Where's my pension ?
May 11, 2005 5:33 PM   Subscribe

UAL (United Airlines) dumps four pension plans[optional audio interview with Businessweek expert] ; bankruptcy court authorizes shifting of USD 5 billions (allegedly largest pension default in U.S. history) in pension obligations to the Pension Benefit Guaranty Corp. As a result the burden of private failure and incompetency will be shared by all taxpayers (whose taxes finance PBGC which is already operating on a 23 Billion deficit) and by beneficiaries of the pension plans who will see their pension severely cut : pilots from 100K to 30K pensions but also less privileged workers will be hit. For instance Mrs Tamuk, spokeswoman from Association of Flight Attendants said her pension will be reduced from $1,700 a month to $800 a month.
posted by elpapacito (94 comments total)
 
I am unfortunately so filled with rage over hearing about this that I have nothing constructive to say, except that I cannot believe it is legal to steal from your own fucking employees like this.
posted by Civil_Disobedient at 6:00 PM on May 11, 2005


This gives me an idea....Let's Privatize Social Security!!!
posted by destro at 6:00 PM on May 11, 2005


I cannot believe it is legal to steal from your own
fucking employees like this.


What, exactly, would you have done differently given that UAL is already bankfrupt and broke? Where exactly is the money coming from? I know, let's raise fares! That won't make customers switch to other airlines at all!!!
posted by thedevildancedlightly at 6:05 PM on May 11, 2005


What, exactly, would you have done differently given that UAL is already bankrupt and broke?

Liquidate their assets. They have capital stock worth billions of dollars; maybe tens of billions.

The courts need to stop allowing serial bankrupcy by the big airlines, and the government needs to stop bailing them out with cheap loans and partial buy-outs. It's breaking the market.
posted by mr_roboto at 6:09 PM on May 11, 2005


I'm not saying that it's a good thing, but given that a court mandated the move I think "stealing from your own employees" isn't exactly the right phrasing.

A more balanced source than the Union site: International Herald Tribune.

It sounds like UAL was about $4 billion short. What could they possibly do to make up $4 billion given how f'd the airline industry is?

Better idea: let workers save for their own retirement instead of relying on companies that flash in and out of existance. The company-sponsored pension plan seems like a quaint anachronism to the days when people worked one job for life.
posted by thedevildancedlightly at 6:10 PM on May 11, 2005


Well, destro, the whole idea behind privatizing Social Security is the knowledge that many (if not most) private pension plans are almost-criminally underfunded, and sometimes their value is completely dependent on the original company's stock price, or nearly so.

The hope is that launching all these private accounts all at once will cause an enormous inflation in stock prices to occur. Ideally, an underfunded pension plan would become fully-funded practically overnight just from the new influx of cash into the stock market. This is of course also known as a bubble. That's what happens when you inject a trillion dollars or two into any stock market.

Of course where that 1 or 2 trillion in initial investment is supposed to come from, no one can tell.
posted by clevershark at 6:11 PM on May 11, 2005


They really do have to stop the buyouts and let some airlines go under. Sell the planes and the gates and fund the pensions. It's disgusting that they're allowed to do this.
posted by amberglow at 6:13 PM on May 11, 2005


Liquidate their assets. They have capital stock worth billions of dollars

That assumes that there is somebody willing to buy $10 billion worth of used aircraft. Anybody? Anybody?

Their balance sheet shows $14 billion in hard assets, $18 billion in liabilities other than the pension plans. Liquidating the company to pay off just the pension would screw the shareholders (which, ironically, include a lot of pension plans), other creditors, the public, and the union workers themselves since they would then have pensions but no jobs.

Liquidation would put the entire union out of work. Doesn't solve the problem.
posted by thedevildancedlightly at 6:14 PM on May 11, 2005


Sell the planes and the gates and fund the pensions.

That screws workers who are farther from retirement who will be put out of jobs, just to benefit workers closer to retirement.
posted by thedevildancedlightly at 6:16 PM on May 11, 2005


Liquidating the company to pay off just the pension would screw the shareholders (which, ironically, include a lot of pension plans), other creditors, the public, and the union workers themselves since they would then have pensions but no jobs.

Also known as cutting off your nose to spite your face. But hey! As long as the "company"* is duly punished.

*sometimes referred to as a collection of employees working for a common goal.
posted by pardonyou? at 6:22 PM on May 11, 2005


That screws workers who are farther from retirement who will be put out of jobs, just to benefit workers closer to retirement.

Great. Not only will their current obligations be honored, but it puts a cap on the number of people they can fuck over.
posted by Armitage Shanks at 6:23 PM on May 11, 2005


Better be management and executives sharing this pain. But I doubt it.
posted by ROU_Xenophobe at 6:23 PM on May 11, 2005


If they have more liabilities than assets, they should liquidate like we have to when we declare bankruptcy. They made a commitment to their creditors and their pensioners. Their current employees know they're in trouble, and have known for years. We as a country can't afford to keep bailing them out anyway--we already did it at least once, after 9/11.
posted by amberglow at 6:24 PM on May 11, 2005


Liquidating the company to pay off just the pension would screw the shareholders

Funny, I thought shareholder's deserved the profits they got because they assumed risk...

Worker's pensions on the hand were promises and the companies were supposed to fund them as an ongoing business expense...instead they didn't...Whoops.

It may be legal but it still seems like an unsolicited finger up the anus.

I will never accept a company controlled pension as part of a compensation package. I am smart enough to know that only I have my best interests at heart.
posted by srboisvert at 6:26 PM on May 11, 2005


they should liquidate like we have to when we declare bankruptcy

Seems pretty short-sighted.

I think the idea of not liquidating in bankruptcy is that the company can recover and pay off more if the court allows a restructuring instead of screwing the current creditors out of $4 billion. That's why the court is involved - if it looks like the creditors will get more by allowing the company to continue to operate then they'll let the firm stay intact long enough to generate more money to pay bakc the creditors
instead of ripping the firm apart and putting all of the workers out of jobs the moment that assets become less than liabilities.

I will never accept a company controlled pension as part of a compensation package. I am smart enough to know that only I have my best interests at heart.

That (401k, Roth IRA, etc) seems to be the point. You are going to look out for #1 far better than anybody else.
posted by thedevildancedlightly at 6:27 PM on May 11, 2005


Metafilter: An Unsolicited Finger Up The Anus.
posted by fandango_matt at 6:32 PM on May 11, 2005


The problem is that we expect certain economic activities to become profitable and remain profitable. For-profit air travel may have been more viable in the past....but something has obviously changed.

Air travel is expensive. It is expensive to maintain a dependable fleet of aircraft. It is also expensive to acquire and retain the human assets required to operate that fleet. There is also the logistical support on the ground that keeps the planes safely in the air.

The breakdown of one airline and it's "monetary mugshot" is in no way indicative as to the true cost of ensuring that anyone of us USians can fly comfortably from sea to shining sea and back again.

