The financial skies remain bumpy for the oldest and biggest airlines in the US. Those trying to restructure themselves to compete with low-cost competitors are barely making headway.
One place where airlines are looking to save is in pension plans. United Airlines, for example, in trying to get out of bankruptcy, upset its employees last month by threatening to end its pension plan. If it were to do so, some 120,000 employees and retirees would be affected in what would be the largest pension default by a US company - $1.9 billion.
The news caused turbulence for airline workers across the industry. US Airways, on the verge of a possible second bankruptcy, already proposed ending its pilot pension plan. Delta, Northwest, and American Airlines have underfunded pension plans.
By virtue of its size as the nation's second-largest airline, United would put all airline pension plans at risk if it defaulted. The Pension Benefit Guaranty Corporation, a quasi-federal agency that insures failed plans, rightly believes the company has a legal obligation to continue to pay for its pension promises.
The PBGC itself could need a bailout if United defaulted. The agency ran an $11.2 billion deficit last year after taking over pension plans for some 152 companies, including US Airways and Bethlehem Steel in 2002.
United has already suspended contributions to its pension plan during its current restructuring period. When, or if, it emerges from bankruptcy, its pension plan should remain intact - if restructured or smaller. Airline employees promised a pension deserve one, while taxpayers don't deserve a hit for airline mismanagement.