UA-CO Merger Rumors Now Surfacing on Wall Street

[Bear96]

Nothing like a disgruntled former F/A to sew dissention thru misinformation.

Um, I was agreeing with BigRed that there is a lot of misinformation going around among F/As.

(Unless you were referring to Jamake, but he is a current F/A; I am the former one.)

There are just too many variables to come up with an accurate number that depicts the average pilot.

Really? Wouldn't the total amount divided by the number of pilots give the average? Certainly those numbers are available.

 

[ualdriver]

Um, I was agreeing with BigRed that there is a lot of misinformation going around among F/As.

(Unless you were referring to Jamake, but he is a current F/A; I am the former one.)
Really? Wouldn't the total amount divided by the number of pilots give the average? Certainly those numbers are available.

There is a tremendous amount of disinformation, as usual, about the pilot payouts concerning our bond. It's amazing to me that after we took the largest pay cuts of the entire employee group and took, BY FAR, the largest pension hit (for a variety of reasons), that anyone would complain about the payout.

Want some "back-of-the-envelope" numbers? You do the math. It was a $550,000,000 million bond. It sold for $540,000,000 on the open market. I'd estimate that there were probably around 8,000 pilots eligible to take the distribution. When 767jetz said that there were MANY variables that determined the amount someone received, he wasn't kidding. An individual pilot's distribution amount could vary from a few thousand dollars to a few hundred thousand dollars, with the guy getting screwed the most getting that largest amount. Those few "hundred thousand dollar" distributions were a pittance compared to what those guys/gals were supposed to get. If you think the "average" pilot got ANYWHERE near the amount he was supposed to receive for the pension from his bond distribution, you need to take a bigger drag on that pipe.

 

[Fly]

WOW! I got one of the biggest payouts in the f/a ranks. Guess how much I got?

 

[UALDC767]

WOW! I got one of the biggest payouts in the f/a ranks. Guess how much I got?

Now now Fly,

That's a good question for your AFA leaders.

When BK fist hit UAL, our union leadership at the time (actually a one man wrecking crew in the form of the MEC chairman) was willing to do anything, and I do mean anything, to save the A plan (pension). Work rules, furloughs, scope (those new 70 seat Embrear jets) to try and save the pensions. Well once managment got those concessions guess what was left....

Most of us on the line realized the A plan was a goner. Just simple facts of life that no bank or institution was going to invest in UAL if it meant funding the pensions.

So the MEC chair got booted, replaced with, in my view, a realistic, pragmatic leadership. They knew the A plan was going to go so they negotiated a bond payout to soften the blow. I doens't come close to replacing what was lost. But it was better than nothing like the AFA got.

As far as averages.....as a whole group the payout was around 75-80,000 dollars per pilot......but the spread was from $0 to several hundred thousand....factors such as estimated A plan payout when one turned 60, the payout from the pbgc (capped at 28,000 per year since we get penalized for retiring at 60- 5 years early penalty- even thought we have to retire by law!!!!), and our new C fund estimated total at age 60 retirement, all went into this complex equation to figures ones GAP or loss between expected benefits and actual.


Again, ask the AFA why they didnt negotiate a bond? I believe the IAM and AMFA did.

DC

 

[FWAAA]

Again, ask the AFA why they didnt negotiate a bond? I believe the IAM and AMFA did.

Probably because there isn't a single flight attendant, current or retired, who at age 65 is entitled to a pension in excess of the PBGC limit. The pilots, on the other hand, were entitled to a pension at age 60 that was probably 3-5 times the amount of the PBGC "retire at age 60" limit.

Simply put: The FAs will get the pensions they had earned on the date the plans were terminated, and the pilots won't.

 

[Fly]

I'd ask the AFA except their busy in bed with UAL right now.

 

[WorldTraveler]

I'm terribly sorry that you have taken a pension hit - really I am.

I will remind you that DL and NW FA pensions are much more certain after today's pension reform bill signing by President Bush.

Would you still like to continue to tell us that UA FA's make more than DL's?

Maybe DL (and even NW!) really does care more about its people than UA does.

Not having pensions makes UA a better takeover TARGET than INITIATOR.

Oh and Fly, what is AFA in bed with UA management for now?

 

[Fly]

hmmm...let's see......EVERYTHING!

