G4G5 said:
So why did the PBGC all of a sudden decide to come after the pilots, with one day left in 2004?
It's a very clear message to every airline. Try to pass off your pension on us and we will force you into liquidation.
for all you conspiracy theorists,here's one other explanation. Look at the bold below for the real answer....shocker....it's all about the almighty dollar.
I don't deny the fact that UAL is rudderless and basically SUBSIDIZING low airfares through wage reduction; however, whenever decisions are made, ti's usually always tied to the almighty dollar. Not only does this move 'save' the PBGC money, but it also saves UAL in that a) the decision/outcome is made and there is no doubt going into next weeks hearing and b) more leverage for other work groups. It's all about pitting one work group against another (legacy airline mgmt 101)
United Workers Threaten to Go on Strike
Friday December 31, 9:01 am ET
By Dave Carpenter, AP Business Writer
United Airlines' Flight Attendants Threaten to Stage Intermittent Strikes if Company Ends Contract
CHICAGO (AP) -- United Airlines' flight attendants are threatening to stage intermittent strikes if the company ends their contract and imposes additional salary and benefit cuts.
Meanwhile the United pilots' union expressed outrage at a move by the government's pension agency to begin assuming responsibility for their pensions, which occurred Thursday.
The move saddles the Pension Benefit Guaranty Corp. -- already operating at a $23 billion deficit -- with another huge financial burden. The agency estimated it will be responsible for about $1.4 billion of the plan's $2.9 billion in underfunded assets, making it the third-largest claim in the history of the insurance program.
The labor strife and taxpayer burden come as United moves into its third year of Chapter 11 bankruptcy protection.
"United flight attendants have spoken loudly and clearly," said union leader Greg Davidowitch of the Association of Flight Attendants, announcing that 88 percent of members had approved taking unauthorized strike actions. "They will not allow their employer to exploit the bankruptcy process and strip them of their rights. They are ready to fight."
United said the actions contemplated by the union are prohibited by both the Railway Labor Act and federal bankruptcy law.
"We regret that the AFA continues to take actions which are simply not helpful to United, its tens of thousands of employees, or its customers," spokeswoman Jean Medina said. "We remain committed to considering all workable options and alternatives that will still provide the long-lasting savings United needs to exit Chapter 11 successfully."
The two sides remain in talks over a new contract, and no action would be taken until the matter is resolved in bankruptcy court. Hearings on United's motion to terminate the existing contract are scheduled to begin Jan. 7 if no agreement has been reached.
Negotiations also continue between United and unions representing mechanics, baggage handlers and public contact workers.
The pension agency will be taking over the pensions of more than 14,000 active and retired pilots, many of whose benefits will now be sharply reduced from what they were promised from the bankrupt airline -- a unit of Elk Grove Village, Ill.-based UAL Corp.
The PBGC already was facing the required takeover of United pension plans in 2005. By acting at year's end instead of in May, when the pilots' pensions were to have been terminated, the agency said it can avoid the annual increase in mandated benefit payments and save as much as $140 million in additional payouts.
The action follows a tentative contract agreement between United and its pilots union earlier this month, part of United's effort to slash labor costs heavily for the second time in its two-year bankruptcy restructuring.
Facing $4.1 billion in required pension contributions by the end of 2008, United said earlier this year it would terminate all its existing employee pensions and replace them with much less expensive defined-contribution funds, similar to 401(k) plans.
United issued a statement saying the PBGC's decision "changes nothing with respect to our need to terminate and replace all four of our defined-benefit pension plans." The company says it requires an extra $725 million in labor cost savings to emerge from bankruptcy "as a sustainable, profitable enterprise."
The pension agency had objected to the tentative deal with pilots, who dropped their opposition to the pensions' elimination in exchange for additional financial considerations. But it might have little recourse if the deal is approved in bankruptcy court.
"The decision to take over a pension plan is never made lightly, especially in situations where participants won't get everything the company promised but failed to fund," executive director Bradley Belt said. "I hope the plight of participants in airline pension plans puts an exclamation point on the need for Congress to strengthen the funding rules for defined benefit plans."
The pilots' union deplored what it called an "ill-timed attempt to retaliate" against it, and suggested it might be an "outrageous ploy" designed to undermine the contract ratification vote currently under way among its members.
"ALPA will vigorously oppose any effort by the PBGC to take over the plan before May 1, 2005 or to single out the pilot group for punitive and vindictive treatment in the United bankruptcy," said a statement by the leadership group of the Air Line Pilots Association's United branch.
The PBGC planned to file a formal objection to United's pilots plan in bankruptcy court by Friday, spokesman Randy Clerihue said.
www.pbgc.gov
TC
