Delta NOT to make pension payment to pilots...

[AMRCostUnit]

This deserves its own thread...the other DAL thread should read:
"Grinstien will be OK, Delta...well...


Thu Sep 15, 2005 5:43 PM ET
NEW YORK (Reuters) - Delta Air Lines Inc. (DAL.N: Quote, Profile,
Research) will send a letter to some 3,500 retired pilots informing them
of its inability to make their October pension payments, Delta lawyer
Marshall Huebner said in a hearing on Thursday.

The letters saying there is a good chance the October payments will not go
out will only be sent to pilots above a certain salary level, Huebner said
during the hearing in U.S. Bankruptcy Court in Manhattan.

 

[bafanguy]

Yes, the letter from GG says the non-qualified pension is a "...pre-petition obligation..." which they are now "...barred by law..." from paying without approval of the BK court. Well, from what I read, DL didn't ask the court to continue the NQ payments but rather actively sought the court's approval for STOPPING those payments. If the court's approval of NQ payments was needed, it doesn't appear they sought that but rather the opposite.

I would guess this is just the opening salvo. Next will come distress termination of the entire DB plan, the survivors & disability plan, followed by stopping health insurance access for retirees. That should pretty much dispense with those pesky retirees.

Like the EAL guys said, "what goes around comes around"...and here it is.

 

[klhoard]

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Well, He11, why don't they just stop paying all "salaries below a certain level". . . .
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[V-1]

Like the EAL guys said, "what goes around comes around"...and here it is.

Funny how similar that quote is to Delta's motto "Good Goes Around".

 

[FDJ2]

Date: September 14, 2005 To: All Delta Employees From: Jerry Grinstein, Chief Executive Officer Subject: Delta's Financial Reorganization Under Chapter 11


"Understandably, in view of our circumstances, people also are concerned about their pensions. Delta has been doing everything it can, within the bounds of what it can afford, to continue to provide its active and retired Delta people with already earned qualified retirement plan benefits. Given our financial situation and the need to preserve as much cash as possible for our operations, we do not plan to make the qualified defined benefit pension funding contributions soon due. Neither filing for Chapter 11 nor missing contributions means that our qualified plans stop paying monthly retirement benefits or that we have initiated the process to terminate the plans. Nor does either action mean we have stopped pursuing pension reform legislation that might make the pension plans more affordable."

 

[bafanguy]

FDJ2,

Yes, I was thrown by that statement also, but you apparently have to look at each word individually and read between those words. He used the term "...qualified plans...". They don't consider what they took away part of the "qualified" DB. But I believe it is part of the DB plan as covered in the PWA. I don't have a copy of the contract anymore.

This is gonna be ugly...

 

[FDJ2]

FDJ2,

Yes, I was thrown by that statement also, but you apparently have to look at each word individually and read between those words. He used the term "...qualified plans...". They don't consider what they took away part of the "qualified" DB. But I believe it is part of the DB plan as covered in the PWA. I don't have a copy of the contract anymore.

This is gonna be ugly...

Bafanguy, you are correct Sir.

 

[bafanguy]

On the 15th, the PBGC released a statement reiterating the fact that filing BK does NOT relieve DL or NWA of their obligations to make required funding contributions into their DB plans. DL has said they are not going to make those contributions. Of course, if you already know there won't be a DB plan shortly anyway, why bother ?


Start saving your money, Bro's & Sis's.

 

[densoo]

"...within the bounds of what it can afford..."

That's a mighty big opening.

 

[General Lee]

2500 senior pilots left with half of their pensions in a lump sum. This stopping of payments is pressure for Congress to give LONG term help, or they will dump it. Delta needs to conserve some cash, and they may do this for awhile. If in the end they need to dump it entirely, that is the way it goes IMO. We need to move forward again smoothly someday.


Bye Bye--General Lee

 

[bafanguy]

This stopping of payments is pressure for Congress to give LONG term help, or they will dump it..


