Chip's Response To Cosmo

[Cosmo]

Fitch Ratings issued a press release this morning that discussed a potential reduction in airlines' pension funding requirements due to a provision in the defined benefit pension reform bill now under consideration by the U.S. Senate. If enacted into law, this could have a significant positive impact on airline finances during the next few years. Here's the press release.

Interestingly, the press release also noted that the airlines' unfunded pension liabilities have been reduced due to increases in asset valuations and interest rates since the end of 2002. Here's an excerpt:

"For the major U.S. airlines, like companies in many other mature industries, the combination of poor market returns and declining interest rates over the past three years has created a situation in which plan asset values are well below the 80% funding threshold. As of year-end 2002, the pension plans of the six largest U.S. network airlines (American, United, Delta, Northwest, Continental and US Airways) were all funded at less than 65% of the projected benefit obligation (PBO)--a common accounting measure of the pension liability. Since the beginning of the year, however, the industry funding gap has narrowed as a result of strong plan asset returns and an increase in interest rates from the historically low levels seen this spring." (My emphasis.)

Now, it's hard to say in precise dollar terms how this has affected United's underfunded pension plans. But clearly the company that would rate United's business plan for the ATSB (if the carrier pursues a guaranteed loan) believes that "the market" is helping to reduce United's pension underfunding and thus improve the carrier's prospects to emerge from bankruptcy, at least to some extent. So this will make one of United's remaining hurdles somewhat easier to overcome.

 

[Busdrvr]

Very interesting info. and point of view from an accoutants perspective! I am truly impressed! Best of luck with the outcome from ch11

BBD, lets just hope the latest version of pension"reform" passes and you guys get your A-fund back. Hopefully this is one issue that ALL the union groups at ALL the airlines can get behind.

 

[Busdrvr]

Since the beginning of the year, however, the industry funding gap has narrowed as a result of strong plan asset returns and an increase in interest rates from the historically low levels seen this spring." (My emphasis.)

The Nasdaq QQQ index is up approx 32% YTD UAL pension assumes a meager 8.75% ROR, so the diff closes the gap

 

[Bear96]

busdrvr I have to say I have a problem with you posting on this thread. We expected Chip (and other UAL naysayers) to stay out of threads that said "UAL employees only;" it's only fair we do the same if asked.

And I don't buy your reasoning that since nasty things are being said about UAL here, that trumps the "U folk only" request. This will just lead to everyone ignoring requests that only certain people respond.

While I don't really agree with that policy in the first place (it doesn't really address the issue that we were complaining about), it is only fair that if this is indeed this message board's policy (largely because of the requests of some UA employees, if I am remembering my history correctly), you should respect it the way you expect others to.

 

[Busdrvr]

And I don't buy your reasoning that since nasty things are being said about UAL here, that trumps the "U folk only" request. This will just lead to everyone ignoring requests that only certain people respond.

I disagree. but if you don't want to post, don't. If you started a thread that was titled "Chip sucks" and then said "UA customers and employeees only", would you think it appropriate to exclude Chip from it? You make false statements concerning UAL, I'm gonna respond. Notice Chip's dropped the "poor revenue performance" part of the song and dance? as far as other "neysayers", I think the SHOULD post. this isn't USAir.com or UAL.com. you got some info, post it. You got an opinion, post it. I just tire of certain folks INTENTIONALLY mistating facts to support a flawed arguement or agenda. Bash away, just have a relavent and current factual basis to bash from

 

[USA320Pilot]

Busdrvr:

It's clear that you do not understand respect. UnitedChicago started the United Employees and Customers Only threads that you endorsed and now you cannot play by the same rules. Some what hypocritical, isn't it?

Analyst's comments are accurate and well researched and I commend him or her for their work.

In regard to the UA pensions, Duane Woerth, ALPA International President, told the US Airways MEC in Open Session that if there was not pension legisliatve relief, he believes UA "may not emerge from bankruptcy."

That's a strong statement from the president of the National union.

Meanwhile, we should know more about the UA DIP financing problem, UCT derivative, Pittsburgh hub resolution, and the UA pensions, which could be terminated, in the near future.

By the way, I request that you stop posting in these threads, which I did when requested, otherwise I may go and post on the UA boards in response to your actions.

Respectfully,

Chip

 

[Busdrvr]

Busdrvr:

It's clear that you do not understand respect. UnitedChicago started the United Employees and Customers Only threads that you endorsed and now you cannot play by the same rules. Some what hypocritical, isn't it?

Analyst's comments are accurate and well researched and I commend him or her for their work.

In regard to the UA pensions, Duane Woerth, ALPA International President, told the US Airways MEC in Open Session that if there was not pension legisliatve relief, he believes UA "may not emerge from bankruptcy."

That's a strong statement from the president of the National union.

Meanwhile, we should know more about the UA DIP financing problem, UCT derivative, Pittsburgh hub resolution, and the UA pensions, which could be terminated, in the near future.

By the way, I request that you stop posting in these threads, which I did when requested, otherwise I may go and post on the UA boards in response to your actions.

Respectfully,

Chip

Duane Woerth has an agenda. Protecting his pension and getting yours back.

I "respect" your right to "exclude" folks from responding to an inaccurate and slanderous attack, and in the spirit of your position, I'll start a thread Called "Chip's a @#$@#$ Lier" I'll stipulate "folks with a clue only" so by your "rules", please don't respond.

 

[USA320Pilot]

Cosmo:

I am actively involved with H.R. 2729 and the Airline Pension Act, which has bipartisan support in the House, but does not have a sponsor in the Senate.

In regard to the Fitch report, the proposed Senate legislation would potentially defer pension plan payments, but may not provide the relief United would need to qualify for the federal loan guarantee.

Interestingly, the same credit rating that issued the report you referenced, must independently audit United's loan guarantee application again and certify the company can post a 7% profit margin in 7 years, which may not be possible.

Finally, today I learned some interesting information from ALPA R&I regarding United's pensions and I am even more sanguine about the company's prospects going forward.

Respectfully,

Chip

 

[N628AU]

This board is becoming more and more childish everyday. We are quickly making our way down the path to Yahoo!dom if people don't grow up. In defense of Chip, he is taking a shot at the UAL board where someone posted a "such and such only please" subtitle to the thread. It needs to stop here. If you want someone specifically to respond PM them. This is a public board. If you pay attention to the rules set forward by the operators of the site, you have no problems, and I have never seen them move to censor anything except what is out of bounds. Grow up everyone, so we can get back to meaningful discussion.