House Votes To Stop Ual Pension Default

[mrfish3726]

Gopher,

UniTED'S three time bid & refusal for an ATSB loan was because the Government didn't see a viable business plan to be able to repay the loan. They were smart in their decision, they were just protecting the American tax payer is all. UniTED'S plan was set on oil pricing in the $40 a barrel range. It's now hitting $60 and predicted to be $70 a barrel by the end of summer. Now how could they have paid back that loan???????

The government made it very clear to UniTED at that point. UAL was on their own and would get no Goverment backing, if they pull it off and survive good. If they don't then let them fall by the way side like other once great airlines.

 

[Fly]

Don't start telling us that UA's pensions could have been preserved if the ATSB loan had been granted. The ATSB loan was denied on the basis of UA's business plan - as evidenced by the much deeper cost cuts which UA has enacted since the rejection.

[post="278773"][/post]​

I believe that the refusal was largely due to the fact the US Airways was seriously teetering on entering bankruptcy again and was already reworking the repayment package. The ATSB wanted to save face for making the blunder of approving US Airs package by not approving another.

Also World, you bring up United's defaulting on pension but fail to mention who first halted their pension obligations. (it wasn't United)

 

[WorldTraveler]

how was your trip, Fly? welcome home.

Yes, even the government isn't willing to make the same mistake twice. The reason the ATSB said no to UA was because there was nothing materially different between UA and US' business plans. The failure of US' was plain to see.

I don't doubt that others preceded in UA in their pension negligence, although I'm not aware who went first. Perhaps you'll tell us. I'll guess you are suggesting it was DL.

I think one of the most telling commentaries on DL's pension woes was the grilling and "dressing down" that Gerald Grinstein (DL's ceo) got in Washington by KY Sen. Jim Bunning. When told that he bore a great deal of responsibility for DL's pension woes, Grinstein replied that there was plenty of blame to go around. I personally believe that Grinstein has been very motivated to turn DL around because he thought there was a need to gut the old-style DL management teams (the ones that had kept DL at the front of the industry in terms of profitability and customer satisfaction before the Pan Am acquisition) and replace it with a bunch of outsiders who knew nothing of the industry. If the fear of failure motivates Grinstein, may he be haunted by fear as long as it takes to turn the Old Girl around and get her back to her former greatness.

Nonetheless, I still will have far more respect for Grinstein and DL if they admit their problems and correct them inhouse rather than dump then on others.

May tropical breezes always greet you at the end of a long day.

 

[mrfish3726]

I wonder if UniTED is revamping their exit strategy from BK priced on $70 a barrel for oil??????

 

[mrfish3726]

FLY,

IN case you need your memory refreshed,here you go. The public minutes from their 06/17/04 meeting when they denied the UniTED ATSB loan application for the second time.

http://www.ustreas.gov/offices/domestic-fi...es-06-17-04.pdf

Key points to REMEMBER that were pointed out as to WHY uniTED wouldn't get a loan are:

1. MAY have some access to capital markets, but uncertain as to how much they might get to exit BK.

2. Equity investors would likely require further changes to the business plan. I.E BIG wage cuts and dumping thier pension OLBIGATIONS.

3. Sales of assets may also be needed in order to raise enough capital to exit BK.

So, the Department of Treasury determined that the loan gaurantee was not a neccessary part of maintaining a safe, efficient and viable commercial aviation system in the U.S.

Treasury determined that the obligation would NOt be prudently incurred, specifically that the underlying business plan was built (and still is) on unrealistic
Assumptions.

 

[Fly]

how was your trip, Fly? welcome home.

I'm not....back out again. In EZE.

I don't doubt that others preceded in UA in their pension negligence, although I'm not aware who went first. Perhaps you'll tell us. I'll guess you are suggesting it was DL.

[post="278879"][/post]​

No...it was US. United followed the leader.

 

[Phoenix]

.... but fail to mention who first halted their pension obligations. (it wasn't United)

[post="278845"][/post]​

No... It was a small number of cowards on a certain MEC that were bought out and probalbly now live in constant fear of who lurks around every corner.

 

[markkus757]

If we can all agree that the PBGC is a government agency, then they will get theirs when it is time. I can go BK all I want, I will still owe the feds their student loans and their taxes. UA cannot get rid of that creditor. They may be unsecured at this time, but if Congress can stop them from taking your pensions, they can also sell your assets to pay them back.

