NEWS: United Airlines Dumps Pension Plan on PBGC

United Airlines has struck a deal the federally run Pension Benefit Guaranty Corp.(PBGC) that will allow the carrier to terminate four pension plans covering around 120,000 current and ex-United employees. The PBGC will assume the obligation for these four plans which are underfunded by...wait for it...$9.8 billion!!!! Here's the kicker...the PBGC wanted to do this months ago for at least 2 of these 4 pension plans? Why in the world would they do that you ask? Are they nuts you wonder? The answer is actually that the PBGC was simply looking ahead and trying to minimize the problem. Had they been able to assume the plans earlier the underfunding problem would have been less. The whole situation has simply fried every logic board in my poor little hamster driven brain leaving me a stammering mess in front of my computer monitor. (and no...that's not my normal condition...be nice)

If approved by the bankruptcy courts the pension termination will be the largest in US history. Hey there's something to hang on your wall.

I nominate Jake Brace, United Airlines CFO, for understatement of the year with this quote, "We think this is a very important agreement...". Uhhhh yeah, United figures they can save an average of $645 million annually over the next five years. That would qualify as "very important" at a minimum considering that United's target for annual labor savings is $725 million to exit bankruptcy. Oooo look, another Airline Reality Distortion Field effect, suddenly needing to save $725 million annually doesn't seem so bad.

And finally...I get this inescapable feeling that somehow I am going to end up paying for this. The PBGC is a federally run corporation that...up until now...does not receive tax dollars. But they ended 2004 $23 billion in debt and they just tacked on another $9.8 billion. So my nagging feeling is that sooner later the PBGC is going to collapse like a house of cards and that the taxpayers will end up holding the bag somehow.