Originally Posted by Lewbronski

Over on the United forum, a couple of their guys are pointing out changes since the big airline bankruptcies of the mid-2000’s that they’re saying make the situation you’re describing much less likely, maybe even near-impossible, to occur again.

First, the Pension Protection Act of 2006 changed the requirements for the way companies fund their pensions. I’m not claiming to have a firm grasp on this subject, but apparently it’s much more conservative now, making the possibility of underfunded pensions that end up in the hands of the PBGC much less likely. And then, the law changed some things about the PBGC to make it less likely that pensions that end up being taken over by them less likely to take a hit.

Second, the 2007 changes to chapter 11 bankruptcy law significantly reduce the incentive for airlines to enter into bankruptcy compared to before. My understanding is that all of the big airlines entered bankruptcy prior to the new changes became effective and that they wouldn’t have fared nearly as well after the changes. But regardless, the Pension Protection Act still would have likely resulted in pensions remaining preserved.

I definitely don’t have my mind wrapped very firmly around how these two changes impact the situation other than a little bit of my own research that I’ve done and what is being said by the guys over on the United forum.

I’d appreciate it if you could offer your two cents on how these two changes do or don’t change the situation for pensions.