May 10 Bankruptcy Bonanza For Big Bankers

May 10, 2017

On this day in labor history, the year was 2005.

That was the day United Airlines got the OK to ditch its pension obligations in federal bankruptcy court.

Workers were dragged through years of employee ownership schemes, massive layoffs and concessions, and the gambling away of hard-earned pensions on the stock market.

Then in 2002, United filed bankruptcy.

Many asked, how could this happen at an airline owned by its workers?

By 2005, creditors like Citigroup and J.P. Morgan were fully in control. ‘Employee ownership’ had meant trading billions of dollars in deep wage cuts and givebacks for stock ownership and a couple of seats on the board.

‘Controlling interest’ meant a six-year no-strike pledge, the slashing of tens of thousands of jobs and massive outsourcing.

By 2005 the stock was worthless.

Then United moved to weasel out of union contracts just 24 hours after the court ruled on the pension default!

Some 130,000 pilots, flight attendants, mechanics and ground service workers found their employee stock ownership plans empty.

United executives turned billions over to the federal government who then administered what was left through the Pension Benefit Guaranty Corporation.

In most cases, those pensions were slashed in half and monthly retiree health insurance costs exploded by 700%.

One pilot stated: “I call it legalized crime. I lost almost all my United stock value in the bankruptcy, and here’s another part of the retirement I was promised that is gone. Where does it all end? You feel brutalized by the system.”

Somehow, the $6 million in benefits then CEO Glenn Tilton received, wasn’t affected by the default.

Now that United is swimming in hundreds of millions in profits, many retirees have demanded the restoration of their original pension plans.


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