Posted on 02/02/2012 4:19:37 AM PST by tobyhill
American Airlines filed for bankruptcy in November. The company needs $18.5 billion to cover its pension promises to current and former employees, but it has only set aside $8.3 billion.
Taxpayers could wind up on the hook for billions. Here's why.
American Airlines is asking the bankruptcy court for permission to drop its pension plans. If the court allows that, the plans will be taken over by the Pension Benefit Guaranty Corp, a government agency that takes over pension plans for failed companies.
The PBGC works like an insurance company. Firms that are backed by the PBGC pay premiums to the agency. Those premiums are supposed to pay for the agency's costs, so taxpayers don't have to pay. But in recent years the premiums haven't been enough — the agency's funding shortfall is currently $26 billion.
President Obama has proposed raising the premiums companies pay to PBGC, to make up the shortfall. But big business groups oppose any increase.
(Excerpt) Read more at npr.org ...
That Socialist bastard!
But big business groups oppose any increase.
Duh. When you can just lay it all off on the taxpayer, why would you want to pay for it yourself?
We must save Union Pensions, the greedy tax payers have too much money and can do without.
Here is a better idea.......... businesses will begin to dump their pension problems on the government en masse... any company that does this should have all assets seized and sold at auction, including the owners and officers personal assets.........unless genuine need is proven
Sounds like Welfare, Section 8 housing, UAW, etc., etc. Now, we'll soon pick up the tab for houses that were mortgaged under threat of Red-lining Lawsuits by banks to welfare-income-only parasites, AND, we're running out of Taxpayers (why work a minimum wage job when you can stay on un-employment for up to 2 years?)
It's kind of interesting that despite our wonderful ‘Social Security’ system that takes money out of our paychecks and puts it into a ‘lockbox’ for us (sarc), companies are being crushed under the weight of their pension plans.
I think the same thing happened with United and the retirees ended up getting shorted.
Pension obligations always seem to be years out from being needed, until they all of a sudden aren’t or when bankruptcy looms and the cash for pensions or the sudden lack of obligation would save the company.
The state of the economy is certainly part of the whole problem with the zero interest rate the FED so jealously guards as another issue.
I suspect if companies or governments were forced to have every dime of pension obligations in a non money losing account, there would be no such thing as a pension. Seems to me annuities would be a less expensive alternative to having every dime squirreled away.
Apparently that is also deemed too expensive. Insurance companies can also go broke, although the rules under which they must operate, do tend to make them somewhat more responsible, and less likely to go under.
Bottom line, the taxpayers need to revolt on this and every other attempt at pushing financial foolishness off on the public.
So then the employees have pensions intact but no job.
AMR had been the only major airline since 9/11 not to go invoke bankruptcy protection to reset their labor contracts ... this mess has been a long time in the making and there's lots of blame to spread around.
valid point.......... requires further thought....my main bitch is putting the taxpayers on the hook for a private companies pension plan... THAT is just not right
Wow, sieze all stockholder’s personal assets. That’s some idea.
Why wouldn’t the requirements for participating in this insurance program require that the pensions be always fully funded? How is an underfunded pension fund different from ignoring drunk driving and speeding tickets when determining auto insurance premiums?
that’s what the government is for. To take care of everyone. Once they own you, they can tell you what to do.
That explains it. Thank you.
You forgot Southwest.
just double checked my post... did not say anything about stockholders... owners and officers is what I said...
Southwest doesn't qualify as an American airline. It's well run and well regarded by the public.
The stockholders ARE the owners. That’s the definition.
Yet it does qualify as a major airline these days. :P
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