Anyway

I say federalize it all. "We the Poeple" have subsidized the bulk of it anyway. Make the true costs apparent......and then build some damned high speed rail.
posted by PROD_TPSL at 6:33 PM on May 11, 2005


Having just been forced to quit job because I was in a union, I'm probably a little bitter about the treatment of employees, but that said, I can only say that while I find it disgraceful that employers can do this, I can't say I find it surprising.

The disgusting part is that it's legal to do it.

And as for those who say "why not?", well, let's see you work your ass off in a job you're lucky to have in a messed up global economy (especially in the airline business) while you're struggling to raise a family, while in the meantime, the executive team that pays your wages get to live it up, in the knowledge that if you weren't working for them, they wouldn't have a job to go to.
posted by tomcosgrave at 6:38 PM on May 11, 2005


For-profit air travel may have been more viable in the past....but something has obviously changed....I say federalize it all.

Bullshit. Southwest, America West, JetBlue, and AirTran are all booming. They're doing great business and making large profits.

It's the traditional carriers that are struggling. And it's the traditional carriers that are allowed by the courts to enter bankruptcy in a serial fashion, and are constantly bailed out with low-interest government loans and buyouts. The market can't function properly if these companies never have to balance their books or compete on a level playing field. It's screwing us all over.
posted by mr_roboto at 7:24 PM on May 11, 2005


what mr_roboto said--we keep propping up the old carriers while more and more people don't use them, and take the new discount carriers.

Why is it that these airlines (Delta, United, American) get bailed out over and over? For all the talk about free markets, you'd think that just once in a while the govt would let the free market work--especially when it costs us trillions for nothing in return.
posted by amberglow at 7:36 PM on May 11, 2005


I wonder how many UAL pensioners are going to be forced into bankruptcy, now that their guaranteed benefits will be cut. Oh, yeah... Sorry about your house, your car, the nest egg for the grandkids... But hey, don't cry, Glenn Tilton feels your pain (though I doubt he or his will be eating dog food in their old age...)
posted by Chrischris at 7:58 PM on May 11, 2005


Delta, UA, and American have "Long Haul" international service. These smaller carries have relatively limited service to other nations, all of it is limited to the western hemisphere.

I highly doubt that Southwest, JetBlue or AirTran could assume those long haul services. Who has the fleets of 747's and 777's

That is why we will continue to bail them out again....again....and again.
posted by PROD_TPSL at 8:01 PM on May 11, 2005


In all the parties involved, the shareholders rank pretty much last, certainly behind employees. The owners (shareholders) have incurred debts beyond their capacity to pay. The court has decided that by moving one large burden, pensions, away from the company and onto the federal insurance, there is a chance that UAL may survive and thus more of the creditors may be payed off. This is in effect a court mandated federal bail-out, with the unfortunate effect that many of the workers, especially higher paid one, get screwed.

To a large degree this comes about because the rules governing pensions favor the employer over the employee, especially when it comes to how much a company must put aside to pay future pension costs, how it does that and how those funds are protected. If the reserves were higher then this wouldn't happen. However, that would lock up more money for all companies and lessen what they could plow back into the business. It sucks for UAL, especially UAL employees, but that is partly why we have pension insurance and lax rules. It protects pensioners but also stimulates business by freeing up money to reinvest.

If you work in a troubled industry, or a volatile one, a defined contribution pension plan probably beats a defined benefit plan. The risk of asset growth is on you, but the assets themselves are much more protected. In a defined benefit plan, like UAL, the risk of asset growth is born by the company, but the assets are not really protected from creditors.

Next up, Ford and GM.
posted by caddis at 8:07 PM on May 11, 2005


Hey.....it was fun while it lasted......market competitiveness and all.

It's gonna be interesting watching iconic American companies fall into the insolvent dust.

Maybe I shouldn't have bought that fuel efficient Nissan.
posted by PROD_TPSL at 8:13 PM on May 11, 2005


Fuck you, thedevildancedlightly. The very idea that a company is more beholden to its stockholders than its employees is ludicrous. Airlines are allowed to exist in this state of perpetual bankrupty that is absolute bullshit.
posted by graventy at 8:18 PM on May 11, 2005


PROD_TPSL
Delta, UA, and American have "Long Haul" international service. These smaller carries have relatively limited service to other nations, all of it is limited to the western hemisphere.

Then why do other, non-US carriers like Cathay Pacific, Singapore Airlines, Emirates, Qantas, etc. continue to report strong profits? They fly about the same mix of distances and frequency, but actually know how to make money (and are a hell of a lot better to fly from the consumer's standpoint).
posted by nathan_teske at 8:32 PM on May 11, 2005


Fuck you, thedevildancedlightly. The very idea that a company is more beholden to its stockholders than its employees is ludicrous.

Classy.

No need to get hostile. I said _also_ beholden, not _more_. Please relax and tone down the personal attacks on people who have different viewpoints.
posted by thedevildancedlightly at 8:36 PM on May 11, 2005


Actually, if you read the entire sentence, it continued with "and the current employees, who would be out of a job." The point was that liquidation would have side-effects, but you didn't make it that far before breaking out the personal attacks.
posted by thedevildancedlightly at 8:41 PM on May 11, 2005


Our Government in a Nutshell--...While the Bankruptcy Bill was steamrolling through Congress, Dick Durbin offered an amendment that would've "protect[ed] employees and retirees from the common corporate practice of discharging liability for retirement plans, retained earnings and matching funds when businesses file Chapter 11." This is really, if you think about it, quite amazing. The Bankruptcy Bill made it harder for individuals to declare and survive bankruptcy. Durbin offered an amendment that would've forced corporations, when they were declaring bankruptcy, to fulfill their stated financial obligations to their employees. These financial obligations are retirement plans, matching funds, and so forth. They are, in other words, the exact same long-term assets that are supposed to keep hard-working Americans out of bankruptcy court! ...
posted by amberglow at 8:41 PM on May 11, 2005


Airlines traditionally don't make a good return on investment. From roughly the 1950s to present, their ROI as an industry is between 1 and 2 percent. Sure some are higher and some are lower... point is its a relatively low margin business.

In theory I like the idea of the PBGC as its inevitable that large businesses will occasionally fail and ideally the workers shouldnt lose everything. OTOH, its the taxpayer picking up the tab.

There's no ideal solution to the problem of US workers saving for retirement. Ultimately we just need to save more, and there's no way around it, nor are there any free lunches to be had. One of the best ideas I've heard, however, is making the "default" setting of your 401(k) at work to be saving 10%. So many people don't elect to use their 401(k) out of ignorance/laziness, etc. If it were set at 10%(or pick whatever figure you like) you'd have to make a conscious decision not to save, thus more people would save.... Might not work, but I thought it was a good idea.

posted by MjrMjr at 8:45 PM on May 11, 2005


UAL. Kill it. Liquidate its assets, pay off the largest creditors, and be done.
Same with GM.
Same with Ford.
Same with any company whose failure is so catastrophic as to lead to bankruptcy.

