Continued Losses

[Cosmo]

I'd be shocked if UAL was #1 in Virginia.

United might be the largest private (i.e., non-governmental) employer in Northern Virginia. But I'm almost certain that it's not true for the state of Virginia overall (consider the Norfolk-Southern Railroad and Newport News Shipbuilding, to name only two that are likely to be substantially larger than United on a state-wide basis).

 

[uafa21]

The PBGC will file suit on Ua and will win a judgement. They proved this when they filed on USair. They will do the same against Ua. The problem is Ua has past obligations with the PBGC and has not yet terminated pensions. You can't have it both ways and Ua will find out the hard way in court.

As far as big finacial institutions lining up to loan Ua money, this is a dead wrong statement. Ua is in fact having a hard time finding money. The loans are there but there are covenants in order to get the money. When and if, Ua gets the funds there will be covenants placed on the loan. Ua is not a good risk right now. They have not yet proved they can be profitable. Driver says look at ebit, the bankers look at operating profit, overhead, debt ratios, liquidity, and collateral value. Serveral if not all these are missing or are out of range.

This company didn't face facts 3 years ago. It has affected the future of us. You can't trow billions out the window and recover very quickly.

 

[WorldTraveler]

The PBGC's decisions on United are and will be made within the context of the entire airline industry and every other company that sponsors defined pension benefit plans. It is very possible that the PBGC will allow UAL to tank if that is what it takes to keep them from having to take over many other pensions.

 

[767jetz]

PBGC is never going to make it look easy to dump pensions but they can't MAKE United pay something they don't have money to pay for. Wouldn't a forced pension payment ensure liquidation AND still force PBGC to pay the pensions? (not mentioning all the unemployment for those above states)

[post="230912"][/post]​

Exactly. Same goes for the unions. They won't make it look easy, and won't let it go without a fight or at least without getting something in return. But if UA has to pay what it can't afford and it results in liquidation, then the employees still lose their pension. Either way, it is gone.

 

[767jetz]

The PBGC will rebuff UA's schemes simply because the alternative is to absorb every other discarded pension plan by mismanaged businesses is not an option for the PBGC.

You are delusional.

[post="230926"][/post]​

Not true. Back to the auto insurance analogy. They can't disallow a claim because they think it will set a precident that other "arrogant" drivers might have accidents and submit a claim. That's the whole reason they exist, and it's the reason UA and every other company paid in to them for so many years. If they refuse, I suppose we can demand a refund of the years of premiums paid in all those years.

As for the idea that the PBGC is on the hook for everyone's pension, I don't believe that is entirely accurate. In the example of TWA many years ago, I think the PBGC initially paid benefits for 6 months or so out of their pocket, until the particulars were worked out. Then they buy an annuity that pays the individual their guaranteed amount based on the "bucket" they fall into, and the PBGC walks away from that obligation. Once the annuity is purchased, the person gets their $ regardless of what happens to the PBGC.

 

[767jetz]

The PBGC's decisions on United are and will be made within the context of the entire airline industry and every other company that sponsors defined pension benefit plans. It is very possible that the PBGC will allow UAL to tank if that is what it takes to keep them from having to take over many other pensions.

[post="230945"][/post]​

Now who's delusional??????????

Do you hear what you are saying? If UA tanks, that is about the most definitive way to have a distressed termination. The PBGC still ends up covering their obligation. Otherwise, what is the point of even having the PBGC??? The PBGC has no say over "letting" UA tank. The judge will say either yes or no to the termination, and that's that.

What part of this are you not getting?

 

[767jetz]

As far as big finacial institutions lining up to loan Ua money, this is a dead wrong statement. Ua is in fact having a hard time finding money.

[post="230944"][/post]​

You have no idea what you're talking about. Go to a union meeting and get some facts please.

There is money to be had if we meet certain targets. And those targets have been set by the people with the money. It's that simple.

 

[uafa21]

Interesting replys here. I think like worldtraveler. The pbgc has more power than what we think. I think they will set a precedent and try to force Ua tank as well. They don't want every other airline dumping their pensions. There would be a huge taxpayer revolt.

The problem is though, that Ua has continued with the pension plan, however, they have failed to contribute. It's like a past bill that accures, you may want to stop the service but you still have to pay the bill up to date. Ua will not get out of that bill. The company can ask to end pesions going forward, but they have accured several billion in past several years without paying.

 

[Dave]

Interesting replys here. I think like worldtraveler. The pbgc has more power than what we think. I think they will set a precedent and try to force Ua tank as well. They don't want every other airline dumping their pensions. There would be a huge taxpayer revolt.


And how exactly is the PBGC going to force UA to tank? Some kind of ultra secret conspiracy (USC) involving the banks?

And if they could somehow force UA 'to tank', do you realize that they will still be on the hook, even more so, for the employee pensions?

