United Airlines: Avoid Liquidation or Honor a Contract

I can imagine the bankruptcy Judge in the United Airlines case asking himself if it would be better to let the airline go out of business or let it shirk its pension obligations. In fact, I believe that it would have been better had he decided to let United Airlines be liquidated. Some assets could have gone to funding the pension obligations. Liquidation would also have cleared away some of the competition from airlines that feel obligated to honor all their contracts.

The judge's decision has ramifications far beyond United Airlines. Now airlines that honor all their obligations are operating at a disadvantage. Though they may have the strongest desire to keep faith with their commitment to their employees, they may find that they too will have to dump their pensions in order to compete. Will the U.S. government's Pension Benefit Guaranty Corporation be able to handle the stampede?

Is this anyway to have to run an airline, let alone a country? The credit card companies can get legislation for strict bankruptcy rules to be imposed on their debtors. Why cannot pension holders get equally strict rules imposed?

If it's any consolation, at least we didn't have our Social Security private accounts invested in United Airlines pension funds.