Why is the situation for Tribune employees not the same as it was for United Airlines (UAL) employees who were in an ESOP and lost much of their retirement value when UAL filed for bankruptcy in 2002?
In the UAL situation, many employees were required to make wage and benefit concessions in order to participate in the ESOP. Unlike the UAL situation, Tribune employees are not being asked to give up any salary or wages or “roll-over” any existing retirement accounts into the ESOP. The new retirement package will also include a cash balance plan that provides a 3 percent annual allocation to employees, which has the effect of creating a “floor” retirement benefit on which employees can rely. Employees will also be able to continue to contribute to the 401(k) plan. Those two benefits would be safe even under a bankruptcy of Tribune. And, as described above, all existing retirement benefits are secure. It is also important to note that the existence of an ESOP did not, by itself, lead UAL into bankruptcy. UAL experienced many problems in their operations and industry which ultimately led to its bankruptcy. Like most airlines at that time, UAL suffered from high labor costs, rising fuel c
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