Stories in today's Dallas Morning News and New York Times report that American Airlines could try to ditch some or all of its pension plans during its trip through bankruptcy court.
We should all hate that. Every time we allow another business to slash the throats of its own retirees, we expose our own throats to the same gory knife.
The News and Times stories quote AMR, the ownership company, as saying it is "not necessarily" planning on abandoning its obligations to loyal long-term employees. But the News story quotes a written statement from Josh Gotbaum, director of the Pension Benefit Guarantee Corp., the government entity that will get stuck with the pensions if American walks on them, as sounding like a very worried man:
"Some have suggested that American must duck its pension commitments and kill its pension plans in order to survive. We think that commitments to 130,000 workers and retirees shouldn't be disposable, that American should have to prove in court that this drastic step is necessary."
The PBGC has been forced to go to court to pry basic numbers for the pension plans out of AMR. Gotbaum is quoted as saying that AMR has made misleading claims to the effect that high pension obligations are what ran American onto the rocks. He says in his statement that Delta Air Lines "pays an average of $13,210 per employee in pension costs -- almost two-thirds more than American's pre-bankruptcy cost of $8,102."
Underlying this scenario is a fundamentally un-American notion that loyal employees are the problem -- that people who have worked hard and bargained in good faith for benefits are bloodsuckers holding the Gordon Gekkos of the world in thrall.
That's obscene. Talk about moral hazard. That's the morality of the Mafia.
Before a single employee is stripped of a single dollar in AMR pension money, all of the Gekkos running the place need to be stripped of their mansions and their maids, their Maseratis and their executive hostesses. And that's still only a symbolic pittance.
Much more fundamentally, we should abhor the underlying assumption that a corporation owes more fidelity, honesty and decency to its directors than it does to its employees. There is some formula by which that bankruptcy judge can slice the pie, keep the company alive and keep its pension funds intact, and AMR shouldn't be allowed to set a toe outside the courtroom again until that formula has been found.
We all have at least two dogs in this hunt. If AMR is allowed to dump its pension obligations on the taxpayers by abandoning them to the PBGC, the PBGC will be that much more hammered and that much less able to come to the aid of pensioners in a real emergency, as opposed to this manufactured one.
But the second dog is the bigger one. We need to enforce a moral bottom line here. When a company -- or a government -- enters into a good faith contractual agreement with its employees or its citizens to repay their lifelong loyalty with retirement benefits, that obligation must be held sacrosanct and inviolable. Playing with the pension money, borrowing against it recklessly, any kind of slippery ducking ought to put somebody in the pen.
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Otherwise, you know what happens, right? If it's OK to screw the employees of AMR, it's OK to screw to anybody and everybody. Listen to those Republican presidential candidates. They are competing to see which one would gut Social Security faster.
The mere mention of the possibility of AMR skating on its pension obligations should send a chill down all our spines. When you put it in context, the full quote from AMR is especially scary:
"A company's Chapter 11 reorganization does not necessarily mean that a company's pension plan will be taken over or terminated, although that is a possible outcome."
I think we all recognize that kind of slick corporate screw-you tone and what it really means. It means Luca Brasi sleeps with the fishes.