Devildancedlightly, pardonyou?, and every other free-market advocate, it's time to put up or STFU. Do you believe in capitalism, or don't you? Because if you start hemming and hawing and dragging out tired excuses (poor employees! poor stockholders! poor creditors! wah wah wah!) for allowing these entities to keep on sucking at the governmental teat, your rhetoric is exactly that, rhetoric. So, guys, are you capitalists or just crypto-socialist corporatists?
posted by Chrischris at 8:46 PM on May 11, 2005


thanks for the privatization pamphlet there shark.
posted by destro at 8:53 PM on May 11, 2005


....crypto-socialist corporatists

Nice! I gotta remember that one.
posted by destro at 8:54 PM on May 11, 2005


Chrischris - so you don't think there's an in-between? No way to have a free-market system but balance out the hardships to employees? Either I'm a complete socialist or I don't think the government should intervene at all?

Do you think that the right answer is to allow the employees to go broke without pensions? Sucks for them right? They should have known better than to sign up with United. Grandpa might be eating cat food this month, but that's his fault for being an airline mechanic. Man, tough shit for him.

Note that liquidating UAL wouldn't solve the pension problem since they have more liabilities than assets.

It's all free-market or all socialism, right? Life is completely black-and-white to you? Do you want to roll back the New Deal, or go socialist?
posted by thedevildancedlightly at 9:00 PM on May 11, 2005


Oh yeah, I can go all kinds of places on Jet Blue, from Georgia. And Southwest (nearest airport with SW as a carrier - Birmingham, AL) too! Sheesh, even if I wanted to take Jet Blue (nearest location - New Orleans, nine hours away from me), I could only go to New York, Burlington, Rochester or Syracuse. NYC? Fine. But, Syracuse? And Air Tran sucks. And it's being undercut by the apparently irresponsible and debt-heavy Independence Air. And none of these airlines fly out of anything but airports in major cities and cities with a significant amount of tourist dollars. That, or they receive major local subsidies to come into the smaller and mid-sized cities. Yet people still yell about how we subsidize Amtrak.
posted by raysmj at 9:04 PM on May 11, 2005


but that is partly why we have pension insurance and lax rules. It protects pensioners

It doesn't seemed like that worked here. Or are you saying it worked because people are getting half their pension instead of none?

Better idea: let workers save for their own retirement instead of relying on companies that flash in and out of existance. The company-sponsored pension plan seems like a quaint anachronism to the days when people worked one job for life.

I look forward, nearing retirement 25 years from now, to hearing the latest young conservative incarnation explaining to *my* generation how, oops, yet again, looks like the fruits of the tree of capitalism actually lies (cranes neck): just over yonder.

I wonder what the Wal-Mart greeter job of my day'll be?
posted by hackly_fracture at 9:05 PM on May 11, 2005


You don't even recognize that a company should honor its promises to those that faithfully worked for them, thedevil, and you don't acknowledge that golden parachutes for execs get paid regardless of whether grandpa starves. You don't even recognize that if it was a textile company it would have gone bankrupt years ago without bailouts. Why is an airline treated differently? The employees have options that the retirees don't have--realize that. There are many airlines they can work for.
posted by amberglow at 9:05 PM on May 11, 2005


Do you believe in capitalism, or don't you?

Entirely false dichotomy.

To give you a high-school level economics and history lesson, I think you're trying to refer to a "laissez-faire" system in which the government plays no role in the market. By the end of the Great Depression the last nail had been driven into the coffin of that theory.

No reputable capitalism theorist these days denies that there are plenty of times when there are market failures and it is appropriate for government to intervene. Some people believe it should be more often, some people beleive it should be less. But to say that the government has no role in the market is not "capitalism", it's "laissez-faire".

Modern capitalism was formed in part out of the New Deal which recognized that the market on its own did not work perfectly. Social security, the FDA, the FCC, the SEC, and all of the rest of the alphabet soup of government agencies were born of the recognition that the law needed to correct for private market failures.

Other things like Intellectual Property laws are premised on the fact that the market does not fully account for public goods.

To allow the government to have a hand in the market is not "not being a capitalist" or "being a cypto-socialist coporatist" (incidentally, "corporatism" is a very specific term which you have mis-used, generally it refers to handing off government functions to private companies), but rather recognizing advances in economics and politics that have occured in the last 100 years.
posted by thedevildancedlightly at 9:09 PM on May 11, 2005


ray, how about all of these regional and feeder airlines? ComAir, America West, SkyWest, Atlantic Southeast, Atlantic Coast, Mesa, Frontier, Independence...
posted by amberglow at 9:12 PM on May 11, 2005


The most classic sort of corporatism doesn't mean handing off government functions to "companies," but groups more akin to what we call "interest groups," only ones that are more umbrella organizations for different trade sectors.
posted by raysmj at 9:13 PM on May 11, 2005


a great site for everyone
posted by amberglow at 9:14 PM on May 11, 2005


Over the long term airlines do not make money. One of the problems here is that during the 90's the government allowed pension plans to be under-capitalized. If you're going to argue for unregulated free markets, then you should also argue that companies should not be able to mis-represent their financial condition to investors and it seems to me that under-funding a pension plan to improve earnings is a mis-representation.
posted by rdr at 9:14 PM on May 11, 2005


Atlantic Southeast is run by Delta. Independence, which I just mentioned, is up to its ears in debt, and probably won't make it through the next couple of years, and threatens to drag its competitors down with it through undercutting them on fares. Frontier? Here ya go.
posted by raysmj at 9:17 PM on May 11, 2005


You don't even recognize that a company should honor its promises to those that faithfully worked for them, thedevil

They should, yes. If I wrote the laws in this country it would be an absolute requirement that company-sponsored pension plans should be fully funded in advance and that any investments made by the pension plan could not include company stock. I think it's absolutely a shock that the pension plan is underfunded and there should be laws to prevent this from happening in the future.

However, what I'm debating here is what to do once it's already too late. The pension plan is $4 billion underfunded, nobody wants to buy $10 billion worth of used planes, and the company is alredy up to its eyeballs in debt.

and you don't acknowledge that golden parachutes for execs get paid regardless of whether grandpa starves

All the moral outrage in the world at that situation isn't going to put food on grandpa's plate, nor would firing every executive and cutting out their golden parachute suddenly create $4 billion in extra pension money. We can be outraged all we want, but it's entirely irrelevant.

if it was a textile company it would have gone bankrupt years ago without bailouts

First, the US does take protectionist measures for a large number of industries. Most recently the US imposed protectionist measures on steel until the WTO threatened huge sanctions.

Second, there are a lot of reasons why there is more public benefit to having a domestic airline industry compared to having a domestic textile industry. Again, there are market externalities to airlines that are greater than to textile mills. Airlines allow you and I to travel all around the country, and the airlines will never be able to capture every dollar of benefit that brings to you and I. Textile mills give workers all sorts of lung diseases and chope their fingers off in looms, costs that the state will have to recoup through medicare and medicaid payments.

