It just gets worse and worse the more you dig:
California taxpayers were left holding the bag for the corporate greed at Enron. The same is about to happen on a much larger scale with airline pension plans. In 2002, the established airlines were hit by a sudden drop in revenues (post 9/11) and, because they were highly unionized, they couldn
Randolph Fritz
And Delta is talking bankruptcy, now. It’s not surprising; the airlines will happily shed as much debt as they can manage. A contract is a contract, I guess, unless it’s with employees and pensioners.
Still be a good idea to have passenger rail; fuel oil ain’t getting any cheaper.
bryan
I admit it’s tempting to say the plan will cost “the government” $9 billion, but that’s not really the case right now. It’s going to cost all the other pension plans in higher insurance premiums.
Now, if the other airlines start trying to pull the stunt United just pulled and the Pension Guaranty Corp. starts having to absorb those defaults, we could see the whole thing bailed out by the government, which would mean we taxpayers would end up paying for it.
I don’t say that such a situation is not highly likely at this point .It wouldn’t surprise me. But it’s not the situation at present.
norbizness
Well, at least the PBGC is only $23 billion in deficit. When compared to all of the other deficits and debts plaguing this bankrupt country, it seems almost quaint.
John Cole
Yeah, but all pension funds are 300 billion in debt.
Can you say Savings and Loan crisis?
norbizness
That’s why I think all people should take advantage of my Give Money To Norbizness Fund. For a limited buy-in, you will have access to my unlimited expertise in losing vast amounts of money in the high-stakes area of the Bellagio after getting drunk on spiked White Russians. The result may be the same in terms of the amount of government cheese you will be forced to consume, but at least I got to go to Vegas in this scenario.
KC
Does anyone know how much the average CEO makes from the various froms of compensation available to him/her?
Stormy70
Norbizness – If I contribute to your fund, will I get a free White Russian?
Gary Farber
May I ‘umbly suggest seeing here for more?
Libertine
A big “cook the books” scam. Don’t set aside the proper amount of funds for the pension accounts and instead report that money as profit to drive up the company stock price. I am no expert on corporate law so I am not sure if these companies were “legally” within their rights to handle the funds as such. But even if it is legal I view it as a company entering into a contract with their workers and they should live up to their financial obligations they made for their employee’s pensions. Just like the credit card industry was rewarded, in the Bankruptcy Bill, for their bad business practices of making ill-advised predatory loans…the airline industry is being let off the hook for manipulating their company’s stock prices at their workers and most probably the taxpayer’s expense.
If this pension issue comes undone across the board, like the Amygdala post suggests (thanks for the link Gary), the problem could dwarf the S&L debacle of the 80’s…not good.
bryan
United’s CEO is making about 750,000 in salary, after taking a pay cut in Dec.
see this USAToday article:
usatoday.com/travel/news/2003/2003-04-04-united-ceo.htm
Now, that’s not counting other forms of compensation. Still, he’s not in the range with other CEOs from the looks of things.
bryan
Documents filed with the government on Wednesday showed that Chief Executive Glenn Tilton’s salary plus bonus amounted to more than USD$1.1 million in 2004, even though he accepted a pay cut during the year.
Sorry, this is more current info.
news.airwise.com/story/view/1111053350.html
Kimmitt
You know, my father-in-law, who’s a pilot with United, insists that United fully funded its pension plans until around September of 2001 — it was the collapse of United’s investments and business which were the real cause of the bankruptcy.
Dunno.