Bye Bye--General Lee

Well, it's hard to tell what has happened leading up to this point. The "effort" at getting pension reform from Congress is at best too little, too late and at worst just a smoke screen to make it look as if DL really intended to keep the DB plan but was just overwhelmed by events beyond their control.

DL didn't get to this point without some advance idea of what they intended to do. These people, for all their other "traits", aren't stupid and have spent huge sums of money on law firms and special consultants to help them craft this process. They don't just take a shot at it and see how it turns out. Just wait and see...in 6 months there'll be no more DB plan because they entered this process intending to get a distress termination from the get-go.

I'll be overjoyed ( and a lot better off ) to be proven wrong but at this point, I wouldn't trust GG any further than I could kick him. Stay tuned...this'll be interesting...like watching a train wreck.

 

[General Lee]

How do you pay off $10.6 billion in only 14 years? It would need to be twice that to allow us to even try to make some sort of profit. It appears an $8.4 billion bill will go to the PBGC soon....($8.4 out of $10.6 billion can go to the PBGC)


Bye Bye--General Lee

 

[bafanguy]

How do you pay off $10.6 billion in only 14 years? It would need to be twice that to allow us to even try to make some sort of profit. It appears an $8.4 billion bill will go to the PBGC soon....($8.4 out of $10.6 billion can go to the PBGC)


Bye Bye--General Lee

...bingo...

 

[Heavy Set]

Congress will have to act sooner with this looming threat...

Look, this will just add more pressure to Congress to act quicker (which almost never happens). If Congress knows that DAL and NWA may add their pension obligations to the gov't agency, then perhaps it will act more expeditiously.

The fact that DAL and NWA filed on the same day opened a lot of eyes and I think the fact that the pension obligation might be ditched will encourage Congress to take a better look. Regardless, DAL needs to focus on saving its cash for the time being and skipping a few pension payments (although critical for the recipients) may be a necessity at the moment to ensure healthy cash in the coffers... This is as much a political statement as it is a financially-conservative move.

 

[Tim47SIP]

To Late!

Look, this will just add more pressure to Congress to act quicker (which almost never happens). If Congress knows that DAL and NWA may add their pension obligations to the gov't agency, then perhaps it will act more expeditiously.


As much as I hate to say this, I really dont think Delta will keep the pension plan regardless of what Congress does. The long term debt is a killer even with reform. Man that would suck for the guys that rely only on that money, but Delta has to survive as well. I think 100% of what is left will go to the PBGC. I can only hope that I a wrong.

 

[bafanguy]

Look, this will just add more pressure to Congress to act quicker (which almost never happens). If Congress knows that DAL and NWA may add their pension obligations to the gov't agency, then perhaps it will act more expeditiously.

The fact that DAL and NWA filed on the same day opened a lot of eyes and I think the fact that the pension obligation might be ditched will encourage Congress to take a better look. Regardless, DAL needs to focus on saving its cash for the time being and skipping a few pension payments (although critical for the recipients) may be a necessity at the moment to ensure healthy cash in the coffers... This is as much a political statement as it is a financially-conservative move.

Heavy,

As Tim47SIP said, it's too little...too late. And "too late" started about two years ago. That is what makes this whole pension law reform look so lame. If you gave DL 50 years to fund the DB, maybe that would do it, but 14-25 ? Don't have much confidence in that, and I'll still be here 25 years from now if genetics has any influence. Pressure on Congress ? Not possible/probable.

PBGC insolvent pretty soon ? Sure sounds like it. The only pressure on Congress would come from public outcry threatening their reelection but, the public isn't capable of getting the concept that their tax dollars will soon be paying the retirements of airline employees. So far, there has been no "government bailout" of airline pensions, but it's just around the corner. My wife will be very grateful that you generous taxpayers funded her retirement.


For DL, all that is irrelevant now. My point is that they knew a distress termination was the plan from the start. Cut the BS, tell the truth. So they took the NQ benefit...big deal...it's only 37% of what we get. Just tell the truth. It's the least they can do to show a little respect for the 60,000 or so who give/gave what they had to make this outfit work...without BK-proof pension plans.