Third, who says this is permanent? If the pension plan is bailed-out and UAL still fails on its own maybe the governmetn will let the industry die. But in the process it's probably a good thing to let employees down gently.
posted by thedevildancedlightly at 9:17 PM on May 11, 2005


The most classic sort of corporatism doesn't mean handing off government functions to "companies," but groups more akin to what we call "interest groups," only ones that are more umbrella organizations for different trade sectors.

Thanks, that's probably a better definition.
posted by thedevildancedlightly at 9:19 PM on May 11, 2005


Just to be clear, this whole fucking thing outrages me. Basically, what has happened is that I as a taxpayer now have to pay for UAL managemement's short-sightedness and fucking incompetence, even as they go along their merry way. I have a whole world of sympathy for the UAL employees who, through absolutely no fault of their own (ever heard of a corporation that allows a machinist to give his opinion on the prudence of whatever bright new management idea some fucking MBA dreams up on the golf course. I thought not.) are now screwed. Basically, this is a shifting of responsibility from a private entity onto the commonwealth--an occurance that should be absolute anathema to any true free-market advocate. Yet, here we have the very same advocates (the market knows best! Blah, blah, fucking blah) hemming and hawing when the chickens come home to roost. All of which leads me to believe that what passes for free-market rhetoric is just a bunch of bullshit slung around by folks who are more interested in preserving the social and economic status quo (with them on top, of course) than in actually--you know--advancing the capitalist gospel they expect us all to bow down before. Fucking hypocrites.

On preview: Devil, spare me your faux-concern for the fate of the employees. If this were really the case, you would be demanding that shareholders be responsible for paying out-of-pocket for the shortfall. After all, this is now an ownership society and they are the titular owners, whose decisions (or those of their employees--the board and management of UAL) led to this impasse. They reap the profits of good decisions, and I see no reason why they should not have to cover the cost of bad ones. I don't see you or anyone else making that leap. Instead, I see a willingness to shuffle off the real financial burden for management's fuck-ups onto yet another class of innocent victims--namely, the taxpayers who will have to pay for this fiasco.
posted by Chrischris at 9:24 PM on May 11, 2005


tddl,

I actually hear you here; certainly I think liquidation is a bad move. And I understand you're coming from a "damage has been done" mindset, which may not entirely jibe with those of us thinking about putting "food on grandpa's plate," though I don't see where your views get him all sated, either.

So but then why not move forward by:

a. Putting into place your idea of fully funded pensions bein mandantory

b. Acknowledging that the mistakes made heretofore were demonstrably not the mistakes of the workers, and that therefore their pensions wil be fully funded

c. After a careful review of whether or not Delta, say, can be made Cathay Pacific-y profitable, if it turns out it cannot be, either let it die or let the government take it over to provide the common good you say it (by which I mean, easy airflight) is?

PS feel weird being "attacked by both sides?" :)
posted by hackly_fracture at 9:29 PM on May 11, 2005


If this were really the case, you would be demanding that shareholders be responsible for paying out-of-pocket for the shortfall

Um, our whole economy works on the premise of limited liability for shareholders. To hold otherwise would pretty well destroy the ability of firms to raise capital. There would be a massive increase in the cost of capital, a huge shift away from equity financing, and the US economy would more or less grind to a halt.

To put it in terms that you might understand: nobody would ever invest in United if they knew that they would personally be on the hook when a United plane went down. There would be no United, Delta, American, Southwest, or ATA.

To give a more clear example: CALPers is the organization which controls the pension funds of California public employee. CALPers is one of the biggest market movers and is pretty famous for using its weight to make positive changes. I wouldn't be suprised at all if CALPers owned some UAL stock. Your proposal would be to open up the CALPers pocket book to UAL employees. If that's not robbing Peter to pay Paul then I don't know what is. And before you get all "there aren't many pension plans in the market", know that 15% of all financial services assets (bonds, stocks, etc) are owned by pension plans.

In reality, what would happen if your proposal were implemented? Every US investor would shift their money overseas and no US company would ever be able to raise capital in the US equity market. In other words, it'd be impossible for firms to get the money to build new factories, buy new planes, etc.

the market knows best! Blah, blah, fucking blah

Read the economics lesson above. No serious economist today believes that the market always knows best. To say otherwise is to construct a giant strawman which pretty much everybody agrees is wrong. There are market failures all the time, that's a large part of the reason why we have a government. The only question is which particular market failures should the government fix.
posted by thedevildancedlightly at 9:34 PM on May 11, 2005


So but then why not move forward by:

a. Putting into place your idea of fully funded pensions bein mandantory


Tell me where to send the fax, I'm all for it.

b. Acknowledging that the mistakes made heretofore were demonstrably not the mistakes of the workers, and that therefore their pensions wil be fully funded

By whom is the problem? UAL simply doesn't have the money to do it because nobody wants $10 billion of planes and Boeing probably has a lein on all of them anyway. If a government bailout solves the problem then I'm all for it. "Screwing the stockholders" right now wouldn't help at all since the firm is only valued at $116 million dollars, not enough to solve the problem.

c. After a careful review of whether or not Delta, say, can be made Cathay Pacific-y profitable, if it turns out it cannot be, either let it die or let the government take it over to provide the common good you say it (by which I mean, easy airflight) is?

If Amtrak is any indication of how the government would run an airline then I'm not convinced that's a great idea. Have you ever tried to rely on Amtrak to get somewhere on time? Amtrak makes the US airlines look like they're run by the Swiss.

There needs to be a change in the structure of the industry, and it's probably going to have to come from the government (shove it, Chrischris), but I'm not sure that full nationalization would be the solution.
posted by thedevildancedlightly at 9:38 PM on May 11, 2005


I wouldn't put all the blame here on UAL. They are in a classic squeeze. They have high costs in pensions and salaries not shared by start-up and regional carriers. The salary structure at the major carriers is far, far higher than at regional carriers. Add to this the airline pricing problem. A large percentage of their costs are capital in the form of airplanes. They can achieve a market increase by dropping prices while still paying operating costs, but at a level too low to pay fixed expenses. You may not do this but if your competitor does then you had better drop your prices or lose business. This is a rotten business model. Consumers certainly benefited from deregulation but it has left the industry unstable. Frankly, UAL and several more carriers probably need to fail before we see stability. That is, we need consolidation to a few carriers to reduce the tendency to drop prices below the level necessary to cover fixed expenses while maintaining the incentive to drop prices to keep business.
posted by caddis at 9:46 PM on May 11, 2005


Dude, I'd love to support Amtrak, but every time I see the ticket price . . . yeah, you're right. But ask the Brits about privatizing their rails. Gray area. Maybe the rails will only work privately. But as for the planes: if it's important enough to be basically infrastructure -- we bail them out, we search their gates for bad guys, we have air marshalls as a fair percentage of the passenger roster, we acknowledge that the country takes serious hits without cheap air travel, apparently we're willing to do what we think feasible for the workers rather than let them starve, etc -- and they are failing, and screwing us over in the process, then I think serious government intervention, rather than just another bailout, should be on the table.

