in retirement benefits.
United established the airline industry's first employee pension program Jan. 1, 1941. By the end of 2003, the nation's six largest legacy carriers had pension funds with shortfalls of $20 billion.
"We're kind of at somebody else's mercy, and that's not a good feeling," said Shumaker. "It's stressful. From one month to the next, I don't know whether or not I'm going to have a check or not."
Both Bradley and Shumaker declined to give salary figures. Many United pilots are entitled to pension benefits of more than $100,000 a year.
The PBGC agency's limit for a pilot retiring at 60 is $28,848 a year, though pilots who already are retired or near retirement could be eligible for more than that, PBGC officials said. For a 65-year-old retiree, the agency's payment cap is roughly $44,388 a year. "If this pension gets dumped, the maximum payoff (from PBGC) is probably going to be about $30,000-$35,000 a year, but we can't depend on that," said Shumaker.
"I based my retirement decisions on the fact that United Airlines would continue to operate and that the pension would remain," Shumaker continued. "My wife and I have really hunkered down, paid off just about everything we could pay off. We take no vacations, waiting to see what happens. Right now, I'm driving a 5-year-old car with 90,000 miles on it. I'm not about to buy a new one."
Both Bradley and Shumaker said they are anxious and angry.
"I did everything you're supposed to do in America," said Shumaker. "I tried to do everything right - went to college, served my country, did everything United Airlines asked me to do, saved my money and in the end I get hit in the face."
Bradley spent his life flying commercial planes and can rattle off the several dozen models of general aviation planes that he knows how to fly. He met his wife, Susan, a flight attendant for United, on a flight from Los Angeles to New York City.
In his 35 years with United, he's been based in Chicago, Los Angeles, Denver and in Washington, D.C., out of Dulles International Airport. He also worked in management for many years with United.
"There are more than 5,000 retired United pilots, some of whom, like me, will lose up to 75 percent of their pensions," he said. Bradley describes himself as a hardheaded Irishmen who had to become independent at an early age in life.
"It's not like anybody's ever handed anything to me," said Bradley. "I've worked all my life for this to have someone yank it away from me."
Novak said pilots like Shumaker and Bradley had a "reasonable expectation" when they retired.
" It's something that was part of their contract," he said. "The industry fell out beneath their feet, and they are suffering for it."
As for the pilots, Novak says "It makes working at the air carriers less glamorous and less secure, but it's the changing face of air carriers - and employment expectations in general."
Shumaker calls it a "nightmare."
"And we're on the leading edge of this nightmare," he said. "All I know is that I'm about to lose 75-80 percent of my income, and if that happens, I won't be the last."