I'm not particularly upset about the loss of the DB plan...I'm disgusted with the disrespect/dishonesty this bunch of yahoo's has shown the employees. And they've only been in BK for three days. It can only get more interesting.

 

[skykid]

As much as I hate to say this, I really dont think Delta will keep the pension plan regardless of what Congress does. The long term debt is a killer even with reform. Man that would suck for the guys that rely only on that money, but Delta has to survive as well. I think 100% of what is left will go to the PBGC. I can only hope that I a wrong.

You are not wrong, and the debt is killer even with reform, just like you said. Delta and the other legacy airlines cannot compete with airlines without pensions. Without dumping the pensions, there is only extinction. It would be nice if mgt would just come out and say that.

For DL, all that is irrelevant now. My point is that they knew a distress termination was the plan from the start. Cut the BS, tell the truth.

I couldn't agree more. The truth is not that hard to swallow.

 

[Hugh Johnson]

DUH! I can't believe anyone is surprised. Come on ladies!

 

[Heavy Set]

It is true that pension liabilities are/will be a competitive disadvantage for any carrier. However, I suppose that DAL could attempt to extend the term long enough (say 25 years with help from Congress) and then keep it for just those who took retirement and qualified up to this point (no more offered in the future). I doubt DAL will offer a pension to anyone going forward - probably a SWA 401K setup.

Congress will have to get involved soon because retired people are AMONG THE MOST VOCAL and they actually vote. I am sure this pension-dumping trend is getting more attention than we think. I believe General Motors is also talking about dumping its massive pension liability as well - something will need to be done to stem the tide.......... But it comes down to timing and DAL and the others won't want to waste any time as Congress considers the problem.

 

[Kid Charlemagne]

Regardless, DAL needs to focus on saving its cash for the time being and skipping a few pension payments (although critical for the recipients) may be a necessity at the moment to ensure healthy cash in the coffers... This is as much a political statement as it is a financially-conservative move.

Holy Cow!

You are one cold-blooded Dude! How you would look at it if you were depending on those pension payments as your income?? You gonna write all those Delta retirees off, just like that? I can't believe you really mean that...

I know, you'll say "there is no other choice, Delta just doesn't have the money, the money could better be used for other things, etc...."

I'll tell you what - I'll even believe that....WHEN Grinstein and the rest of top management give up all their salaries. After all, DAL just doesn't have the money, etc.....

What these guys are trying to do should be a crime. Give GG and the rest of them a "perp walk" like the Enron guys got!!!

 

[pilot141]

Congress will have to get involved soon because retired people are AMONG THE MOST VOCAL and they actually vote. I am sure this pension-dumping trend is getting more attention than we think. I believe General Motors is also talking about dumping its massive pension liability as well - something will need to be done to stem the tide.......... But it comes down to timing and DAL and the others won't want to waste any time as Congress considers the problem.

Quoted because it's obvious: retired people are the ones collecting the pensions! Of COURSE they will be vocal!

Remember, pensions are deferred compensation. The company says: instead of paying you $X now, we will pay you $Y and then $Z forever. By reneging on their pension obligation the company is taking away money earned by the employees, but deferred.

If YOU were the one watching your promised, earned money being withheld, what would you say?

What would these same government employees say if THEIR pension was threatened?

 

[bafanguy]

DUH! I can't believe anyone is surprised. Come on ladies!

No one I know has expressed any "surprise" at these developments. I saw it coming 3 years ago and left 2 years ago ( 4 years early ). It was so obvious even I could see it.

 

[F9 Driver]

2500 senior pilots left with half of their pensions in a lump sum. This stopping of payments is pressure for Congress to give LONG term help, or they will dump it. Delta needs to conserve some cash, and they may do this for awhile. If in the end they need to dump it entirely, that is the way it goes IMO. We need to move forward again smoothly someday.