No, I wouldn't soak the shareholders. You're right. Many shareholders overlap with the workers, these days. Nope, I'd send the bill right to the taxpayers -- sorry everybody! -- because they can absorb the loss the easiest. But only on condition of complete reform to make sure this doesn't happen again. Not for a half-assed "see ya again in three years" bailout.
posted by hackly_fracture at 10:05 PM on May 11, 2005


One thing that could be done is to raise the PBGC insurance rates. If companies are going to underfund their pension plans in order to boost their stock prices, the least they could do is have enough penison insurance to cover their employees 100%. The current requirement of only $19 per employee per year -- less than a penny per hour -- is a joke.

Another thing would be to amend Sarbanes-Oxley to criminalize the intentional underfunding of pensions.
posted by JackFlash at 11:15 PM on May 11, 2005


jesus f. christ, thedevildancedlightlyfilter or what.
posted by Heywood Mogroot at 1:08 AM on May 12, 2005


Basically, what has happened is that I as a taxpayer now have to pay for UAL managemement's short-sightedness and fucking incompetence, even as they go along their merry way.

Seems to me like the taxpayers should be getting shares.

Another thing would be to amend Sarbanes-Oxley to criminalize the intentional underfunding of pensions.

Abso-fucking-lutely.

And most of what Chrischris said.
posted by Civil_Disobedient at 1:08 AM on May 12, 2005


Hackly-Fracture:

The biggest cock-up in British rail privatization was not actually the privatization of the lines, but the privatization of the actual rail infrastructure. With that, the new companies just sort of let the maintenance lapse, stopped maintaining the large on-call crews, and generally failed on upkeep because, well, upkeep is expensive, and if you just shave off a little more maintenance, nothing bad instantly happens and hey! you save a little money.

I tend to believe the state (eg., the regulatory power) needs to keep control of the delivery systems, while the rolling and generating assets can potentially enter the control of private interests. That's not a perfect solution, given bad corporate behavior worldwide, but it's the best mixture to my mind.
posted by trigonometry at 1:52 AM on May 12, 2005


The problem with the Big Six is that there are six of them. Too many planes are chasing too many fliers.

The reason than Southwest is successful? It cherry-picks routes. This worked *great* when the only other competition was the Big Six. The problem -- they've already picked all the low hanging fruit. They'll be fine if they hold steady. They won't. Warren Buffett said it best: Buy SW until they acquire another airplane or start buying airlines. Then sell.

Their balance sheet shows $14 billion in hard assets, $18 billion in liabilities other than the pension plans. Liquidating the company to pay off just the pension would screw the shareholders (which, ironically, include a lot of pension plans)

So? The limited risk shareholders take is seeing their investment drop to zero. This happens.

other creditors, the public, and the union workers themselves since they would then have pensions but no jobs

So the pensions should take a majority of the hit? The pension fund *is* a creditor. Worse, the public is taking a much bigger hit, now that what is left of the UAL pension fund is now in the hands of the PBGC. So, Joe Taxpayer is now liable for UAL debt.

I'm sorry. Not acceptable.

Liquidating UAL would hurt UAL and UAL creditors. The cash should be spread evenly among them -- the leaseholders, those with payments due -- and the pension fund.

It would drastically help the other airlines in the country, and their workers. And, it would send a clear message that companies need to be responsible for ether committments.

But that won't happen in the US. In the US, corporations are sacred, workers are shit. This is why the US has worked for decades to destroy unions (and why do you think the GOP is *still* so anti-union? -- unions represent the only credible threat to corporate power. )

So. UAL, GM and Ford should go out of business, and have their assets sold to pay creditors. What will happen is that they'll limp along, executives will make huge bonuses, since otherwise, they wouldn't stay to "provide guidance in these troubled times", workers will get screwed again, and we'll all march down to McDonalds and Wall-mart for our $6/hr no benefit jobs -- and, of course, have our taxes raised to pay a pittance to the promised benefits those employees are rightfully owed.

Welcome To America!

Personally, if I were a UAL worker, I'd be saying "Walk. We're not getting a pension -- the PBGC will get gutted because of the huge federal deficit. UAL has fucked us. It is time for us to fuck UAL."

C'mon, UAL Unions: You're going to lose anyway. Take the SOBs in the boardroom with you.

(For those wondering, UAL's biggest problem is that for two decades, they've treated the Unions as thier biggest enemy. There's an airline that doesn't -- indeed, it is the *most* unionized airline thier is. They have no labor conflicts, and are renown for both the happiness of thier employees -- and thier profitability. You might have heard of them...upthread.)
posted by eriko at 4:37 AM on May 12, 2005


1. This whole fiasco is an argument for defined-contribution plans, and against defined-benefit plans. How anyone can draw an opposite conclusion just baffles me.

2. It's not just evil corporations that underfund pensions. Unions do it to their own members.

3. Historically, airlines have indeed shown profits. They haven't shown economic profits.

4. Please do not confuse the government-orchestrated restructuring with free markets. The two are bitter enemies.

4a. Broadly speaking, when a company files for bankruptcy protections, the payoff order is: Wages, Taxes, Collateralized Creditors, Senior Creditors, Subordinated Creditors, Equity Holders.

5. UAL leases over 75% of its fleet.

6. Shareowners can't be liable beyond their investment going to zero. That's the rules of the game. Change that, and we're all fucked.

7. graventy-- you're a foul individual.
posted by Kwantsar at 6:58 AM on May 12, 2005


>Liquidating the company to pay off just the pension would screw the shareholders (which, ironically, include a lot of pension plans)

>>So? The limited risk shareholders take is seeing their investment drop to zero. This happens.

Oh yeah rain happens, shit happens too. Indeed when one takes a risks the risk may as well end into loss of investment and interest for shareholder..who happens to be the worker of UAL but also the worker of some other company whose investment fund diversified among many stocks including UALs ones .

Most probably the privatized pension investment funds invested into profiteable companies in not suspicious times, when such companies were expected to give low but consistent and constant returns.

Investors of all kind were sold the idea that whatever business model worked in the past would work in the future ..in other words they were said "hey but the airline business will never default, people will always want to travel" ..which is true, they will always want but that doesn't imply they will have the money to do that or that they will not choose another company or choose a less expensive venue of traveling OR that the company will constantly be able to offer seats at a price compatible with low-cost demand.

So what does one do ? Blames the investor for "not diversifing enough" or "making poor investment choices" ..which is how one rationalizes guilt and externalizes guilt on the masses, quickly and conveniently forgetting the masses were perfectly sane, intelligent and smart when they "wisely" choosed to invest into stockland..or were cornered into believing stockland is the only way to insure yourself a decent persion : there you go, pension is gone.

