Pension Cuts Brought Before Judge

[herkav8r]

United sets stage for cuts

Court filing shows pilots would bear brunt of pension freeze

By Kelly Yamanouchi
Denver Post Staff Writer

Thousands of United Airlines employees could see their pension benefits cut by as much as 40 percent to 50 percent - or more - if the company terminates its pension plans.

In a 101-page bankruptcy court filing Thursday, United parent UAL Corp. disclosed details of what would happen if the airline goes through with its threat to terminate the plans.

The figures showed that pilots would give up the most in pension benefits, although thousands of others also could see cuts. At the same time, thousands of employees and retirees would retain more or all of their benefits, although many current employees would need to work more years to do so.

United said the preliminary numbers are based on standards of the Pension Benefit Guaranty Corp., which would take over the plan assets, and United's assumption that it would create a defined contribution plan.

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The company said it needs to cut costs as it develops a restructuring plan and seeks financing to exit bankruptcy, while under pressure from competition and fuel prices.

The Air Line Pilots Association again criticized United's efforts, saying terminating the plans would be financially devastating to pilots.

The union said it hopes to work with United in the next several weeks on the pilot pension issue. The pilots association said United's cost structure outside of labor and fuel is higher than its peers'.

Association of Flight Attendants president Greg Davidowitch said in a statement that the airline is attempting to influence the bankruptcy court and that the flight attendants union has filed a motion seeking to strike the pension briefing from court proceedings.

"Clearly, flight attendants and other employees will be dramatically impacted by termination of their pension plans," Davidowitch said.

United said in the filing that its pension problem is part of a broader issue facing the nation as the population ages.

"The bottom-line question being forced by the capital markets is whether a financially distressed company like United can realistically continue to afford its traditional defined benefit plans," United said in the filing, adding: "The pension-related challenges now confronting these proceedings are emblematic of the fundamental challenges confronting society as this country's population becomes older and its retirees live longer."

United said it has considered IRS waivers, freezing the plans and a relaxed contribution schedule. It said although it is open to input, "United's analysis of these alternatives to date regrettably suggests that they are likely insufficient to meet United's business needs and the demands of the financial markets."

Also Thursday, United reported that it lost $56 million in August, including $11 million in reorganization expenses.

 

[herkav8r]

I read somewhere else they were going to give everyone a 5% 401K in exchange.

As for the pilots and their statement that termination of the pension plan would be devastating. Try losing your job and losing your pension because your company couldn't get backing to get out of BK. Now that would be devastating to your financial well being.

Life is full of choices.

 

[Borescope]

"In a filing in U.S. Bankruptcy Court in Chicago, United said its four pension plans, covering 62,000 employees and tens of thousands of retirees, are underfunded by $2.7 billion, not the $8.3 billion the federal Pension Benefit Guaranty Corp. has estimated."


Looks like posturing for the big fall..




"United's calculations assume that it will replace the pensions with another retirement plan, such as a 401(k), into which the company would invest an amount equal to 5 percent of each employee's salary."

Chicago Tribune today

 

[Borescope]

As for the pilots and their statement that termination of the pension plan would be devastating. Try losing your job and losing your pension because your company couldn't get backing to get out of BK. Now that would be devastating to your financial well being.

[post="183863"][/post]​

Time to sell the new cars, trade the power boat for a row boat, get rid of the vacation house and tell the wife she has to shop at Walmart instead of Nordstroms

 

[magsau]

Time to sell the new cars, trade the power boat for a row boat, get rid of the vacation house and tell the wife she has to shop at Walmart instead of Nordstroms

[post="183946"][/post]​

Walmart? We do not shop that upscale in our house I think the pilots are going to be OK. You know there was a rumor of a UAL pilot that was suspected of making counterfit money in his baseement. The only problem for the police was that they could not catch him because he never spent any of it

Jokes aside, I believe ALPA national will push through an amendment to the age 60 rule to allow pilots to fly to 65 to allow them to maximize the money from the PBGC. As it stands now you are penalized severely for retiring at 60 in the money you get from the pbgc. Who knows, but it will be OK. The sun will still be up tommorow, I hope.

 

[North by Northwest]

"United said in the filing that its pension problem is part of a broader issue facing the nation as the population ages." It's always someone else's mistake, never UAL Mang.'s. Sounds like "bad" Intelligence infomation...i.e. George (never had a real job) Bush. They should have NEVER allowed US to do this. America is getting ready to awake to some very angry people taking to the streets. It won't end with United. Iraq (billions wasted on Bush pathetic ego) will be the last thing Washington is worried about. I see a VERY big problem here when people have worked hard their entire lives and then are told "Ooops, sorry, YOUR money is GONE!" There needs to be a house cleaning in Washington...on BOTH sides!

 

[uafa21]

What they don't tell you is what is how much will a 40 year old f/a with 14 years with the company will make upon retirement. Or existing employees that have 5-10 years with the company, how much will they get upon reaching 65? I can see it now a bunch of old F/A's still working because they can't afford to retire going up and down the aisle with walkers and canes.

 

[Borescope]

There needs to be a house cleaning in Washington...on BOTH sides!

[post="183959"][/post]​

And then what??????