 

[whaledriver]

I believe NW and DL are the airlines that really got this issue moving with congress. The government is now hearing that IF UA is allowed to continue down this path then ALL of the Big 6 will follow as well. It's sad, UA will end up takng it in the shorts in order to preserve the industry as a whole. Nobody in congress wants to see DL, NW, CO, AA pull the same stunt that UA has done to it's work group...nor will they pay for it.

Congress has just now realized the long term effect that this will have when the BIG 6 pulls the dump lever on the pensions. :down:

 

[Diversion]

I believe NW and DL are the airlines that really got this issue moving with congress. The government is now hearing that IF UA is allowed to continue down this path then ALL of the Big 6 will follow as well. It's sad, UA will end up takng it in the shorts in order to preserve the industry as a whole. Nobody in congress wants to see DL, NW, CO, AA pull the same stunt that UA has done to it's work group...nor will they pay for it.

Congress has just now realized the long term effect that this will have when the BIG 6 pulls the dump lever on the pensions. :down:

[post="279027"][/post]​

The sad thing is that UAL management has not really done anything to fix the business model. The entire recovery effort has been based on government grants, ATSB loans and labor concessions.

 

[uafa21]

Two things, first Scuba refers to several companies pensions being taken by the pbgc. What he failed to mention is that NONE of those companies are still operating under their past names. They were taken over by another operating company or dissolved.

Secondly, the ATSB loan would not have been enough to solve ua's pension problem. Underfunding by $10B and a $2B loan?

 

[North by Northwest]

GO Flight ATTENDANTS! At least GO DOWN FIGHTING!

 

[Eagle]

A couple of quick thoughts.

When it comes to employee relations I suggest one look back to when a certain union group forced out John Edwardson in the mist of the ESOP. He certainly has messed up at CDW. (One of America's 100 best complanies to work at).

Second, It was not that long ago that the pension had been well funded but look at Congress that passed the laws that have allowed outsiders to enter into a debt based leveraged buyouts where the excess pension funds could be used to to payoff the loan. Remeber in the mid-1980s when the company bought annuities for pension earned to date and then I believe used the rest to buy the Pacific division from Pam-Am. Congress could have protected overfunded programs but never did.

Also consider for a few moments that when the Defined Benefit plans began people did not live to retirement or that many years there after. Today it is not unusual to live 15-20 years after. For some that is longer than they worked here. I agree its a kick in the head to lose what we earmed, but better this than to lose the company and the pensions anyway. BTW, the new plans are better than I had expected. Again consider that the company could have been all matching funds.

One last observation regarding the AFA leadership, I hear them yelling about getting a bad deal, and I agree it a'nt good, but where is their alternative to something that all other others say it can't keep it like it was? This seems like the same group that a few years back signed a 10 year agreement when all told them it was a bad idea, then came crying 4-5 years later when during the good times they no longer liked it.

 

[Bizman]

agree, Bizman. Which is why I think UA will have served to help the cause of the four legacies while allowing them to allow a modicum of good will. After all, the legacy airlines are one of the most disliked industries in America. Losing tons of money because of failed and outdated business models and then asking the American people to repeatedly bail them out is exactly why the legacy airlines are so disliked.

The reason why I am so hard on United is because they are the hallmark of why Americans, including Congress, hate the legacy airlines. UA had (and probably still does have) the best route system in the world with the best access to world markets. Yet, UAL failed hard. Despite being employee-owned, employee relations at UA were some of the worst in the industry. As Gopher reminds us, UA has had a mindset of entitlement that is just plain repulsive to Americans which only heightens the refusal to want to help United.

American had a cost structure that was just as high as UA's on 9/11 and was even more complicated by the TW acquisition. Yet, AA has managed to stay out of bankruptcy and has position itself well for survival as has CO. DL and NW are likely to do the same because they have faced crisis before and learned to work their way out of it.

How UA and US has handed their pensions is reflective of the way they have run their businesses and in contrast to solvent four. The solvent four are still solvent because they have managed their businesses such that they confront and deal with challenges on their own instead of expecting others to solve problems for them. In the highly competitive business world that exists in the US of A, it is that can-do spirit that is very likely determinant of ultimate success.

[post="278824"][/post]​

You have hit it right on the head. I agree totally.

 

[gatemech]

All this is funny. Uncle Sam won't bail out UA or any other airline but keeps sticking its nose in the industry. They worry about who can merge. Who can fly a route. Now step in on the pension. Help or back off. The Federal BK court/judge ruled and the PBGC agreed. If Uncle Sam can stop that then maybe our wage cuts can be reversed too. I just don't care any more. Give up the pensions and let's move on. Exit BK or shut down.

Uncle Sam keep out of our business !!!