Can judge wipe out workers’ pensions?

It ain’t over ‘til it’s over.

Eugene R. Wedoff, an anti-union U.S. bankruptcy court judge, has wiped out the pension funds of four unions at United Air Lines. With a stroke of the pen, the judge killed $9.8 billion in contractually guaranteed pensions won over decades of sacrifice and struggle.

Can he make it stick?

UAL flight attendants, retirees, active employees and other union members, who packed the court, will yet have the last word. Starting May 10, they took time off from their jobs and poured into Chicago from many parts of the country to vent their fury over the decision.

The overflow crowd spilled into other court areas. They cheered their lawyers as they defended the pensions and booed the super-rich UAL executives who attended the hearing. Following the court’s illegal decision, union members chased UAL Chief Financial Officer Frederick F. Brace III down the street into a bar chanting “CHAOS! CHAOS!,” an acronym for Create Havoc Around Our System.

CHAOS strike coordinators are in place to mobilize a massive fightback. The Associ ation of Flight Attendants/Com muni cations Workers of America (AFA/ CWA), has overwhelmingly authorized the use of CHAOS strikes to protest any unilateral changes in the contract.

An unprecedented swindle

The pensions, called defined benefit con tribution plans, were signed and sealed over many years to assure employees a modest but guaranteed nest egg for retirement. They were to be held in trusts, as property belonging to the retirees and current members, who contribute the labor power, skills and experience that keep UAL flying.

Judge Wedoff exceeded his authority by abrogating the four pension plans. He conspired with UAL and the Pension Benefit Guarantee Corporation (PBGC), a quasi-independent government insurance agency, to rob over 120,000 employees of their righteous equity.

With a stroke of the pen, he cleared the way for the largest pension default in U.S. corporate history. By approving UAL’s proposal to turn over four underfunded employee pension plans to the PBGC, UAL has walked away from $3.2 billion owed to the workers and retirees and dumped $6.6 billion of its fiduciary responsibility on this government-sponsored agency, which is already deep in the red.

Pension funds in crisis

Last year the PBGC’s books showed $62 billion in long-term obligations to pay workers’ pensions, but only $39 billion in assets. The $23-billion shortfall was double the previous year’s gap and continues to grow. The agency has taken over the pension plans of 141 bankrupt steel companies, with underfunding totaling $10.2 billion, and 12 airlines, including UAL, with underfunding of $11.6 billion.

In other words, bankruptcy has become a convenient way for corporations, which have paid out billions in profits to managers and owners, to foist their pension obligations onto the taxpayers.

By its own estimate, the defined benefit pension plans guaranteed by the PBGC are underfunded by a total of $450 billion.

According to the Center on Federal Financial Institutions, a Washington think tank, “The agency will run out of cash and rack up a $78-billion deficit in 16 years.” A domino effect is inevitable. Already, competing airlines and other sections of corporate America are eliminating their pension liabilities. A PBGC crash may come sooner than later.

UAL workers and retirees have been illegally dragged into the cesspool of PBGC debt. Their pension plans have been in place for decades under contracts that are still enforceable. They were broken when the bankruptcy judge awarded PBGC a bonanza valued at $1.5 billion—$1 billion in notes and $500 million in preferred stock—to take over UAL’s huge pension liabilities.

The PBGC is normally an unsecured cre ditor in bankruptcy court. The agency estimates the average recovery at just seven cents for every dollar of underfunding in a failed pension fund. They are all violating the Employment Retirement Income Security Act (ERISA), passed in 1974, which guaranteed an earned defined-benefit pension.

Corporations are required to set aside funds to pay these pensions. When they default, ERISA guarantees a grievance and appeals process to fight violations.

The union lawyers are well aware of this illegal and underhanded deal carried out behind the backs of the hundred of thousands of employees and retirees. Word going around is that the lawyers are going to appeal the court’s illegal decision. AFA/CWA members are prepared to support it with CHAOS.

According to CHAOS coordinators, “CHAOS is a strategic and coordinated campaign designed for maximum impact ... . We will not announce CHAOS strikes prior to their implementation. ... CHAOS is a strategy of intermittent strikes that could take the form of a nationwide strike for a day or a week, a single city for an afternoon or a single flight at a remote location.”

The coordinators also confirmed that “Flight attendants at 26 airlines represented by AFA have pledged to support a CHAOS strike action in the event any Flight Attendants Contract is unilaterally changed.”

This past December, the AFA/CWA organized a march on Washington. Large contingents from other airlines attended. Members of the International Longshore and Warehouse Union and others joined the march. When the rally ended, they marched to the White House chanting “CHAOS! CHAOS!”

UAL mechanics are represented by an independent union. The International Association of Machinists (IAM) represents ramp workers, reservation clerks and other top-side service workers. If these two unions, which are supporting the flight attendants, engage in a strike or job action, they will get widespread sympathy.

AFA/CWA Council 5 flight attendants and supporters have already staged motor cades educating members and passengers at New York’s Kennedy airport about CHAOS. They are winning public support as they picket, leaflet and rally on the 1st and 16th of each month to protest the UAL attacks on their jobs, wages and pensions.

They are exposing Glen F. Tilton, UAL chief executive, and his high-priced cronies, who found a way to save their pen sions, bloated bonuses, salaries and guaranteed stock options. They want Tilton, a former Texaco CEO, to resign. He has mismanaged the second-largest airline in the country. UAL has lost billions since it filed for bankruptcy in December 2002.

In September 2004, the AFA/CWA joined the IAM in a motion filed earlier in bankruptcy court to appoint a new trustee, a move that would unseat Tilton. After UAL filed for Chapter 11 bankruptcy in December 2002, the company could no longer claim ownership. It had to surrender the title and legally became a debtor.

However, it was granted possession of the airline’s assets by the bankruptcy judge, who appointed a UAL puppet to be trustee and run the airline. One of the first orders of the court, to be sure, was to guarantee these obscene and lucrative benefits to the entire UAL management.

Two of the UAL unions sit on a powerful creditors’ committee. They have the right to overturn the trustee’s decision. But the unions are a minority and are outvoted by powerful forces that represent banks like Citigroup and J.P. Morgan Chase, who are bankrolling UAL with debtor-in-possession loans. They and the vendors who lease planes to UAL get top billing.

Clearly the tens of thousands of UAL union members should lay claim to ownership and workers’ control. They are the principal creditors. They fought to accumulate the equity that is now being stolen from them. They built the company with their experience, skills and sacrifices. What they gave up in lost wages ($2.4 billion), pensions ($9.8 billion), and other benefits should make them the primary creditor to assert their rights to run the company.

CHAOS and the combined power of the labor movement, which has a huge stake in the pension crisis, can make this a reality. It will take a general strike—even if just for a day. This may sound daring and far out. But so was the idea of organizing unions in the 1800s, and occupying plants and organizing general strikes in the 1930s.

The UAL unions are on the firing line. They are preparing their members for a fightback against a conspiracy orchestrated by the government, its agencies and the billionaire tycoons of corporate America.

It will take an independent, class-wide movement—a development that is alien to a labor bureaucracy in disarray—to turn back an unprecedented, relentless economic assault against the workers and the oppressed. Meanwhile the White House, Congress and both capitalist parties can agree to divert hundreds of billions to finance endless wars and occupations.

The airline workers can be the spark to fire up the labor movement. It’s long overdue.