The grass always looks greener on the other side doesn't it? We get some other yoyo in there that eventually finds out it's the easy life and things move on in the same direction. Bottom line is years of mismanagement and a series of other issues (i.e. low stock return, downturn in business, world terrorism) have accelerated the downward sprial of the good old boys club (Legacy Carriers). Unless they get their own houses in order, they're gone. The government can't legislate an air carrier to profitable. They can stop taxing them to death, but then as the carrier makes money, there's always some idiot like Dubinsky who want to "choke" it again and your back in this spot somewhere down the road.

 

[Borescope]

What they don't tell you is what is how much will a 40 year old f/a with 14 years with the company will make upon retirement.

[post="183988"][/post]​

At retirement, you would have 39 years with the company (if they're around), the PBGC pay a maximum benifit of about $44,000, if you take it at 65. Less if you retire early. Go to PBGC.gov to figure what you would get.

 

[herkav8r]

The plot thickens


Bankruptcy Judge Rules Against United

The Associated Press - Friday, September 24, 2004
· advertisement ·
CHICAGO

A federal bankruptcy judge ruled against United Airlines on Friday in a procedural dispute, siding with unions who said the company submitted unsubstantiated factual claims about how employees would be affected if their pension programs were terminated.

Judge Eugene Wedoff granted an emergency motion filed by United's machinists and flight attendants, striking from the record a 107-page document which parent company UAL Corp. filed with the court late Thursday.

The ruling does not derail United's controversial bid to shed its pension obligations but underscores that eliminating them will not be achieved without a legal battle.

The unions had key backing in their emergency motion from the Pension Benefit Guaranty Corp., the government agency that would have to take on billions of dollars in obligations if United terminates the pensions.

In the filing, United said its pension plans are in far better financial condition than previously estimated and that the impact of terminating them would be less than initially feared. It said its four pension plans are underfunded by $2.7 billion, as opposed to the $8.3 billion estimated by the pension agency.

The government agency strongly objected to the United filing, telling the court it was "procedurally improper, gives potentially opposing parties no realistic opportunity to respond and serves no legitimate purpose."

Wedoff agreed with that reasoning at a hearing Friday morning.

United spokeswoman Jean Medina said the company was disappointed.

"We still believe the information is important for all of our employees and retirees and other stakeholders," she said. "We will continue to make the information briefs available."

United's pilots, who would take by far the biggest hit if pensions are eliminated, had joined the other employee groups in assailing the filing.

"No amount of self-serving sugarcoating by the company's lawyers can mask the plain fact that ... the immediate impact on thousands of individual retired and active pilots will be devastating," the Air Line Pilots Association said late Thursday.

___

On the Net:

www.united.com

 

[Rampman]

Borescope,

I think you might be wrong on your guess about how much a FA will get. If they end the pension today that person would only get credit for the 14 years. But the remaining 25 years that he/she works will not count toward the pension. So you will get 14 years times the multipier (lets say 80). So he/she would get 14X80 = 1120 a month. Not *39*X80 = 3120. So he/she would only get credit for the 14 years and recieved $1120, NOT $3120. The PBGC is not stupid.

That is why the second they cancel the pension I am quiting. Go out and find a county goverment job that has a state funded pension. I wish they would lay me off but it would be very hard to reach my company time without them laying off 50%+ of the rampers.

 

[uafa21]

Rampman - Thanks. I think you are correct as well. I also think they will back that up by 3 years. Meaning 11 years instead of 14.

I fly with a lot of junior people who think that they will get almost a full pension benfit. this is brought on by the propaganda that the company is not telling. All everyone reads is the $44,000 at age 65, that is not correct. Only for higher paid people. There is some explaination in skynet, but the average person cannot read it as it doesn't make a lot of since.

It seems to me that Ual is trying to comfort the present retired employees as well as those close to retiring. They are not addressing those with 5-20 years of service and still in their 30's and 40's with many years left to work.

 

[Fly]

People with lots of years left should have, and definitely should be, saving for their OWN retirement.

 

[Borescope]

UAL MEC
"United's legal filing dramatically demonstrates that the pilots
of United airlines -- and the pilot group alone -- will bear the
overwhelming majority of the losses inflicted by United's
scheme to dump its pensions. The average pilot will lose nearly
50% of his or her pension in a termination, while every other
employee has far, far less at risk. Both the Company and the
capital markets should understand that the pilots of United
Airlines will not accept this result under any circumstances."


Do they think the rest of the employees are a bunch of has beens? Everyone has a lot to lose, it's just that with a 50% reduction in a pilots pension means they'll have to start living like the rest of the world. Say bye, bye pilots You can thank the management for this one. h34r:

 

[tinpadro]

A logial assumption would be to move junior people to a 401K plan with major matching. However, its is also logical to assume if you are not laid off in the future and you don't incur any reduction in pay or increased medical premiums and the company achieves profitability that you could save something tangible for retirement. I don't believe the people in their upper 40s to near 60 will make it financially because of a lack of time. The non pilot group wage rate is just too low to get the time value of money needed here.

I forsee a possible scenario that if the company gets its way and no pension and people are on a 401K plan there is nothing in the world from stopping their contribution toward that plan as far as matching is concerned. Look at USair, they have a major cash flow problem and they are putting the brakes on the 401K plan.

At UA they cant even hit the elusive financial target for the annual payout to employees as in the current contract. Only the operational one quarterly which yields 88 dollars for PCE people. Now if the company can't hit the financial goal which is variable as defined by management, how in the world will they truly support an aggressive 401K and bonus plan to keep people motivated and financially solvent.

:unsure: