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!!!