I just joined this forum, so excuse the timing of my response to the original UAL question.

As an American taxpayer, I am sick and tired of every company in financial trouble abusing the PBGC system to off-load underfunded pensions. In my view if it isn't 100% funded it isn't a pension, it is a fantasy. The unions in this country have all held the pension gun to managements head at every contract negotiation, with short-sighted management capitulating to their demands, knowing they would not be around to deal with the consequences.

Let me give you all an illustration that should make you sick- Over the last few years the US Steel industry has suffered significant losses due to antiquated resources and a "big steel" business mentality. The result is that 3 of the biggest players in the industry landed in bankruptcy. (Bethlehem, National, and J&L) All of them cited labor and pension costs as a major contibutory factor, in essence the problems were much deper than that. (Sounds like UAL doesn't it.) Anyway, to make a long story short, an investment firm out of Cleveland purchased these companies for pennies on the dollar, and immediately offloaded the pension obligations onto the US taxpayers. Then, they bundled up the three companies and sold the package (sans pensions) to Mittal Steel out of India for a tidy billion dollar profit. It is an outrage, and part of the reason why there is little or no sympathy on this post for the UAL (or Delta or Northwest, or USAir) pension woes. If you want to write letters to Congress, include this example on your list of grievances.

I do feel sorry for the UAl employees in this deal, but their union is the one who led them down the primrose path on this deal. What did the union do with the billions of dollars these people paid in union dues every month? If they were truly looking out for the best interests of these workers, they would have negotiated a fully funded pension plan with monthly contributions going into investment accounts. Instead the squeezed every cent they could out of these companies, completely ignored the issue of pension liabilities, and then blame the companies they helped bleed to death for the fact that they did nothing for these employees, either.

The entire airline industry is a house of cards (Alaska, Southwest, and maybe a couple of others excluded) and anyone with any concept of business can see this. Only a fool would rely on a company (or an industry) that is hemmoraghing billions of dollars of cash every year to fully fund your retirement 20 years later. Industry in this country is not a free ATM machine, and you can't have it both ways. You cannot expect to make $100k as a mechanic or 350K as a pilot and still expect the company to have the funds when you retire to pay your pensions, the math just doesn't work. Unless a company is consistently profitable, it will not be able to sustain high wage or pension costs, the party has to end sometime.

I know a bit about UAL, I flew well over a million miles on them between 1985-2000. I moved to PHX and switched to America West, which I can say has been very refreshing. UAL has a tired fleet and tired employees. There is no spark left, the service is abysmal, and customers sense it every time they fly. Why would you spend your money for this experience, when there are other choices available? That is the real reason UAL got into trouble, escalating labor/pension costs and declining revenues. This was a tightrope act for many years , until a third load factor (9-11, fuel costs, etc,) is applied. When the three meet, the results are predictable, (apparently to everyone but the employees, the unions, and airline management.)

As a businessman, I am also concerned about the unfair competitive advantage that these bailouts do for competition and fair trade in the industry. It is not fair for the US Government to allow UAL or any other airline to enhance it's competitive position against a Southwest or America West for example by cleaning up their balance sheet through the PBGC. It should be illegal, and it reeks of anti-trust when these companies all run for the bankruptcy courts with the same problem at the same time.

As I mentioned before, I feel bad for those employees whose pension are affected, but I don't feel responsible for picking up the tab for years of poor management and unrealistic labor contracts. Unless we tell Congress NO MORE on these bailouts then this crap will continue to escalate. If we need to let a UAl or Delta fail to get this changed, then so be it. The country and the industry wiill be stronger for it in the long run. As I said before, I feel bad for the employees affectred, but I don't feel financially responsible for the choices they made with regard to their employer, their union afilliation, or their pension.


My own pension plan is almost entirely self-funded through 401K contributions, and is augmented by sporadic company profit-sharing contributions. I chose not to rely on a pie-in-the-sky company pension plan or a corrupt union to provide for my future. Sure, it has involved sacrifices to make these contributions every year, but it was worth it. At least I won't have to make those same sacrifices in my golden years if my employer folds.
The old axiom 'pay me now or pay me later is appropriate here, unfortunately for a lot of the organized US workforce the axiom has been "pay me now AND pay me later" It can't and won't work.

My thoughts, for what they are worth.