http://money.cnn.com/2012/02/01/news/companies/american_jobs/index.htm?hpt=hp_t1I wonder how my cousin the pilot is doing.
Sticky point:
Some of the savings will come from the airline's proposal, also announced Wednesday, to shift its underfunded pension plans to a government agency, the Pension Benefit Guaranty Corp.
"If this liability is not eliminated, we will need to have more than $800 million each year in additional savings to service the unfunded liabilities," said the company.
But the Pension Benefit Guaranty Corp. once again said it would seek to block the airline from dumping its pensions on the agency, which is already facing a deficit of its own. The agency's estimate is that American's pensions are underfunded by $10 billion.
"Before American takes such a drastic action as killing the pension plans of 130,000 employees and retirees, it needs to show there is no better alternative," said agency director Josh Gotbaum. "Thus far, they have declined to provide even the most basic information to decide that."
For those who don't remember, some of you being too young: in the 1980s, the Reaganites changed the rules for accounting for pensions, to make it possible for companies to intentionally under-fund their pensions. In those days they were claiming that the pensions were OVER-funded, by making wildly unrealistic assumptions about the growth of the investments that the pensions were invested in.
They were even doing accounting fraud to log losses as profits to the company. They'd project ridiculous profits on their pension investments, then claimed the excess belonged to the company and booked it as a profit. The practice was widespread which is why so many pension plans are kaput.
So are a lot of 401(k)s. There was a lot of moral hazard involved in what options were offered to participants. Companies like Enron for example encouraged employees to "invest" in company stock. Even in best cases, the conflict-of-interest resulted in poor performance for typical participants.
Retirement funds are the last remaining large pool of savings in the USA. They've been targeted for plunder since at least the 1980s.
As for American Airlines, no matter what, jobs will be cut.
