That United Airlines pension bailout
One of the best examples of modern capitialism in action: company fucks up, workers get shafted:
The United pension system was a creature of five decades’ worth of collective bargaining agreements in which the airlines’ unions had agreed to forgo present compensation in exchange for employer contributions to the airline’s defined-benefit pension plans. The plans promised each employee a specific monthly benefit at retirement, based upon their length of service (beyond a minimum number of years) and their highest annual wage.
In the stock market boom years of the 1980s and 1990s, the funds became so flush that United, like many large corporations with surpluses in their pension plans, diverted some of the money earmarked for pension contributions to dividends, executive mega-salaries and general operations. Now, after five years of stock market decline, the pension fund has assets that fall short of its obligations by $9.8 billion. At the same time, rising fuel prices, declining consumer demand and fare wars have weakened the airline so severely that it has sought protection in bankruptcy court.
The combination of the gigantic shortfall in the pension plan and the financial crisis in the airline industry gave United the opportunity to shed its pension obligations once and for all. As part of its proposed plan for becoming profitable again, the airline asked the bankruptcy court for permission to hand over responsibility for its pension plans to the Pension Benefit Guarantee Corp. (PBGC), a quasi-public entity created by Congress in 1974. In sanctioning the pension termination, the court has left United’s 134,000 active and retired employees with only a fraction of the retirement income they had expected.