 

[767jetz]

The pbgc has more power than what we think.

[post="230963"][/post]​

This is simply nonsense. Thoughts of consipiracy abound. The PBGC has exactly the power they are legaly entitled to. No more. No less. And in BK the company and the court have all the leverage.

I think they will set a precedent and try to force Ua tank as well. They don't want every other airline dumping their pensions. There would be a huge taxpayer revolt.

[post="230963"][/post]​

They can not force anything. And as many of us keep saying over and over again is that IF UA "Tanks" then the pension goes right to the PBGC's lap anyway.

The problem is though, that Ua has continued with the pension plan, however, they have failed to contribute. It's like a past bill that accures, you may want to stop the service but you still have to pay the bill up to date. Ua will not get out of that bill. The company can ask to end pesions going forward, but they have accured several billion in past several years without paying.

[post="230963"][/post]​

First of all, the company has not accrued billions of debt without paying, as you stated. They are underfunded for many reasons, not the least of which is the return on the stock market since 2001. UA was up to date on required payments right up to the point they entered bankruptcy. In BK, not all the past bills must be paid. It is up to the judge, and his main focus is preserving the entity if possible. If they can prove that they must terminate the pensions in order to emerge from BK, then it will happen. It doesn't matter whaqt anyone else likes, wants or believes.

 

[Blues`]

This is simply nonsense. Thoughts of consipiracy abound. The PBGC has exactly the power they are legaly entitled to. No more. No less. And in BK the company and the court have all the leverage.
They can not force anything. And as many of us keep saying over and over again is that IF UA "Tanks" then the pension goes right to the PBGC's lap anyway.
First of all, the company has not accrued billions of debt without paying, as you stated. They are underfunded for many reasons, not the least of which is the return on the stock market since 2001. UA was up to date on required payments right up to the point they entered bankruptcy. In BK, not all the past bills must be paid. It is up to the judge, and his main focus is preserving the entity if possible. If they can prove that they must terminate the pensions in order to emerge from BK, then it will happen. It doesn't matter whaqt anyone else likes, wants or believes.

[post="230975"][/post]​

i disagree, the judges main focus is to see that whatever debt is due to shareholders and lienholders... as well as all other creditors are protected , and if in the end the sum of the parts is worth less than the whole then i believe the decision will got that way... there has already been discussion of the fact that since bk was entered the company has had the efforts of the employees as a credit and the resultant pension payments have not been made.... either way this will set bk and pension precedent.... we are in uncharted financial waters

 

[Falco]

Let's get down to basics-if I were the PBGC, what would I do? I know that UAL will terminate the pension plan, so I've got that on my books no matter what. If UAL can jettison the pensions, does that mean the other airlines will? Highly likely. How can I stop this? Make sure United gets shut down, the resultant decrease in capacity makes it much less likely anyone else will terminate their pensions. A no brainer in my mind, fight the termination as far as I have to.

 

[Busdrvr]

i disagree, the judges main focus is to see that whatever debt is due to shareholders and lienholders... as well as all other creditors are protected , and if in the end the sum of the parts is worth less than the whole then i believe the decision will got that way...

[post="230994"][/post]​

I suggest you do a little more research on corporate BK.

 

[aafsc]

Let's get down to basics-if I were the PBGC, what would I do? I know that UAL will terminate the pension plan, so I've got that on my books no matter what. If UAL can jettison the pensions, does that mean the other airlines will? Highly likely. How can I stop this? Make sure United gets shut down, the resultant decrease in capacity makes it much less likely anyone else will terminate their pensions. A no brainer in my mind, fight the termination as far as I have to.

[post="231000"][/post]​

Very good post. I was thinking the same thing. Scenario #1: UA liquidates, the PBCG assumes pension liability, capacity is reduced, ticket prices rise, and the other airlines become profitable and are able to fully fund their pensions. Scenario #2: UA dumps their pensions on the PBGC along with US and emerges as a leaner meaner competitor. As my ex-TWA redheaded friend (MCI transplant) points out on another thread, this WILL set a precedent and I am in total agreement. Not only will all the other airlines do the same, but companies in other industries will partake in the festivities. This will overwhelm the PBCG and it will go bankrupt. And does anyone really believe that this labor-hating president we have along with a republican controlled government will use tax payer money to fund the PBGC? Of course not! What this means is that nobody from any airline currently in business (UA,AA, etc) or long since dead (Eastern, Pan Am, TWA) will receive their PBGC checks. Not only airlines but all companies with a defined benefit who was taken over by the PBGC will lose their benefits. Those currently receiving benefits will stop receving them. Yet another slap in the face by this administration.

 

[casual rat]

The only problem that I see is that just as soon as capacity is reduced, other carriers start buying planes, running for Market Share. Which leads us back into.....overcapacity. Just a thought....