A Stitch in Haste

Longtime readers know that I have been keeping one eye on the status of airline pension funds, since they serve as a good analogy for the Social Security crisis.

Well, this time it’s Delta Air Lines in the news, disclosing a $3.6 billion pension shortfall. By way of reference, Delta has only $1.8 billion in cash, and — like almost every airline — is not making much money these days. A PBGC bailout may well be on the horizon.

Ho hum, same old same old. But this little snippet caught my eye (WSJ - $):

Delta, Northwest Airlines and several other airlines are pushing the [pension reform] legislation, which would allow the loss-plagued airlines to stretch out the time they have to fund their obligations to 25 years and switch some employees to cheaper retirement-benefit plans.

Gee, mismanage your pension assets, promise the moon and when the bill comes due, cry poverty and try to change the rules. Where have we heard that before?

UPDATE: Another day, another airline hand-off to the PBGC--

A federal bankruptcy judge approved United Airlines' plan to terminate its employees' pension plans Tuesday, clearing the way for the largest corporate-pension default in American history.

The ruling, which carries broad implications for U.S. airlines and their workers, shifts responsibility for United's four defined-benefit plans to the government's pension agency. ... United's pensions are underfunded by an estimated $9.8 billion, of which the PBGC would guarantee only about $5 billion.

Get used to headlines like these, first from companies shedding their overpromised pension plans to the PBGC, then from the PBGC itself, then to Social Security.

And those who stick their political heds in the sand will be neither forgiven nor forgotten.