Flight Attendant Feels Sting From United Fallout
Source: Birmingham Post-Herald
Author: Elaine Witt
Reared on a farm in Boaz, Sherry Powell-Wyatt hadn't seen much of the world when she went to work as a courier for a space program contractor in Hunstville in the early 1960s.
Her boss was none other than the famous German-American space engineer Wernher Von Braun, and it was he who suggested that she pursue a career in the growing commercial airline industry.
She was offered stewardess jobs by five carriers, but went to work for the first one that asked, United, in August 1966.
In those days, stewardesses (they didn't become "flight attendants" until years later, after their ranks were opened to men) were subject to bra and girdle checks and strict weight requirements. When they married, became pregnant or reached their 32nd birthday, they were required to resign.
Those rules eventually were lifted, allowing Powell-Wyatt to have a family and a 39-career airline career. Based in Hawaii for most of those years, she saw a great deal of the world, including the flight she considered most memorable — her first visit to Communist mainland China.
United's flight attendants weren't the top-paid in the industry, she said, "but it was OK. ... We didn't pay for our medical, and we had our pension we could count on."
When United downsized its Honolulu base in the mid-1990s, Powell-Wyatt transferred to Chicago and moved to property that's been in her family for generations in north Alabama.
Like a number of United employees in Alabama, she commuted to her Chicago base on unfilled airliner seats; if none were available, she bought a discounted seat on another airline.
In 2003, after declaring bankruptcy, the airline asked senior employees to take early retirement. The pitch was that the retirements "would save junior flight attendants' jobs," Powell-Wyatt recalled. "Our pensions would be intact and our medical was guaranteed.
"Of course, nothing was ever in writing, which was dumb. But we took them at their word."
Not long after the mass retirements, the company announced plans to cut retiree medical benefits. The Flight Attendants Association successfully fought that plan.
In recent months, the company has launched a plan to default on its pension plan, turning it over to the federal Pension Benefit Guaranty Corp.
A bankruptcy judge has approved United's default on $9.8 billion in pension obligations. The PBGC, a pension insurance program funded by its members, will pay $6.6 billion. The other $3.2 billion will be absorbed by 130,000 United workers and retirees like Powell-Wyatt.
When she retired 18 months ago, Powell-Wyatt's pension benefits were calculated at $1,981 per month. This week, she was informed by the PBGC that will be cut by about $700.
She knows she's more fortunate than some. The cuts are based on a complex formula which will leave some United retirees with less than half the pension benefits they were promised. Although her second husband, a retired United pilot, also is facing severe pension cuts, he also draws a military pension. And the couple has extra income from some rental properties they own.
Still, she says she wouldn't have retired if she'd known.
"For many of us it's too late to turn the clock back. You can't go earn that benefit ever again. I've lived the first two-thirds of my life, and that's a fact. It has to be faced," she said.
The terrorist attacks of Sept. 11, 2001, played a role in United bankruptcy, but the handling of the pension fund is blossoming as its own scandal.
In a story published July 31, Tthe New York Times reported that seeds for the pension fund's doom were planted in the late 1980s, when the fund's managers moved most of its assets from relatively safe bonds into the riskier stock market. Based on Wall Street promises that stocks would appreciate in value more quickly than bonds, United reduced its annual contributions to the pension fund, the Times reported. After the Sept. 11 attacks, both the airline industry and the stock market crashed, and the fate of the pension was sealed.
The failure also has been linked to an expensive contract the company negotiated with its pilots in 2000. And a string of top executives has come and gone in recent years, each drawing generous compensation packages as they came and went.
For employees, a major sticking point at the moment is that a $4.5 million pension benefit set aside for United's current chief executive, Glenn Tilton, will be unscathed.
For the nation at large, a concern is that if United is allowed to dump its pension obligations on the quasi-governmental PBGC, other companies will follow suit. Delta and Northwest airlines already have announced an interest in doing just that.
And if enough companies default on their pensions, taxpayers could be left paying the bill.
For the average American worker, the message is that you can't count on anything.
Health care costs are soaring, but employers don't like to cut medical benefits for active workers; employees notice that.
Employees don't have access to much information about the investment of pensoin funds. By the time they find out the accounts have been underfunded or improperly invested, it's too late.
For many veterans of the "friendly skies," it's too late now.
Elaine Witt's column runs Tuesday, Thursday and Saturday in the Birmingham Post-Herald.