How do you pay off $10.6 billion in only 14 years? It would need to be twice that to allow us to even try to make some sort of profit. It appears an $8.4 billion bill will go to the PBGC soon....($8.4 out of $10.6 billion can go to the PBGC)
Bye Bye--General Lee

“2500 senior pilots left with half of their pensions in a lump sum. This stopping of payments is pressure for Congress to give LONG term help, or they will dump it. Delta needs to conserve some cash, and they may do this for awhile.

How do you pay off $10.6 billion in only 14 years? It would need to be twice that to allow us to even try to make some sort of profit. It appears an $8.4 billion bill will go to the PBGC soon....($8.4 out of $10.6 billion can go to the PBGC)”

You’ve GOT to be kidding! How do you think these legacy carriers got to this point? They bet your retirement on the tech bubble and lost. Now in a fit of 21st century hubris they are saying “I’m in debt up to my eyeballs. Somebody help me!” The lawmakers say “Not on my watch or to my constituents.” And allow this travesty of justice to wreak havoc on the rest of the industry.

This mess was created five years ago and is just coming home to roost.

“If in the end they need to dump it entirely, that is the way it goes IMO. We need to move forward again smoothly someday.”

How much time do you have left to work before 60 General? If it were you or yours who was coming up on mandatory I don’t think you would have such a caviler attitude.

It is why I fundamentally oppose these bankruptcy filings. All the carriers do is screw over the people (investors, creditors, and employees) who had good faith deals prior to the gross mismanagement of the company which in turn screws over the companies who have a sustainable business model.

 

[~~~^~~~]

F9:

If you oppose bankruptcy, what do you suppose as an alternative?

Delta has no choice but to dump debt obligations, or the Company will go away and the net result will be the same - no payments. To the tens of thousands of people who currently work and earn a living a Delta, your attitude towards them seems cavalier, Sir.

Bankruptcy is designed to balance these interests. The principal concern is for the future of the business, which does not bode well claimants no longer engaged in the productive functions of the business.

