United Airlines pension cut hits home

INCLINE VILLAGE - After a federal bankruptcy judge allowed United Airlines to terminate employees' pension plans last week, pilots and airline employees at Lake Tahoe are not only worried about their future financial security, but also about the precedent the decision sets.

Some United Airline employees living in Incline Village, nicknamed "Pilot's Ghetto" for the high number of airline employees in the North Shore community who commute to their base airports, said they're not sure how the ruling will affect them yet.

But other Lake Tahoe residents expressed concern for the decision.

"We've been expecting this for about six months," said Incline Village resident Anne Guymon, the wife of a United Airlines pilot. "It's very disturbing."

Guymon, who moved to the North Shore four years ago with her husband Mike and three children, said she's worried the pension cuts, along with a post-9/11 pay cut her husband took, will force her family to move.

"(This decision) is going to have a huge spiraling effect, not just for airlines, but for all companies," Guymon said.

Stateline resident Cindy Trigg, a flight attendant with American Airlines, said she fears other airlines will follow suit with pension or other benefit cuts, despite reassurance from industry and union representatives.

"When you see another company that's able to disregard the benefits they've promised their employees over the years, they seem to follow a pattern," she said. Trigg has been with American Airlines since 1978, and said it's difficult for employees caught up in benefit cuts, such as the recent ruling on United, to leave their employers because airline employees are compensated based on seniority with the company.

On May 10 a judge allowed United Airlines to terminate its employee pension plan, the largest corporate-pension default in American history. United will save an estimated $645 million a year - money the airline says it needs to pull itself out of Chapter 11 bankruptcy.

The decision shifts responsibility for the pension from United to the government's pension agency, the Pension Benefit Guaranty Corp. PBGC has agreed to guarantee $5 billion of United's pension, which is underfunded by an estimated $9.8 billion.

Bankruptcy Judge Eugene Wedoff told The Associated Press the settlement does not violate any law or United's collective bargaining agreement and that United employees could end up with no benefits if an agreement is not made.

More than 100,000 current and retired United employees nationwide are covered by United's pensions.

The Allied Pilots Association, which represents workers at American Airlines, questioned the prediction that the United Airlines' decision would create an industry "domino effect."

"We are highly skeptical that stripping employees of their hard-earned negotiated benefits, either through legislation or in Federal Bankruptcy Court, will serve to ensure any organization's long-term success," said Captain Ralph Hunter, president of the APA.

According to the Air Line Pilots Association, the union that represents United workers, pension benefit plans for airline workers have been in "severe crisis" because of historically low interest rates, a depressed stock market and industry-wide revenue losses.

"There is little that ALPA can do to change the economic conditions that led to these pension problems," according to an APLA statement. "However, the regulatory flaws that exacerbated the growing pension crisis can - and must - be corrected."



- The Associated Press contributed to this story.