Originally Posted by TheManager

VIII. Conclusion
We analyze the ability of airlines to renegotiate wages, using their financial position to extract
concessions from labor. Our empirical results indicate that airlines in poor nancial position are
able to renegotiate and reduce labor costs of those employees whose pension plans are underfunded.
Furthermore, exploiting the exogenously given PBGC maximum guarantee, we show that airlines
extract larger concessions from employees with average salaries higher than the PBGC limit. Our
evidence supports the view that rms take advantage of their nancial position when negotiating
with labor and strategically use the threat of `pension dumping' to extract concessions from labor.
As such, our paper should be viewed as part of a growing literature on the interplay between
nance and labor market conditions. Recent events in the financial crisis of 2007{2009, and the
ongoing disruptions in the labor market, underscore the importance of a deeper understanding of
such rm-labor interactions.