CAL inching towards ceasing lump sum option

[densoo]

And the eventual value of the Lifetime Annuity "option" with any airline in this day is probably near zero.

CAL declares bankruptcy, hands it over to the PBGC, then the government pays a dime to the dollar, or will zero it out because of the deficit.

"Even with CAL’s assurances, you should be aware of the consequences of a liquidity shortfall. If a liquidity shortfall occurs, and CAL fails to make a contribution to cure it, they would be in violation of applicable pension legislation and would be subject to a ten percent excise tax on the amount of the liquidity shortfall. For example, if at the end of the fourth quarter, there is a liquidity shortfall of $15M, CAL could contribute $15M to the pilot pension fund to make up the shortfall or instead, they could pay $1.5M to the IRS as a penalty. To pay the excise tax rather than make a contribution seems a waste, since the excise tax does not go towards paying benefits or offsetting the shortfall, but rather solely to the IRS’ coffers. It is important to note, however, that if CAL chooses to pay the excise tax in lieu of making the necessary contributions, the lump sum option would not be available for each affected quarter.

CAL has this year contributed $70M into the non-pilot pension fund (the one management is in) and only $32M into the pilot pension fund. The non-pilot pension plan is being funded above the 80 percent level -- the minimum level necessary to protect their lump sum-- while our pension plan has deteriorated and come closer to a liquidity shortfall and the possible resulting suspension of our lump sums."

 

[whymeworry?]

Betcha' the age-60+ guys who decided to stay are kicking themselves now for not taking the early retirement package that was offered 2 months ago.

Gee, you get to work till your 65 (if you can make it that long), pay more taxes, and have pretty much nothing left when finally given the boot.

Can't wait to hear their whining once they really have to hang up flying for good.

 

[whatitdoing?]

This is going to be painful.

 

[Flopgut]

I will not listen to anyone complain about losing thier lump sum if they were eligible to go under the ERW and didn't. Period.

 

[whatitdoing?]

Ya, cuz 75k or whatever it was was HUGE money. Think how much these guys will be losing in their frozen A fund. I don't think this is the case. It was a letter given to Kellner warning him of the shortcomings of their contributions, thus resulting in a possible liquidity of assets. Won't happen. If anything, it's a prod to get moving with it. We'll see.

 

[Flopgut]

It could have been as much as 150k. Whatever it was the ship has sailed; Will not happen again IMHO. Larry offered the ERW so he can look them in hte eye when it's terminated or the lump sum ends and say he gave them a chance to get out. Too stupid to help themselves.

 

[Flopgut]

If anything, it's a prod to get moving with it. We'll see.

Did you catch the part about the company more fully meeting the same obligations for the non pilot employee retirement plan? That should indicate a lot.

 

[AWACoff]

It could have been as much as 150k. Whatever it was the ship has sailed; Will not happen again IMHO. Larry offered the ERW so he can look them in hte eye when it's terminated or the lump sum ends and say he gave them a chance to get out. Too stupid to help themselves.

100K was the top amount.

 

[Flopgut]

100k, thanks. I wasn't sure.

Did any of these guys not think there wouldn't be a funding disparity when they forced their money out of the single A plan? I have a small amount in there so they wouldn' listen to me. I felt to single out the pilots was to put a bullseye on it.

 

[SFR]

Who cares.... we have a B-fund anyway.

 

[nimtz]

And the eventual value of the Lifetime Annuity "option" with any airline in this day is probably near zero.

CAL declares bankruptcy, hands it over to the PBGC, then the government pays a dime to the dollar, or will zero it out because of the deficit.

So Larry and company are fiendishly twirling their imaginary mustaches at the great idea of bankrupting the airline and screwing shareholders (including them) just to terminate the pilot pensions. Come on dude, try living in reality a touch...

 

[densoo]

dude

Dude!

 

[luckytohaveajob]

So the question is what next?

Is there going to be a mass exodus?

Or has the over 60 crowd just decided to stay till 65 now that they have too?

Considering the stupidity of those who did not take the bonus program and the retirement when they could have, it seems likely no one will leave.

 

[Flopgut]

If they end the lump sum, think how far the money will go? What's a guy going to do after retiring from CAL at 65: Live very long? I doubt it. Of course I forgot...how exactly do you divide that up between 2-3 wives?

 

[Twotter Driver]

If they can afford to get out now, invest some or all of their lump sum in the market, sit on it for a few years, I think they will make out quite nicely. That’s what I’d do if I were in their shoes! They should be able to double if not triple the current value of their lump sum.

 

[tie1on]

payback is a bitch. most of these guys that crossed the line in the 80's got the bonus of screwing the junior guys one more time, but now the tide has changed. they should run while they have the chance or get used to living on an annunity.


they can work until they are 65, if they can keep a medical.


Too frickin bad. you had a chance and you blew it, larry will have the last laugh

 

[flygirlqt]

I guess we have the new breed of opportunists piping in on this thread.

The junior vs senior mentality has never accomplished anything anywhere. What would some of you be saying if those that deserve and are owed the lump sum were politicking to eliminate scope to save their pensions?

 

[hmmm]

That's just it..... Politicking for scope elimination to save pensions by the guys that are now retired is what seemed to start the ball rolling many years back wasn't it?

 

[captbert]

What would some of you be saying if those that deserve and are owed the lump sum were politicking to eliminate scope to save their pensions?

Good luck with that. The pilots that have anything significant in the A plan are outnumbered by 3 times the number of pilots who have nothing or almost nothing in the A plan. There are over 1500 pilots (30% of the pilots) that have been hired since 2005, and they do not participate in the A plan.

 

[densoo]

The junior vs senior mentality has never accomplished anything anywhere.

It accomplished plenty for the senior mentality.