(oh, and UAL f/a's ARE paid more than Delta's. Why does that bother you so much, my dear stalker buddy?)

 

[WorldTraveler]

I'd love to see the math you use to support your assertion that UA's FAs are paid better.

I wouldn't exactly call reading your name on the bottom of a topic as stalking. If you don't want it there, sign in anonymously.

 

[TechBoy]

Not having pensions makes UA a better takeover TARGET than INITIATOR.

I'm not sure I understand your point here. By either terminating or freezing their DB pensions (plus the new special interest legislation), most airlines have created more certainty around their pension related costs. While I agree that nobody wants to take over a company with huge potential liabilities, that arguments rings true for both termination and freezing. That would make DL, NW, CO, UA and US better "targets" under your analysis. I don't think that this analysis has any bearing on being an "initiator" except to the extent that AA's pension liability may make some wary of buying them, but it's a moot point as the other airlines are unlikely to be able to finance a takeover of AA in any case.

 

[WorldTraveler]

DL and NW (as well as CO which is freezing its pilot plan) still have pension liabilities. The cost is known but it is still a liability. UA and US have much lower liabilities, although their post-retirement costs per employee may actually be a lot higher since the other four airlines are paying their pension plans off on a time payment plan. AA’s acquisition of TW was one of the few airline acquisitions where the stated intention was that pensions of the “acquireesâ€￾ would be honored but reality has been very different. Pension assumptions are very rare in airline acquisitions.

 

[jbguppy]

DL and NW (as well as CO which is freezing its pilot plan) still have pension liabilities. The cost is known but it is still a liability. UA and US have much lower liabilities, although their post-retirement costs per employee may actually be a lot higher since the other four airlines are paying their pension plans off on a time payment plan. AA’s acquisition of TW was one of the few airline acquisitions where the stated intention was that pensions of the “acquireesâ€￾ would be honored but reality has been very different. Pension assumptions are very rare in airline acquisitions.

WT,

what post retirement costs?, other than pass travel the airline should have minimal cost with any retired employee. Just so I understand you correctly, you think it is cheaper to keep giving your employees a pension than to terminate it?????

If so why are DB plans going by the wayside in the greatest numbers ever.

Just because DAL is doing something doesn't change the basic economic reality of pension cost.


GMAFB,

JBG

 

[FWAAA]

what post retirement costs?, other than pass travel the airline should have minimal cost with any retired employee. Just so I understand you correctly, you think it is cheaper to keep giving your employees a pension than to terminate it?????

If so why are DB plans going by the wayside in the greatest numbers ever.

I'm guessing that WT is referring to the fact that in the last few years, WN has spent a lot more than AA (on a proportionate basis) for retirement plan contributions. Sure, the DB plans are usually more expensive, but for now, DC plans look to be fairly costly. If interest rates trend up and the stock market continues to perform, then AA's pension fund liability shrinks very rapidly. But UA's new defined contribution expenses don't diminish.

Dunno how UA's retirement plan expenses will match up against WN's, but if the proportions are similar, then AA (as well as CO, DL and NW) are gonna have a cost advantage over UA. Maybe not forever, but for a while.

 

[sastal]

And UAL has a LOT of great Asian routes to compliment CAL's great European routes.

UA’s ORD–HKG: You look fabulous today, dear. I love your ETA.

CO’s EWR–FCO: Thank you, darling!

 

[TechBoy]

DL and NW (as well as CO which is freezing its pilot plan) still have pension liabilities. The cost is known but it is still a liability. UA and US have much lower liabilities, although their post-retirement costs per employee may actually be a lot higher since the other four airlines are paying their pension plans off on a time payment plan. AA’s acquisition of TW was one of the few airline acquisitions where the stated intention was that pensions of the “acquireesâ€￾ would be honored but reality has been very different. Pension assumptions are very rare in airline acquisitions.

All businesses have liabilities. Their existence does not change their propensity to engage in M&A activity. They only have an impact when the liabilities are unknown or open ended. DL, for instance, has frozen or terminated its DB plans. So its liabilities over time are fairly well known and are unlikely to change much. Ditto the rest, except for AA. (And as others have pointed out, AA may do well if there is a strong market or have even greater liabilities is there is a weak market.)

Trying to spin this point into a reason that UA will be an acquiree rather than an acquiror was a huge stretch -- an totally invalid IMO.