Pension Issue

[767jetz]

In the next year or so, UA will undergo more serious shrinking.

And as to the pensions... most if not all (especially the pilots' plan)...

I respectfully disagree that these 2 comments are ultimately going to happen.

As for shrinking, UA has already shrunk. According to the info that I have seen, our block hours will continue to shrink into the early spring. After that we will probably see a gradual increase in block hours entering next summer. The reduction in block hours I refer to has already been taken into account in the business plan and the projected furloughs. In other words, we will shink a little more, but no more than what has already been planned for. Certainly not another 30%. IMO opinion, the company and the unions are working VERY closely with the ATSB to address all of their concerns. Many of them have already been addressed. I am confident that the ATSB will approve the loan. Again, IMO this is the most likely outcome.

As for the second comment, I agree with bigbusdrvr that everything possible should be done to protect the pension. I would suggest that each employee stay informed and active in your union if you want to have a say. Don't believe what you read in the paper. Your primary source of information should be your union leaders. ALPA has been the most proactive on the pension issue, and I assure you that there are several contingency plans in place. Don't be so sure that the pilot's pension has a larger bulls eye on it than the rest. You may be surprised to find out that our pension has the lowest underfunding problem of them all.

 

[The Ronin]

My 30% figure may be somwhat drastic, but not out of reality. I hope your figures and predictions are right. I believe my pension is gone. The only 2 contingencies that may have anything to show are management and the pilots. This is mostly a 2 tier company anyways and I think most of us realize it. The pilots always will enjoy the lions share with management parasitically feeding on everything else to the deteriment of everyone else. Regardless, except for the ESOP debacle, I put 30% of my UAL pay into my 401k. I also max my ROTH every year and allocate 15% of my net earnings into either savings or moneymarket accounts. Of course all I do is work all the time with my own part time business, but that's just the way it is. Coupled with a job or two under the table weekly for pocket cash and for the most part if this whole thing rolled over tomorrow, I wouldn't shed one tear. I love working on airplanes, I love working in the aviation enviroment with fellow mechs and engineers and tech reps etc. They are amazing machines that awe me 20 yrs later, but you can have the rest of the business.

 

[The Ronin]

My second comment follows the path of the ATSB. I think all current employees should hope our financing comes from them regardless of some of the stipulations that will accompany it. I fiqure that if the money comes through the government ( I realize they are only cosigning) and we are approaching an election year with a jobless economic recovery, that there might be just some political pressure to retain some jobs. With outside money I believe it is a sure bet that downsizing and contract changes will continue for everyone.

 

[Bear96]

I respectfully disagree that these 2 comments are ultimately going to happen.

jetz,

Well, I sure hope I am wrong and you are right. But I foresee lots of drama before we can exit Ch.11, and it seems like the pensions are one of the biggest obstacles ahead of us. To date, we haven't gone through anything like U did-- or even AA with their pay and work rule changes, and they aren't even bankrupt!

I am also concerned that UA employees are getting a little complacent. We go to work (those who haven't been laid off of course), things have seemed about the same, stable for several months now, our paychecks aren't bouncing, we're over the initial shock of the smaller checks since May, our operational stats are great. I hear lots of "Hey. BK isn't all that bad. And U and AA got it even worse!" Saying things like, "We will probably see a gradual increase in block hours entering next summer," to me shows this complacency. Of course I hope you are right, but I think this winter will be a tough one to get through and as Tilton has said, "There are difficult choices to be made." (Hope that doesn't sound too munnish.) I am sure the plan is to gradually increase block hours next summer-- IF we can continue to string the creditors along and there are no unexpected big shocks to the company.

Meanwhile we post a $600M loss for Q2, which people just rationalize away; and are the only major airline actually in Ch.11. And low cost airlines-- which DON'T have major pension funding liabilities-- continue their inexorable growth; while revenue remains at severely depressed levels, meaning a SW or JB or ATA can operate a flight from ABC to XYZ and make money at the levels the market can support, while we can only do that by taking advantage of the breaks we get in Ch.11 (i.e., no debt repayments) and by pushing off the pension problem until tomorrow-- which can't be done indefinitely.

And it doesn't really matter to me if the pilot's pension has a larger "bullseye" on it than the others or not. For most of us non-pilots, our pensions are so small that the PBGC will cover most if not all of it anyway.

