United Changing The World (For Employees)
Retired United Airlines employees can expect their benefits to be cut by at least a third after the airline won the right to dump its underfunded plans on a government guarantor on Tuesday. In an historic decision, Judge Eugene Wedoff of the U.S. Bankruptcy Court agreed with United that it had no hope of emerging from Chapter 11 bankruptcy protection with the crushing expense of the four pension plans. The also-stressed Pension Benefits Guaranty Corporation, a federal agency, will take over the plans said it could only cover $6.6 billion of United's $9.8 billion pension fund shortfall. The other $3.2 billion will come directly off the checks of retirees. At the same time, United will switch its pension plans to 401(k) type plans, which will save it even more money. But it's still not enough. United wants more concessions from employees and the court may have to impose those concessions if the airline is to be saved. Analysts told the New York Times the decision, the largest-ever pension plan default, could ripple through the industry with other airlines declaring bankruptcy to escape the crippling pension payments. Meanwhile the affected unions have stopped short of calling a strike but there are threats of rotating actions to "inconvenience" the airline (which may mean inconveniencing passengers, too.) United CEO Glen Tilton, in a pre-recorded message, told employees the pension default was the hardest decision he's made since putting the airline in bankruptcy. However, Greg Davidowitch, president of the union representing flight attendants, accused the airline of trying to destroy the unions. "Management is using the bankruptcy process to achieve not what it needs, but what it wants," Davidowitch told the Chicago Tribune.. "This management team is hell-bent on destroying unionized workers."