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It will be taxpayers who foot that bill. Money that would have normally gone toward their own retirement (401(k)'s, etc.) will now be skimmed by Uncle Sam and given to fund the retirements of those subject to the PBGC annual lifetime payouts.
Correct. However its fair to ask who will have to pay for it if AMR has to keep the pensions.Originally Posted by eaglefly
....and so are all the poor saps who will have to pay for it if AMR doesn't keep them.It will be taxpayers who foot that bill. Money that would have normally gone toward their own retirement (401(k)'s, etc.) will now be skimmed by Uncle Sam and given to fund the retirements of those subject to the PBGC annual lifetime payouts.
There is a certain cost to that pension plan, especially in a market that is volitile and constantly subjected to massive plunges in value no matter how diversified. If the plan is kept, even if frozen, the money it will take to perpetually fund it has to come from somewhere. I'm sure AMR would LOVE to keep the pensions...if they could outsource 100 seaters at AE/AC, A321's at JB, 737-900's at AS and 777's at BA as much as they want with no restrictions. Oh and throw in a 20-30% pay cut for remaining pilots as well as other benefit and QOL cuts. I'm sure AMR management could show how, if they only had all that, they could keep those noble, solemn obligations to their beloved workers.
Give them all that and I'm sure AMR will be happy to put those pensions in whatever "lockbox" it takes to secure their immortality. But the means to that end might be more nefarious than the alternative for anyone with more than a few years left there and certainly for the rest of the industry.
I don't know how they will handle this situation, other than to state the obvious that at the very least the lump sump payouts will either end or be significantly reduced and the program will very likely end up frozen. Beyond that anything is possible, depending on whatever else happens. But pick your poison.