I wouldn't be surprised to see some outbreak of irrationality from workers..maybe under the form of ideologization, some call to the return of communism..what is really admirable is the capacity of workers of not derailing into violent protest which would certainly lead to a fascist response. Yet if they care about their offsprings and to survive they must not tolerate what's going on.
posted by elpapacito at 7:12 AM on May 12, 2005


Rules of corporate fascism:

1) Socialize risk, privatize profit.

2) Control government so as to apply rule #1

UAL retirees now celebrate sodomy! Taxpayers do too!
Who wins? Why, the CEOs and CFOs and their puppet politicians, that's who! (Ask Ken Lay how much he has stashed away and whether any of his former employees and stockholders will ever see a dime of it.)

Bankruptcy should be the death penalty for corporate personhood.
posted by nofundy at 8:50 AM on May 12, 2005


Thanks for that link about airplane leasing Kwantsar.
posted by caddis at 8:52 AM on May 12, 2005


First, everything Kwantsar said.

Second, if your concern is, truly, for the employees (both past, present, and future), the real question should be "What is better for those employees?", not "How do we inflict the most pain on the officers and directors of the company?" As tddl repeatedly tried to point out (and was repeatedly ignored): If you liquidate the company, you may be able to partially satisfy current pension obligations (but not completely, because pension liabilities alone exceed value of assets). But then everyone's out of a job: No wages, no future benefits. On the other hand, if you restructure, most employees continue to work and accrue benefits. The company could very well restructure into a competitive enterprise by emulating some of its leaner rivals, without being saddled with the legacy cost structure it couldn't otherwise change.

What's the greater good for the employees (all of them -- not just the retirees)? I would submit it's the latter. You might make an argument for the former. But most of what I read here is "liquidate to fuck UAL to get back at it for cutting pensions." Again, are you sure that's not cutting workers' noses off to spite their face?
posted by pardonyou? at 8:55 AM on May 12, 2005


UAL retirees now celebrate sodomy! Taxpayers do too!

nofundy, I don't know what's happened in your life recently, but you've officially become a troll.
posted by thedevildancedlightly at 9:21 AM on May 12, 2005


1. This whole fiasco is an argument for defined-contribution plans, and against defined-benefit plans. How anyone can draw an opposite conclusion just baffles me.

You mean counting on a company to be around to pay you 50 years down the road is a bad idea? Who would have thunk it? Invest in your own 401k instead of counting on UAL not going out of business.
posted by thedevildancedlightly at 9:23 AM on May 12, 2005


Anyone know if the top-end executives and directors of UAL took a significant pay cut -- ie. one that places their wages on par with those of their employees?

Dollars to donuts it's the front-line employees that are getting screwed, while the upper management continues to pork out.
posted by five fresh fish at 10:21 AM on May 12, 2005


eriko: Southwest, again, serves a limited number of markets. Go check their web site out, and see for yourself.

Everyone: Please go look at what cities SW serves, then come yelling about how the company proves that a national airline can make it.
posted by raysmj at 10:32 AM on May 12, 2005


thedevildancedlightly: I took Amtrak and ViaRail (Canada) all summer. At one point, on the West Coast, they were horribly late, about five hours. But part of that problem was having to share a line with an uncooperative freight carrier, or so I was told. The same train was late to Vancouver, B.C. later. By comparison, all other trains I took, in Canada in the U.S., were either on time or just an hour or so late.

By comparison, I waited four hours in Los Angeles after coming back from Hawaii while waiting for an American transfer flight to San Francisco. And Air Tran was an hour late. I also recently had to wait an additional hour-and-a-half for a southeast regional transfer flight. And you have to get to the airport much earlier than you do a train station.
posted by raysmj at 10:37 AM on May 12, 2005


freight trains take priority on all tracks in the country--don't know why.
posted by amberglow at 10:40 AM on May 12, 2005


Dollars to donuts it's the front-line employees that are getting screwed, while the upper management continues to pork out.

I don't know about management, but on the Newshour someone noted that the more highly paid employees, like pilots, would feel the biggest hit on the pensions as there was a maximum per year payout per person. I think it might have been about $45k.
posted by caddis at 10:47 AM on May 12, 2005


I took Amtrak and ViaRail (Canada) all summer.

My Amtrak experience was based mostly on the Northeast Corridor lines (formerly MetroLiner, now Accela) which have been just a disaster. Amtrak shares part of the track with (I believe) ConRail and part with other commuter railroads, but even outside of that they are a consistant debacle in the Northeast. The "high speed" Accela service just got taken offline for a few months due to brake failures (last year it was bad bolts, the year before it was bad anti-roll stabalizers).

I agree that Amtrak sometimes gets it right, but overall it's a disaster in the Northeast.
posted by thedevildancedlightly at 10:52 AM on May 12, 2005


but the Northeast Corridor is where it's profitable, and needed. We have all the population.
posted by amberglow at 10:54 AM on May 12, 2005


but the Northeast Corridor is where it's profitable, and needed. We have all the population.

I think that Amtrak is a good thing to have in the Northeast, don't get me wrong. I'm just saying that it's poorly run and hence I wouldn't trust the government to run an airline. I think "high-speed" rail between NYC and Boston and NYC and DC is crucial to the growth of the area and federal support for Amtrak pays for itself in the benefits that the public gets (ie, less congestion on 95, less congestion at LaGuardia, less pollution, etc).

I just wouldn't ever want to fly an airline run by the people who put together Amtrak. On a train there's a lot less that can go wrong than on a plane.

Some people question if the "profit" in the Northeast corridor is real or an accounting fiction (attribute less overhead to those lines and it's amazing how you can make the numbers work), but it's besides the point.
posted by thedevildancedlightly at 10:59 AM on May 12, 2005


Well, I'm in the "privatize everything" camp, but to be honest, I should note that in most forms of transportation, the government owns the infrastructure (seaports, airports, roads), and industry owns the vehicles (boats, planes, trucks). In the case of Amtrak, industry owns the tracks, and the government owns the trains.

Whether this fundamental difference explains the clusterfuck that is Amtrak, I don't know.
posted by Kwantsar at 11:07 AM on May 12, 2005


I have to admit up front that most of this is well beyond me. But I can add that I heard some dude on TV last evening say that if this was "ok" to do, there is bound to be other industries that will soon be doing the same thing. Thus, if that is correct, we ought not focus merely on airlines.

