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May 11, 2005
Bankruptcy Reform Act In Action
While apparently doing nothing to prevent corporations who are still in business from defaulting on pensions promised to their employees, at least the new bankruptcy law won't let those lazy retirees get out from under their new found mountains of debt without going back to work. Ah, the smell of progress. Or wait, is something burning?
Judge Approves End of United Pension Plans
CHICAGO - A federal bankruptcy judge approved United Airlines' plan to terminate its employees' pension plans on Tuesday, clearing the way for the largest corporate-pension default in American history.The ruling, which carries broad implications for U.S. airlines and their workers, shifts responsibility for United's four defined-benefit plans to the government's pension agency.
That will save cash-strapped United an estimated $645 million a year, part of the $2 billion in annual savings it says it needs to line up enough financing to emerge from Chapter 11 bankruptcy as soon as this fall.
But the cost will be painful to its employees, many of whom stand to lose thousands of dollars annually off their pensions when they are assumed by the Pension Benefit Guaranty Corp. A total of 120,000 current and retired United workers are covered by the pensions, including 62,000 active employees.
Here's my nominee for understatement of the year:
"This is not in any way a joyous day."United's Chief Financial Officer Jake Brace
Posted by Mike at May 11, 2005 12:57 AM
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