If you remember how the Eastern guys were treated you know how this business gets.

~~~^~~~

 

[General Lee]

“2500 senior pilots left with half of their pensions in a lump sum. This stopping of payments is pressure for Congress to give LONG term help, or they will dump it. Delta needs to conserve some cash, and they may do this for awhile.

How do you pay off $10.6 billion in only 14 years? It would need to be twice that to allow us to even try to make some sort of profit. It appears an $8.4 billion bill will go to the PBGC soon....($8.4 out of $10.6 billion can go to the PBGC)”

You’ve GOT to be kidding! How do you think these legacy carriers got to this point? They bet your retirement on the tech bubble and lost. Now in a fit of 21st century hubris they are saying “I’m in debt up to my eyeballs. Somebody help me!” The lawmakers say “Not on my watch or to my constituents.” And allow this travesty of justice to wreak havoc on the rest of the industry.

This mess was created five years ago and is just coming home to roost.

“If in the end they need to dump it entirely, that is the way it goes IMO. We need to move forward again smoothly someday.”

How much time do you have left to work before 60 General? If it were you or yours who was coming up on mandatory I don’t think you would have such a caviler attitude.

It is why I fundamentally oppose these bankruptcy filings. All the carriers do is screw over the people (investors, creditors, and employees) who had good faith deals prior to the gross mismanagement of the company which in turn screws over the companies who have a sustainable business model.

F9,

Too bad your company never offered it to any of your employees. The DB plan is a broken promise waiting to happen, telling employees that the employer will take care of them for the rest of their lives. What happens if the airline or employer has tough times? It happens you know. Bad things happen (like 9-11) and businesses sometimes can't afford those promises. Those 2500 pilots were very lucky they could take half. Look at the NW pilots---they don't have that chance, and will sacrifice their young to keep something for the senior. Not at DL. Our senior guys left with a chunk, and now they "got theirs." The rest of us have to fend for ourselves now and will not keep it around and allow us to suffer. I am 40 by the way.

And, I love your anti-bankruptcy stance. How many times has F9 been through the ringer? Weren't they sold to Continental for awhile, then came back as F9, and then had some hard times again? Delta has never had a financial problem until now. We have "tried" to stay out of court, for 4 years. We made and effort, and now we have to restructure. Thank gawd F9 has never had any problems.........

Bye Bye--General Lee

 

[Heavy Set]

Holy Cow!

You are one cold-blooded Dude! How you would look at it if you were depending on those pension payments as your income?? You gonna write all those Delta retirees off, just like that? I can't believe you really mean that...

I know, you'll say "there is no other choice, Delta just doesn't have the money, the money could better be used for other things, etc...."

I'll tell you what - I'll even believe that....WHEN Grinstein and the rest of top management give up all their salaries. After all, DAL just doesn't have the money, etc.....

What these guys are trying to do should be a crime. Give GG and the rest of them a "perp walk" like the Enron guys got!!!

Hey Kid,

Did they teach you to read yet? I said skip "a couple of payments." That DOES NOT IMPLY LONG TERM. Of course the pension payments mean a lot to the recipients - I never said they did not. However, if delaying or skipping a few of the payments helped to ensure DAL's longevity and provided the "political impetus" to enact legislative change (i.e., enough people were upset and vocal about it to spur change through their elected officials), then perhaps skipping a few payments would be worth the pain.

Kid, what's the alternative in this case? DAL could hand the obligation over to the Gov't just like UAL and USAirways and then the pensioners would also be hurt with much lower pension payments. In a turnaround, cash is king. Cash will buy a company time to restructure. If DAL wants to extend the terms of the pension obligation (and thus keep the obligation), then we should ensure that DAL has the lattitude to do so.

I wouldn't want for anyone to miss pension payments - I am just saying that "buying some time" might pay off in the long-run and help to keep the obligation in house. I never advocated dumping the pension obligation.

 

[bafanguy]

Hey Kid,

Did they teach you to read yet? I said skip "a couple of payments." That DOES NOT IMPLY LONG TERM. recipients -

. .

Heavy,

Unfortunately, it will not be "a couple of payments" by DL's own memos. Robert Kight, VP Compensation & Benefits, said in a Sept 16th memo to retirees referring to the NQ payments that, "...we currently do not plan to make such payments from this point forward." That DOES imply long term. The game is over with the post-game wrapup to occur shortly.

 

[Flopgut]

F9,

Too bad your company never offered it to any of your employees. The DB plan is a broken promise waiting to happen, telling employees that the employer will take care of them for the rest of their lives. What happens if the airline or employer has tough times? It happens you know. Bad things happen (like 9-11) and businesses sometimes can't afford those promises. Those 2500 pilots were very lucky they could take half. Look at the NW pilots---they don't have that chance, and will sacrifice their young to keep something for the senior. Not at DL. Our senior guys left with a chunk, and now they "got theirs." The rest of us have to fend for ourselves now and will not keep it around and allow us to suffer. I am 40 by the way.



Bye Bye--General Lee

Quick question: Can the PBGC come back and get any portion of the lump sum payments made to the early retirements? I had heard they could and I hope that is not true. I would think that the instant one received the money it could be put toward something/invested essentially making it disappear. Has the PBGC come after anything paid to USAir or UAL early pilot retirees?

BTW, which airline is F9? Frontier? The FAL pilot retirement plan (FARP) was fully funded by the time Lorenzo got a hold of the airline. He had so much contempt for the FAL group (they had averted his initial purchase effort by aligning with Peoples Express) that he replaced the fund monies with NYAir stock, then sold NYAir into CAL thereby taking ALL of the FAL pilots money. Eventually, they received some of it back. Just a little useless info...that was a different airline.

 

[Jim Smyth]

Maybe the managements pension/golden parachute needs to also be tied to the PBG&C.

 

[General Lee]

Flopgut,


The PBGC never has done that. Could they? I don't know really, but I would move my $1 million to Costa Rica and buy myself a whorehouse---and only be the manager.....Really, only the manager (my wife is watching me type this....I love you honey....)


Bye Bye--General Lee