Aviation

In June 2005, two airline companies warned Congress that they could go bankrupt if they are not allowed to modify their pension payment plans. As the nation's planes take to the air this fall, some of the employees keeping them aloft face uncertain futures. Many of their companies' pension plans are in jeopardy. One of those companies, United Airlines, terminated its pension plans after a bankruptcy judge gave it the green light in May. Under funded by $9.8 billion, United Airlines default is the largest in U.S. history. Now, the carrier's retirees get their benefit checks from the Pension Benefit Guaranty Corporation, or PBGC, a federal body now running in the red by some $23 billion.

The Senate Finance Committee brought federal pension insurers, airline industry executives and employee representatives to Washington for a hearing designed to help prevent the next pension collapse. The chairman, Sen. Charles Grassley from Iowa, was critical of loopholes in the law that allowed United to portray its pension fund as solid when it was in fact weakening. According to Senator Grassley, "our pension laws tell these companies, take off the green eyeshades and put on rose-colored glasses." Some maintained that United had operated within the law.

Although the hearing focused mainly on the airline industry, more than half of the nation's 100 largest pension plans have less than the promised benefits on deposit. Some 34 million people, or 20 percent of the nation's work force, expect to get payments from their employers' benefit plans. Capt. Duane Woerth, head of the Air Line Pilots Association (ALPA), warned other airlines would follow United's path.

According to ALPA, these legacy carriers are on the same path. U.S. Airways and United Airlines were the first to shed the light on this issue, but following closely behind is Delta Airlines, Continental Airlines, Northwest Airlines and eventually American Airlines will follow that same path with almost certainty. The bottom line here is that other airlines will be headed toward bankruptcy unless reforms are made.

Today's airlines are at a crossroads, and without changes to the current rule, airlines will almost certainly be forced into bankruptcy in the transfer of additional pension liabilities to the PBGC. 5 billion dollars were lost last year by Delta alone. Some may argue that this is as a result of the post 9/11 fallout, although this might be true, how do we save airline employees from losing all they've work for?

I will agree that this is a result of bad management at the Airlines. Employees could not only loose their pensions, but reduced pay as well. These employees are not careless people who failed to plan for their retirement. They did everything right -- they worked hard, they saved as much as they could and they invested when possible. Their only mistake was