Video: Protect American Airline workers, retirees and taxpayers, Miller says at pension hearing today
WASHINGTON – At a hearing today with PBGC Director Joshua Gotbaum, Rep. George Miller (D-CA), the senior Democrat on the House Committee on Education and the Workforce, urged the agency to protect American Airline workers, retirees and taxpayers. Yesterday, American Airlines announced that it intended to terminate the company’s pension plans. This would be the largest pension termination in history. Miller said that the PBGC should learn from its mistakes in the United Airlines bankruptcy in 2005.
“[When the United] bankruptcy determination was made, the workers took their cuts, the taxpayers took the liability, and the executives of United Airlines got their bonuses for steering their company through bankruptcy,” Miller said. “I think the taxpayers got screwed and the workers got screwed. I just want to know that the PGBC under your leadership will be more active about conserving the taxpayer resources and conserving the workers resources. I don’t think United is the model for workers or taxpayers.”
In 2005, the PBGC and United Airlines ultimately agreed to terminate United Airlines’ pension plans. The PBGC also ceded its right to ever restore the plans to United Airlines, as well as its right to seek additional assets from United, should the company ever become profitable again. Not only did United reap profits in subsequent years, a GAO investigation found that leading up to and through the termination of United Airlines’ four pension plans, the airlines’ CEO at that time and two other executives received a total of about $55 million in salary, benefits and other compensation.
Miller also noted that American Airlines received pension relief of $1 billion in 2007, which helped them to restructure payments to their pension funds. That provision was added to a bill that included the first minimum wage increase in a decade.
“This is going to be the largest pension default in the history of this country. This is an airline that is in to us for, I believe a billion dollars, for the change in interest rates that the U.S. Senate changed in the minimum wage bill. Minimum wage workers got 75 cents and American Airlines got a billion dollars in the same bill,” said Miller. “[They got the] Senate to change their payments in the pension plan. Then they schedule their bankruptcy to minimize the payments.
“It’s a hell of a deal. It’s just not very good for taxpayers and it’s not very good for workers…if you can get an early bailout and you can reschedule your payments and then you can reschedule your payments in bankruptcy…there’s 14 million homeowners who’d like to the same shot at that kind of deal.”
On Monday, Miller sent a letter to Gotbaum asking him to avoid a potential termination of American Airlines’ pension plan that may leave taxpayers on the hook and threaten the retirement security of thousands of current and future American Airline retirees.
Watch the full video of Miller here.
Next Article