This doesn't completely answer your question but is a start. BK will be expensive even though leases will be renegotiated to save money. UAL has spent big bucks in BK. But they gave away their pensions and cut wages to the bone. Work rules also suffered. UAL is now going to come out of BK with less debt than Delta has. I see great things in UAL's future. Not sure about Delta. Someone on this board said Delta might buy UAL. I see UAL being able to buy Delta or Delta assets. Or maybe Airtran could buy a major with Wall street's help.
BTW General, if you are listening, just because UAL and USAir were allowed to survive in BK and are coming out it doesn't mean DAL will be afforded the same opportunity. We are in different times now. Oil is high and financing may not be rolling in to help Delta. Delta could be the first chapter 7.
I view BK as a chance for management to gain great flexibility in dealing with labor (very bad) but they risk someone taking over the company if the courts feel they have a better plan. I wonder if the PBGC will survive these 2 BK's. Or how much equity and money Delta will be forced to give to the PBGC to give up the pensions. I wonder how much downsizing is about to occur for NWA and DAL. UAL and USAir both downsized in BK. Don't know why that is necessary but it seems to be the standard.
Airline pensions underfunded by $16.3B
PBGC on the hook for $11.2 billion http://www.marketwatch.com/1.gif By Rex Nutting, MarketWatch
Last Update: 12:16 PM ET Sept. 15, 2005 E-mail it | Print | Alert | Reprint | [url="http://www.marketwatch.com/images/rss.gif"]http://www.marketwatch.com/images/rss.gif[/url]
WASHINGTON (MarketWatch) - The employee pension plans of two major airlines that declared bankruptcy Wednesday are underfunded by a total of $16.3 billion, the federal Pension Benefit Guaranty Corp. said Thursday.
The federal agency, which serves as a safety net for defined pension plans, could be on the hook for $11.2 billion, while employees stand to lose a total of $5.1 billion, the agency estimated Thursday.
Delta Airlines' (
DAL:
news,
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profile) pensions are currently underfunded by $10.6 billion, the PBGC said. Employees could lose $2.2 billion, while the PBGC could pick up $8.4 billion, the largest single claim in the 31-year history of the pension agency.
Northwest Airlines' (
NWAC:
news,
chart,
profile) pensions are underfunded by an estimated $5.7 billion, with employees standing to lose $2.9 billion and the PBGC losing $2.8 billion.
The PBGC pays pension benefits up to a certain level when it takes over a plan, which could leave some employees losing promised benefits.
Until the bankruptcy court, the PBGC and the airlines reach an agreement on the pension plans, the airlines are obligated to continue funding the plans, the head of the federal pension agency said Thursday.
"The financial challenges facing the airline industry are significant, but nothing in the bankruptcy code requires companies to skip their pension funding payments," said Bradley Belt, executive director of the PBGC.
The PBGC is funded by premiums on companies that offer employee defined benefit pension plans.
The PBGC has estimated that airline pensions are underfunded by more than $28 billion. The agency has picked up $6.6 billion in obligations from the pension plans of bankrupt United Airlines