As for pensions: I am pleased to say looking back that my pension was never in the hands of my employer but was placed in another spot, where the emplyer was not able to touch it, no matter what. Seems to me that if they pension you are earning is kept by the company you work for, there may well be a problem down the road. And we see that that is what is now taking place.
posted by Postroad at 11:09 AM on May 12, 2005


Well, I think my point was that airlines often aren't on time either, and it's especially irritating as regards transfer flights - and there can be myriad transfers, even if you fly out of a major city. In short, my point is that our flight system is a clusterfuck too. Our entire system of transportation is, no pun intended, a train wreck. And maybe the answer isn't dergulation, or re-regulation, but maybe something more related to our basic concepts of how the system should work, or it's a matter of priorities and a commitment to quality over price or whatever. It's not necessarily private v. public going on here, I don't think. But hackneyed references to Amtrak's performance (Do we really have much of a commitment to rail travel?) and how Southwest is booming don't cut it.
posted by raysmj at 11:21 AM on May 12, 2005


Amtrak has been nothing but great for me. I take it all the time between NY and DC. Don't know what all this disparagemnt is about.
posted by destro at 11:21 AM on May 12, 2005


1. This whole fiasco is an argument for defined-contribution plans, and against defined-benefit plans. How anyone can draw an opposite conclusion just baffles me.

Sure sure sure. Hindsight is 20/20, especially for the innocent victims who thought they had some kind of contractual guarantee (how quaint!) to a fully functional retirement program... We can all agree that this is the proper path ex post facto.

But it still doesn't address the fundamental issue here, Kwantsar, which is that UAL has essentially engaged in criminal fraud (the pension plan was part of a contractually-based compensation package that UAL and its unions agreed to honor. The workers, by, you know, working, honored their end of the bargain; UAL defrauded them by consistently underfunding the pension fund and now reneging on their legal and moral responsibility to honor a contract they willingly entered into.) and now seeks to shield itself (however you define "itself") from the consequences. By consistently underfunding their pension plan, in direct contradiction to their contractual responsibilities, they have essentially defrauded their workers in a criminal manner. Individual officers of this corporation (UAL's Board, the CEO, probably the CFO) have therefore engaged in a willfull pattern of deception and negligence which should render them liable for both civil and criminal penalties. Someone should be going to jail for this fiasco. Do you agree? And if not, why not?
posted by Chrischris at 11:40 AM on May 12, 2005


eriko: Southwest, again, serves a limited number of markets.

Exactly. Why do you think I mentioned cherry-picking routes? SW flies STL-MDW, because they make a killing, and they don't fly STL-MKE, because they wouldn't.

The reason for this isn't even profitability -- those routes could be profitable flown once or twice a day. The reason they don't fly them is that they aren't profitable enough. SW, or to use thier proper 2 letter abbreviation, WN lives on the turn. Get plane in. Shove people out. Shove people in. Get plane out. Do so at least 8 times a day. Anything that rates less than 4 turns a day isn't flown, period.

This works well if you're competing against the Big Six. In the end, what will probably happen is dozens of cities in the US will lose all air service, unless the government(s) invovled offer subsidies.

This can kill you, though -- Amtrak is forced to run lines that are finacially disasterous, but if they stopped running them, Congress would kill them. So, they can't become profitable, but they can't keep living on the marginal government handouts. So, they basically suck, with a few exceptions.

Ideally, Amtrak would shut down most of the coast to coast routes, and work the NE and California corridors, then build track to interconnect the Midwest Cities with high speed rail that they could beat the airlines at -- a 120MPH limited stop train could do (for example), St. Louis to Chicago in 3 hours, with two intermediate stops (Springfield, IL and Bloomington, most likely.) This is more than workable time-wise, compared to flying. It doesn't work on long-hauls, of course, but it could work extremely well in the 150-300 mile range.

Right now, though, Amtrak takes a listed six hours, and even more if there are problems. The biggest issue is the tracks -- they're running on leased tracks, and the freights get priority. If anything goes wrong, the Amtrak train gets stuck behind the slow freight. For this to work, Amtrak will need to either own the rails, or have priority on them. If you want high-speed, you need to own the rails, since the maintenance requirements are so differeent.

Destro: The Bos-NYC-DC corridor is one of the few places where Amtrak does work. Amazingly enough, it's one of the few places Amtrak owns the rails it runs on....
posted by eriko at 11:40 AM on May 12, 2005


Chrischris, your argument is absurd.

1. A whole fuckton of pensions are underfunded. 1,050, in fact, and that's just counting the big ones.

2. Very, very few (if any) of the responsible officers have served jail time, because it's a business risk.

3. I haven't read anywhere that UAL (UALAQ, now) officers made intentional, material misstatements in any regulatory filings.

So your argument, then, is that management said that the pension money would be there, and it wasn't? And that's a contractual violation? It's a result of a tough market, high fixed costs, and a less-than-perfect-management. There's also that prickly matter of a court of law which decided how the firm was to be restructured.

It does disturb me that the common trades at a buck a share. That means that the market thinks there's still some value in the equity above what's owed the pensioners, who in this case are creditors. There's no way that's just, and by my lay understanding of the law, it's wrong.

So, in other words:
Pensioners don't get their pensions, shareholders get nothing, no fraud from management = Unfortunate, not criminal.

Pensioners don't get their entire promised pensions, pre-restructuring* equity holders get something/anything out of the firm = immoral, unjust, and against my (lay) reading of the law.

*often in reorganization, a court will declare the common shares worthless and then reissue restructured debt and equity to the creditors. My statement is inapplicable to these new equity-holders, as former creditors.
posted by Kwantsar at 12:14 PM on May 12, 2005


eriko: But a truly national one couldn't "cherry pick" them. Southwest's cherry-picking wouldn't work without major carriers, is my understanding. But then you just stated as much. In any case, I'm in a corner of the world with millions of potential customers, a vast regional market that isn't served at all by Southwest. And I get sick of hearing them brought up, as if SW is a cheap alternative for me. Indepedence is, but it's hugely in debt, and Air Tran sucks ass.
posted by raysmj at 12:16 PM on May 12, 2005


We can all agree that this is the proper path ex post facto.

We don't, by the way. Many on the left believe that better regulations can prevent this sort of thing. I think it's ridiculous that the same party is responsible for one's job, health insurance, and retirement (no matter how well-regulated that party may be), but that's just my opinion, man.
posted by Kwantsar at 12:19 PM on May 12, 2005


It does disturb me that the common trades at a buck a share. That means that the market thinks there's still some value in the equity above what's owed the pensioners, who in this case are creditors. There's no way that's just, and by my lay understanding of the law, it's wrong.

The market currently values the sum total of all UAL equity at $116 million. I'm willing to bet that those holding that stock are hoping that somebody will buy-out UAL, or that they'll get paid off in the restructuring. It's a long bet, but when the total value of a formerly giant company is only $116 million it's not unreasonable. I would be suprised if they thought the stock would ever become valuable through profits.
posted by thedevildancedlightly at 12:30 PM on May 12, 2005


Chrischris, your argument is absurd.
If so, then i'll thank you to state--plainly, for the record, that you believe there should be neither moral nor legal consequences for contractual fraud. Apparently, contracts are to be honored at one's convenience. Heh, I should try that one out on my mortgage company (see, we have this little contract, but I'm not really feeling like making my payments this year. I wonder how they will take the news?). Apparently in matters financial, principle and the rule of law are...flexible for you and your ilk. I'll remember that next time you make a pronouncement on some social issue or other.

