United workers' dreams on hold

By Marilyn Adams
USA Today

For 39 years, Earl Potter has fixed airplanes for United Airlines.

He rises at 4 a.m., arriving at Chicago's O'Hare International Airport by 6 a.m. to work in rain, biting cold or summer heat.

Potter, who also has a pilot's license, has worked awful hours all these years knowing he could retire with a full pension this year at age 60. His dream: to leave Chicago and run a small-town airport.

But now Potter's dream, and his life, are on hold. United's decision to default on its pensions has left Potter and nearly 123,000 other current, retired and former United employees in a bewildering bureaucratic limbo. A Chicago bankruptcy judge last month granted permission to United to transfer financial responsibility for its pension plans to government insurer Pension Benefit Guaranty Corp., or PBGC. It's the largest corporate pension default in the U.S.

Now, United employees and retirees are finding that pension "insurance" is a loose term that doesn't mean they will get what they expected when they expected it. Promises made in past labor contracts and personnel letters are moot, and no one will tell them what they can expect now.

The PBGC has an extensive Web site and an 800 number, but the agency says it can't give callers specific numbers because it doesn't yet know the exact value of funds it will get from United to help pay benefits. Also adding to the uncertainty are multiple court challenges that could delay the transfer.

United is the second industry player to go down this road, after a default by US Airways. With industry losses mounting by the billions, more airline workers could face the same.

Some United people are so uncertain and so scared, they are preparing to sell their homes or other assets, return to work or see their spouses go to work to avert financial crisis.

Potter, who turned his retirement forms in to United in April, hastily withdrew them after learning the PBGC is taking over. A lead mechanic, Potter is afraid to give up his $61,000 a year job now that his long-anticipated $39,670-a-year United pension is gone.

He knows it wouldn't be more than $29,649 a year, or a 25 percent cut from what he had been promised. That's the most PBGC will pay anyone who retires at 60. The PBGC has notified retired United ground workers, such as mechanics, that it has taken control of their plan. But how soon it will take over the plans for United's pilots, flight attendants and management workers depends on how soon the court rules on the legal challenges and how quickly the PBGC's bureaucracy can move.

The PBGC says it could take two years from the takeover to determine everyone's benefit.

Muddying the waters are three legal challenges to the pension terminations by unions for pilots and flight attendants, and by a group of retired pilots. They could at least delay transfer of the plans and determination of benefits. Retired pilots complain they are victims of a Catch-22. Federal aviation law requires airline pilots to retire at 60. PBGC views that as retiring early, which it penalizes with a reduction in benefits. The maximum PBGC payout at 60 is $29,649.

Retired flight attendant Gail Rodosevich, 55, is so worried about her future that she has launched a new career selling skin products from her home in Pueblo, Colo.

She retired in April 2003 under an early-retirement package from United that included a pension and medical insurance. Rodosevich collects $20,424 a year from her United pension, within the PBGC maximum for a retiree her age.

Her pension checks should stay the same, but she fears her health insurance is at risk. Last fall, her share of the insurance premium jumped $188 a month when United made cuts as part of its bankruptcy-court-protected reorganization.

Rodosevich has lingering pain from a serious spinal injury she suffered when turbulence threw her backward during a flight. She was off her job nearly five years through three surgeries.

Her husband, Chuck, who draws a pension from the state of Colorado, has chronic health problems.

"United says it told us things could change in bankruptcy," she says. Chuck, 57, is job-hunting, and they are considering moving to a smaller house, "so we're not at the mercy of the government."

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