Vote to Block United Airlines
from defaulting on Pension Plans
George Miller's pension Bill passed by a vote of 219 to 185.
AFA International press release is below the Reuters Article.
Teddy
MEC President
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Subject: HR vote to block bankrupt United
Airlines from defaulting on its pension plans
June 24, 2005
The
US House of Representatives voted on Friday to block bankrupt United Airlines
from defaulting on its pension plans and shifting them to the nation's pension
insurer, the Pension Benefit Guaranty Corporation (PBGC).
Critics said the vote would have no practical effect, because the provision
was attached to a government spending bill, while the PBGC does not spend
government money. Under an agreement with United, the PBGC has already taken
over one of United's four "defined benefit" pension plans.
But supporters said the vote was a strong rebuke for United and other
struggling airlines that might be tempted to follow United's lead by swamping
the PBGC with their pensions -- which could force a taxpayer bailout of the
agency.
Thirty-one Republicans joined 187 Democrats and one independent in voting for
the measure, 219-185. Sponsored by California Democrat Representative George
Miller, it said the PBGC could not spend government funds to carry out a
court-approved agreement to take over pensions from the bankrupt airline.
"This amendment is absolutely necessary if we are going to stop the
dumping of pension obligations on the taxpayers of the United States,"
said Representative David Obey, a Wisconsin Democrat. "Without this
amendment, Uncle Sam is being Uncle Sucker."
United and the PBGC reached an agreement in bankruptcy court this spring to
terminate the airline's four big plans covering 120,000 current and former
workers.
The airline says terminating the plans, the largest pension default in US
history, would save it USD$645 million annually and help lift it out of
Chapter 11.
Benefit promises of United's retirement plans exceed assets by nearly USD$10
billion. The government will insure USD$6.6 billion of the shortfall, meaning
most workers face benefit cuts. The PBGC already has assumed the ground
workers' plan.
United said the congressional action will have no immediate impact on its
2-1/2-year restructuring effort although it comes as it tries to attract
investors.
"Given the complex and lengthy process, it is inappropriate for the House
to single out United and interfere now, especially since the pension issue has
been consensually resolved with every union other than (the Association of
Flight Attendants)," United spokesman Jean Medina said.
A PBGC spokesman said the agency was examining the House move.
The PBGC charges companies premiums to insure pensions, then bails out plans
when they fail. But the agency is USD$23.3 billion in the red as a result of
defaults by US Airways, United and others.
Some Republicans argued Congress should not interfere. Representative Mark
Kirk, whose state of Illinois is home to United, said the pension deal was
helping to keep the airline flying and 62,000 people in jobs.
But the House action was greeted enthusiastically by flight attendants.
"In the battle between corporate America and working people, the House of
Representatives today sided with the people," Greg Davidowitch, president
of the Association of Flight Attendants, said in a statement.
Michael Roach of Roach & Sbarra Airline Consulting in San Francisco said
odds are small Congress could actually block pension termination. But he said
there is a chance that it could disrupt the carrier's campaign to attract
investors needed to step out of court protection. "This is a very large
issue that must be resolved," Roach said.
(Reuters)
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| FOR IMMEDIATE RELEASE: |
CONTACT: Sara Nelson
Dela Cruz
|
| June 24, 2005 |
617-794-8951 cell
|
Flight Attendants Score Key Victory in
Congress
Over 30 House Republicans Join Democrats to Block PBGC Funding to Terminate
Pension Plans
WASHINGTON DC-
Flight attendants at United Airlines scored a key legislative victory today in
their battle to preserve their pension plan. The House of Representatives
passed an amendment to an appropriations bill prohibiting the Pension Benefit
Guarantee Corporation (PBGC) from spending funds on the termination of their
pension plan. If adopted by the Senate and passed into law, termination of the
flight attendants' pension plan would be stopped in its tracks.
"This is a significant win for United flight attendants, and for all
working Americans who are concerned about retirement security," said Greg
Davidowitch, president of the Association of Flight Attendants at United.
"In the battle between corporate America and working people, the House of
Representatives today sided with the people."
Just yesterday the PBGC announced in legal notices in major newspapers that it
would terminate the Flight Attendant Pension Plan on June 30, 2005. The agency
had earlier insisted that the flight attendants' pensions "can and should
survive" United's reorganization in bankruptcy. But, after reaching an
agreement under which United would pay $1.5 billion in settlement of the
PBGC's bankruptcy claim, the agency reversed itself and agreed to terminate
the plan.
"The deal between United and the PBGC was an outrageous attempt to evade
the intent of existing law," said Davidowitch. "Congress has
illustrated today that the people of this country, not special interest big
money, are the source of all political power. We are incredibly grateful to
Representatives George Miller, Jan Schakowsky and Joseph Crowley for their
persistence and encouragement of their colleagues to act as idealistic
servants for every worker in this country who deserves a dignified retirement
for a lifetime of service."
More than 46,000 flight attendants, including the 20,000 flight attendants at
United, join together to form AFA, the world's largest flight attendant union.
AFA is part of the 700,000 member strong Communications Workers of America,
AFL-CIO. # # #