 

[atabuy]

And it doesn't really matter to me if the pilot's pension has a larger "bullseye" on it than the others or not. For most of us non-pilots, our pensions are so small that the PBGC will cover most if not all of it anyway.

The link below gives the reason pension funding is where it is today.
I am still searching for info on Ual's pension underfunding.
The last summary plan I can find is for 2001. That plan said we met the funding requirements. Does anyone know where the 2002 SAR can be found. I would like to look at those numbers.
Thanks

http://www.cfo.com/article/1,5309,8341,00.....html?f=related
Pension Funding Gap Seen Widening in 2003

With widespread retirement-plan shortfalls looming, FASB contemplates possibility of accounting rule changes.

 

[767jetz]

The link below gives the reason pension funding is where it is today.

With widespread retirement-plan shortfalls looming, FASB contemplates possibility of accounting rule changes.

This is an accurate article and shows why all of corporate America needs pension rule changes.



""Pension funding laws were originally developed to allow employers to budget pension contributions over time with flexibility, so they could fund more in good times and less in bad times," says Kevin Wagner, a retirement practice director with Watson Wyatt. "But with numerous changes to funding rules over the past 15 years, today's laws have precisely the opposite effect."

The benefits-consulting firm points out that current law requires an annual comparison of the market value of a plan's assets with its current benefit liability.

Here's the interesting part: if the ratio falls below 0.9, the plan may be subject to additional minimum funding requirements above and beyond "normal" funding requirements. However, if the ratio exceeds 1.0, plan contributions may not be deductible. What a difference 0.1 makes.

As a result of this narrow range, contributions tend to be volatile from year to year. In fact, because of the market's collapse, many plans went from a situation where they were not eligible for a deduction to one of major underfunding.

"The bottom line is that if employers aren't given more flexibility in terms of when they can or can't make pension plan contributions, they won't sponsor these plans," notes Wagner in his statement. "Without orderly funding, employers have difficulty managing other important costs, including pay budgets and technology investments. And ultimately, this hurts employees the most." "



There is a lot of pressure on Congress, and there is a big election year coming up. For once, the company's and employee's interests are aligned on an issue. It is to everyone's benefit to change the funding rules. Even to the avererage citizen who may not have a pension plan. The last thing anyone wants is for the these pensions to be terminated and handed over to the gov't. This would mean a tax payer bailout instead of allowing companies to more reasonably handle their own pension liabilities.

 

[767jetz]

The Ronin,

I agree with you your last 2 posts very strongly. First of all I congratulate you on your ability to agressively save for retirement. I think everyone should be thinking this way in the long term. To be honest, I am not saving as aggressively as I would like, due to the large pay cuts and other financial responsibilities. Luckily I have time on my side and way more than 20 years to go.

I hope this career we all chose will eventually stabilize (and I believe it will) because I hold the same sentiment as you. I love the work and have always been in awe of the amazing machines we work with. For many of us it has been a life long passion.

I also agree that the ATSB (co-sign) is the best avenue for all involved. It has been said before on this board that it's the difference between getting money from a bank or from a loan shark. Whatever the stipulations of the ATSB, it will still leave more equity and benefit for employees to enjoy one day when we emerge from this dark cloud.

Keep the faith. There are still some tough roads ahead, but I believe we are finally on the back stretch.

 

[767jetz]

I am also concerned that UA employees are getting a little complacent.




For most of us non-pilots, our pensions are so small that the PBGC will cover most if not all of it anyway.

I don't think any of us can get too comfortable, and we certainly don't have the option to relax and let our guard down. We all have to keep working just as hard as we have been, now and beyond our emergence from CH11. Complacency is not an option. I'm talking about everything from security and safety, to passenger comfort, to recognizing the obstacles ahead of this company.

As for our costs and competing with other Low Cost Carriers (LCC's), I want to point out that our costs have come down dramatically. Once we start our LCC, the costs will come down further by adding more seats and increasing the average usage of those planes, much the same way South West, Jet Blue, Frontier, and Song does. I have heard some numbers that I won't reveal here (I hope that doesn't sound too "munnish" either), but I believe our competition will be surprised to see the CASM when our LCC is in full swing.

