The Wall Street Journal has a headline writer with a real talent for understatement. A story titled "American Airlines falls short on pension payment" in fact centers on American's parent company, AMR, having paid just $6.5 million of a $100 million pension plan contribution it owed:
The shortfall threatens to further undermine funding at pension funds that cover 130,000 American Airlines workers and retirees, a Pension Benefit Guaranty Corp. spokesman said Thursday.
"The company has determined this is the appropriate course of action," an AMR spokesman said. "This action allows the company to preserve cash."
AMR filed for Chapter 11 bankruptcy protection in late November, saying it needed to cuts costs to stay competitive. Since then, the company has warned that it may reduce its pension commitments to employees as part of the restructuring.
Such statements have drawn a rebuke from the pension agency, which would inherit the pension funds' obligations if the airline was to terminate its employee retirement plans.
Only paying $6.5 million of $100 million you were scheduled to pay when you have total obligations of $18.5 billion is something rather more extreme than "falling short." It's failing to enter the race at all. I'm going to get really radical here and suggest that we keep "falls short" to describe cases where the difference between what should be and what actually is does not exceed 20 percent.
Basically, though, it looks awfully much like AMR is preparing to ditch its pension obligations, sticking the Pension Benefit Guaranty Corp. with the task of paying pensions that AMR knowingly promised its workers. The pension agency would likely not be able to pay the full amount the workers are owed, leaving those 130,000 people without the secure retirement they earned.
That's the corporate way these days: Get your workers to trade wages now for a pension later, underfund your pension, and then ditch it because it's just too expensive and you're really not going to face any negative repercussions for screwing over your workers anyway.