2. Very, very few (if any) of the responsible officers have served jail time, because it's a business risk.

By this logic, anything--and I mean anything--done in the name of pursuing profit is perfectly cool--or at least ethically neutral. Bhopal was a business risk. Three Mile Island was a business risk. For OBL, it could be argued, 9/11 was a business risk. Nice moral compass you got there, Kwantsar.
posted by Chrischris at 12:42 PM on May 12, 2005


nofundy, I don't know what's happened in your life recently, but you've officially become a troll.
posted by thedevildancedlightly at 12:21 PM EST


I'm sorry. I just wanted to be a part of your club.

What chrischris said.
You worshippers of the Great Invisible Hand are the worst bunch of apologists for criminal activity I've seen in a while.
posted by nofundy at 12:59 PM on May 12, 2005


ddl, just because you post a lot doesn't mean you post well.
posted by bardic at 1:26 PM on May 12, 2005


I'm sorry. I just wanted to be a part of your club.

How is disagreeing with you trolling? I'm sorry, nofundy, but every time you accuse anybody who disagrees with you of either being a troll or reading off "talking points" you just make yourself look worse.

You worshippers of the Great Invisible Hand are the worst bunch of apologists for criminal activity I've seen in a while

Did you read the thread? Nobody is saying the Great Invisible Hand is going to solve the problem. Get off your high horse and interact like the intelligent human that I'm going to assume you are unless you keep demonstrating otherwise.

Very, very few (if any) of the responsible officers have served jail time, because it's a business risk.

Very poorly framed.

you believe there should be neither moral nor legal consequences for contractual fraud

I have not seen the Collective Bargaining Agreement between UAL and the unions so I can't say for certain if there was contractual fraud or not. However, I can tell you about the general structure of a typical employer-sponsored pension fund and why what happened here is quite possibly not fraud. It's possible it was, but there are plenty of ways that it's not.

Employers today know that at some point in the future they will face pension obligations from current employees. They put money in a trust fund. It'd be silly to require that they keep the money in cash for 40 years (since that would result in inflation destroying the money) so by law they are allowed to invest the money in certain ways and to assume a certain rate of return on that money. Most of this is controlled by the Employee Retirement Income Security Act.

Things were going swimmingly in the late 1990's when the market was boomign and the growth in all of that invested money made it appear that most pension plans were in fact over-funded.

As it happened for UAL, 2001 marked a huge downturn in ther investment growth, as well as a huge cash hit to the business. Again, I don't know the details of the UAL CBA, but it's quite likely that the plan met ERISA standards prior to 9/11 and then the market dive combined with the poor performance of UAL post-9/11 to put the plan underwater.

Hence, UAL has not "defrauded" (which implies an intent to rip somebody off), but "rather "defaulted". Huge difference in intent. Fraud is punishable, default is an accident.

the worst bunch of apologists for criminal activity

What, exactly, is the criminal activity? See the paragraph above. If you can find a violation of ERISA or any other law then I'm happy to agree. Until then calling what happened "criminal" is simply wrong, not helpful, and pretty close to slanderous. There is a civil ERISA suit filed for events after 9/11, but nothing before then

I'm sorry that the facts don't fit your worldview, but can you please try to consider them before making any further accusations?

Does it suck that the executives probably got over-paid? Sure. But all the executive pay in the world wouldn't make up the gap in the pension funds.
posted by thedevildancedlightly at 1:29 PM on May 12, 2005


ddl, just because you post a lot doesn't mean you post well.
posted by bardic at 1:26 PM PST on May 12 [!]


Umm, okay. I care what you think because...?

What do you disagree with? Feel free to engage in dialogue rather than snarking from the sidelines.
posted by thedevildancedlightly at 1:30 PM on May 12, 2005


If so, then i'll thank you to state--plainly, for the record, that you believe there should be neither moral nor legal consequences for contractual fraud.

If you default on your mortgage, you lose your house.

UAL lacked the ability to cover its debts, and the equity holders lost (should lose) their equity.

Could you spell out for me where the fraud occurred here? And why my moral compass is broken?
posted by Kwantsar at 1:34 PM on May 12, 2005


Amtrak will need to either own the rails, or have priority on them

yeay. Highspeed service sharing the line with freight? That'll work!

And as for this pension thing, haven't I seen this movie before? Something about "Greed is Good"?
posted by Heywood Mogroot at 3:02 PM on May 12, 2005


And why my moral compass is broken?

Governments selectively bailing out companies 'too big to fail' is a moral hazard.

Like all the welfare moms driving cadillacs. Something tells me fat cats have stolen more money from the taxpayers than people cashing AFDC checks.
posted by Heywood Mogroot at 3:03 PM on May 12, 2005


And why my moral compass is broken?
Mine was an admittedly rhetorical response to what was, I hope you will agree, a somewhat callous (not to mention, rather tautalogical) statement. Play on...
posted by Chrischris at 3:40 PM on May 12, 2005


What hardly anyone appears to notice is that US airlines, far from being a shining example of free enterprise, are one of the most absurdly sheltered and subsidised industries in the world.
a) A significant number of airliners (including some of UAL's) are actually paid for by the Air Force as the Civil Reserve Air Fleet.
b) Foreigners are banned from owning over 25% of an airline operating within the US, as DHL had to find out.
c) Foreign airlines are (of course) banned from competing in internal routes. European proposals to reciprocally open markets have been shunned so far.
d) Current bankruptcy rules allow a number of airline zombies to stay in operation. Just like UAL, they get rid of their liabilities and climb back into the market.
e) Aircraft fuel is, of course, tax-free.
posted by Skeptic at 4:15 PM on May 12, 2005


Skeptic: From that last article you linked, at the Wharton school site.

"How many domestic automakers do we have? Three (General Motors, Ford and DaimlerChrysler) and one is foreign owned. The airline industry should be like that."

Yeah, we want the airlines to be like the domestic auto industry! Shining example there.
posted by raysmj at 4:49 PM on May 12, 2005


f) plenty of crossover from the military-industrial sector for civil plane technologies.
g) FAA as subsidy.

The FAA budget is $14B, and the domestic airlines run 500B passenger-miles/year, working out to 2c per mile or $85 for a cross-country flight.
posted by Heywood Mogroot at 8:47 PM on May 12, 2005


The FAA budget is $14B, and the domestic airlines run 500B passenger-miles/year

To be fair, the FAA does handle things other than just the domestic airlines. You have to count overseeing incoming and departing international flights (the bulk of traffic at JFK), supervising private aviation, supervising some aspects of commercial aviation (as in crop-dusters, helicopters, etc), accident investigation, etc.
posted by thedevildancedlightly at 12:38 AM on May 13, 2005


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