As for the last comment on pensions, I think you touched on the very reason that ALPA is being so aggressive in coming up with multiple solutions for multiple scenarios.

Again, let's all keep the faith, guard against complacency, and keep setting UA ahead of the competition on each and every departure.

Jetz

 

[Analyst]

ALPA International President Captain Duane Woerth addressed the US Airways MEC in Open Session for two hours on September 11, with his main focus on the proposed Air Line Pension Act. Woerth also addressed several other issues, including baseball style arbitration, airline security, Age 60, membership ratification, and an airline industry update addressed several other issues, including baseball style arbitration, airline security, Age 60, membership ratification, and an airline industry update.

Woerth said that without a legislative solution to its pension problems, NW could be in bankruptcy in 2004. He also said that UA is having the same bankruptcy problems as US that included NPC trying to reject the credit card processing agreement, but this can be solved. UA has been unable to get anybody to provide exit financing and the government has changed their demands for a loan guarantee three times. The ATSB is the only form of exit financing available and this money must be used to repay the DIP of up to $1.5 billion.

Woerth told the US MEC that UA has been very close to violating the DIP covenants a number of times and the company had a little better summer than forecast. He is concerned about the airline financially this fall. With pension relief, Woerth believes UA has a fairly good chance to get out of bankruptcy.

For those of you who personally attack Chip, it sounds that his comments were accurate regarding the UA pension issue and exit financing.

 

[Bear96]

For those of you who personally attack Chip, it sounds that his comments were accurate regarding the UA pension issue and exit financing.

I have certainly done my share of criticizing Chip. But I have also said many times that I share some of his pessimistic views concerning UA's future.

One can agree with the underlying facts someone else is presenting, and still have legitimate objections to the manner in which those facts are being presented. There is a distinction.

Life is a little more complicated than "You're either with us, or you're against us."

 

[767jetz]

For those of you who personally attack Chip, it sounds that his comments were accurate regarding the UA pension issue and exit financing.

With all due respect, Captain Duane Woerth is not a United pilot, does not sit on UA's board of directors, and does not not sit in at meetings between UA ALPA and UA management. Therefore, he has just as little inside information as the USAir captain you refered to.

Captain Woerth's comments are pretty general and I don't think anyone here disputes them. The ATSB is a large part of "Plan A." It's plans "B" "C" and "D" that vey few people know about. I don't suppose Captain Woerth mentioned any secret corporate transactions, did he? I didn't think so. Now tell me again about accurate comments by a certain USAir captain... :huh:

 

[767jetz]

One can agree with the underlying facts someone else is presenting, and still have legitimate objections to the manner in which those facts are being presented. There is a distinction.

Ditto! I second that notion.

 

[Analyst]

767, just because Chip ' s UCT has not occurred (yet) does not mean it will not happen in the future. What is true on Monday may not be true the very next day. I think the real problem is that some readers do not like his message versus his delivery method. I do not always agree with Chip or a certain USAir captain as you implied. But he has never been disrespectful to you or anybody else and many times the information he posts on the USaviation message boards we see before it hits the press.

To change the subject, I think Duane Woerth has a very good understanding of the UA situation and his comments echoed Chip ' s previous posts, which is a simple fact.

The comments by J.P. Morgan analyst, Jamie Baker are very interesting.

Hot summer for airlines could cool in autumn

 

[Bear96]

...But [Chip] has never been disrespectful to you or anybody else...

I have to very strongly disagree with THAT assessment.

Every time Chip posted, just under the surface he was dripping with disrespect and venom towards UA employees.

Though he tried to cover it up with a thin veneer of what he considered to be "objectivity," most if not all of us were able to see through it.

He was never NOT disrespectful towards UA employees.

 

[767jetz]

Anal yst,

I will not spar with you about a certain USAir captain. I assure you that 90% of the reason people were tired of him was his delivery, and the disrespectful way he pounded us on a daily basis with speculation and very little more than quotes from uninformed journalists.

For what ever reason, this captain has finally chosen to stay away, and a majority of people on this site are grateful, and enjoying the peaceful exchange of ideas.

Now back on topic... I respect Duane Woerth very much. I just do not consider him an authority on the business plan of United Airlines. And neither should anyone else.