Pension Skies Get Unfriendly
Source: The Arizona Republic
Author: Maggie Galehouse
How will we pay bills? United retirees ask
SCOTTSDALE - When Sandi Peattie went to work as a stewardess for United Airlines in 1965, the company was intent on projecting a wholesome image.
Young women with girl-next-door good looks became the face of the airline, the embodiment of United's motto, "Fly the Friendly Skies."
But 40 years later, after defaulting on the pensions of employees and retirees, United has lost its status as a friendly airline.
And though it has been months since the news broke, the shock has still not worn off for 60-year-old Peattie, who retired in 2003 and is worried about her future.
United's pensions are underfunded by $9.8 billion.
Pension Benefit Guaranty Corp., the federal agency that has agreed to take over United's obligations, is now responsible for three of the company's four pension plans.
The sums that the agency guarantees are, in many cases, much less than United employees and retirees were expecting. Pilots, who stand to lose the most because they earned the most, are the only employee group still pending.
Peattie, who made as much as $52,000 a year, retired with a package that guaranteed her $3,100 a month until she was 65, and $1,430 after that.
She has no idea if the Pension Benefit Guaranty Corp. will cut will meet either of those sums. It is unlikely.
"We expect letters to flight attendants informing them of cutbacks will go out in November," said agency spokesman Jeffrey Speicher. "The cutbacks will become effective with January's check."
About 1,000 of the 4,500 retired flight attendants will be affected, Speicher said.
Peattie is braced for the worst.
It isn't as if she failed to plan for retirement. In December 2002, when United declared bankruptcy, Peattie refinanced her house and paid off her car.
But if her pension is cut, Peattie said there is "no way" she could pay her bills without going back to work.
Pension drawbacks
By today's standards, the pension Peattie and many other career United flight attendants earned is generous, said Ken Klingler, a retirement practice leader in Watson Wyatt's Phoenix office.
But the drawbacks to such a plan are clear.
"If you have a rich pension promised," said Klingler, "your security is somewhat compromised depending upon your company's financial situation."
Over the years, employers have shifted benefits from pension plans to 401(k)s, said Klingler, so most existing pension plans for those earning $50,000 would be covered by the Pension Benefit Guaranty Corp.'s guaranteed sum.
Even so, for Peattie and hundreds of other United flight attendants in a similar situation, this is a personal tragedy, Klingler said.
The benefits and travel are the main reasons many flight attendants took the job in the first place.
And some have been treated well by the company.
Karen Shannon, who lives in Scottsdale, flew with United from 1961 until 1986, when she was diagnosed with multiple sclerosis.
The final months of her job, which included flights to Sydney, Tokyo and Auckland, New Zealand, were rough. She was exhausted, with shaking hands and wavelike sensations down her spine.
"I was thrown once, during turbulence, and I had to crawl back to my jump seat," said Shannon, 67.
After a year of sick leave, followed by seven years of medical leave, Shannon retired in 1994.
"Even then, trying to find out what my pension was going to be, I got five different answers," Shannon said.
She ended up with about $700 a month in her pension, which supplements additional income.
Just last month, Shannon got word from the Pension Benefit Guaranty Corp. that because she retired on disability, her pension amount will remain the same.
"I'm very lucky," Shannon said.
Going to court
The flight attendants' union has filed two separate court actions in response to United's sellout.
One suit argues the Pension Benefit Guaranty Corp. violated federal pension law in the action that led to the takeover of United pensions.
"Our pension plan is the most affordable and, because of the unique circumstance, federal law says each plan should be reviewed on its own merit," said Sara Nelson Dela Cruz, a United flight attendant and spokeswoman.
In a case against United, the union is appealing the bankruptcy court's approval of the company's deal with the federal agency.
"United went around the court process on May 11 to determine whether pension plans should stay in place," Dela Cruz said.
This is hardly the first time flight attendants have challenged United's decisions or taken their company to court.
In the 1960s, stewardesses, as they were then called, started disputing company guidelines related to height, weight, gender and age.
"Back then, five feet two was the shortest you could be, and you had to be super skinny," said Connie Baker, 59, a retired United flight attendant who lives in Fountain Hills. "In 1967 we had to wear girdles, and we had girdle checks. Supervisors would snap you to make sure you had your girdle on."
A lot of training in those years was focused on appearance and etiquette.
"They gave us make-up lessons," Baker said. "They took us all to a salon in Chicago near the training center and cut our hair, which could not touch our collars. They taught us how to sit and stand."
Changing faces
By the end of the 1960s, United had gotten rid of mandatory retirement for flight attendants at age 32.
By 1970, girdles, spike heels and gloves were phased out of the uniforms and, by the end of the 1980s, the no-pregnancy requirement, weight restrictions and other issues were partly resolved through negotiation and litigation. Throughout the 1990s, flight attendants fought hard for raises and benefits packages.
Despite it all, Peattie, Shannon and Baker loved their jobs.
Flying was considered an event and a privilege in the 1960s and early 1970s.
"If you've ever seen the movie Catch Me If You Can, it was like that," said Baker. "Passengers dressed beautifully. Women wore heels and men wore suits and ties."
The Airline Deregulation Act of 1978 let airlines to set their own routes and, after 1982, set their own fares. For flight attendants, the glamour went away, but not the fun.
"We do champagne things on a beer budget," said Jer'i Conway, 56 a United flight attendant who lives in Fountain Hills. "I enjoy my international layovers. I'm shopping in Beijing and think, They're paying me to do this. It's a constant state of flux and I enjoy that. I'd be bored working 9 to 5."
Yet Conway made many concessions to keep her job in the years before and after United declared bankruptcy.
Most significantly, she has taken two major pay cuts.
"I'm down a good 40 percent (of) what I was earning three years ago," said Conway, who has a daughter in college. "I am the only income. My husband is semi-retired. We moved here when he had cancer and was going through chemo."
Conway is already having a hard time meeting her budget.
She planned on getting about $2,500 a month for her pension, but now expects about 80 percent of that.
"I see in the near future having to sell our house," she said.
Sense of humor
Yet because flight attendants are trained to make the best of challenging situations, the pending pension cuts have not deflated the spirits of United retirees.
In May, Baker and husband Bruce released a calendar called "Stewardesses Stripped (of their pension?)" It features tastefully provocative photos of Baker, Conway and three other United flight attendants, accompanied by terse, humorous messages. The message below a leggy brunette in a maid's uniform reads, "Coffee, tea or . . . me without a pension?"
A flurry of media attention, including spots on the Today show and Inside Edition, helped get the word out about the pension plight and boost sales of the $14.95 calendar, available at www.stewsstripped.com.
"We're still getting orders every day," Baker said. "We've sold around 7,000."
And Sandi Peattie has started her own company. Living by Design . . . décor and more, at email: one4decor@cox.net, is an organizing and home redesign business.
The irony, said Peattie, is that she didn't want to retire early. But when United froze pensions and increased medical costs in 2003, it didn't make any sense to keep working.
"All of us that left absolutely loved our jobs," Peattie said. "It was in our blood."
