Delta NOT to make pension payment to pilots...

[F9 Driver]

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.

~~~^~~~

Well here’s the thing. I never said the choice was a pleasant one. The first couple of airlines (UAL & USAir – especially UAL) should have had a bit tougher time wringing out the bankruptcy process, to the detriment of everybody else in the industry, than they did. The whole system is flawed, and I don’t know how to fix it.

I’ve met too many UAL folks who got/kept their jobs at UAL for the pension. Remember there are other employees than pilots. The folks “no longer engaged in the productive” blah blah blaa did their part and had the expectation of the company doing its part. I’ve heard from too many that they are going to have their pension robbed from them and still their company is going to be run into the ground.

That is where the General’s cavalier attitude comes in. The folks who retired can’t come back and work a bunch more years to make up for their management’s short falls. The current employees should have the money the company owes them and can find other employment if it comes down to that. The past employees should have what's owed to them. If there are enough assets to keep going then great. I’m not happy about that solution either, but it is how the free market is supposed to work. Right?

What ever happened to personal/corporate responsibility? If I go out and get an interest only loan for the big house and car, get into debt up to my eyeballs, and lose it all when I bet everything I own on the market should I still keep the house and keep on betting? Or should my creditors get paid and I move into the Maytag box by the freeway?

DAL isn't going to chapter 7 any time soon, and don't try and spin my remarks to mean that I want that to happen either. I just think the whole thing sucks.

 

[F9 Driver]

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

We’ve never had a DB plan and that was by design so we’d have lower operating costs. We’ve got a good 401K and a fair pay scale. I save some money myself, and do fine. You, at 40, can sock away a bunch of cash in the 20 or so years you’ve got left with or without DAL’s DB. If you’re peeved at the recent retirees for taking their half and freeing up a spot on your seniority list then take it up with them.

F9 hasn’t been through the wringer once. FAL was sold and went thru the mill with Lorenzo. F9 is a wholly different company. Bad things do happen. We went thru 9/11 too and I was flying that morning. In the next weeks we took temporary pay cuts to avoid furloughs.

I wish you luck with what’s to come. I don’t want to see you out of a job. I do take exception with what I see as a fundamental misuse of the bankruptcy process by much of the airline industry.

 

[F9 Driver]

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.

I guess greedy airline management isn't a new thing.

 

[bafanguy]

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?

.

Flop,

Yes, the PBGC can come back for a period of 3 years following retirement and take back the lump sum. It's been in the law for a long time apparently although to my knowledge, it's never been done. What bothers me a bit is that there has never been this "perfect storm" set of circumstances involving the PBGC before. Just because they've not done it before doesn't mean they won't do it now. I'm trying to get info from our reps on this, but they're pretty busy now.

As for investing it, it all had to go directly into an IRA to avoid losing a huge part of it to the tax thieves. I'm not sure there's any way to intentionally make it "disappear" without it actually being gone...if you get my drift.

As for the UAL guys and their lumps, I don't have any direct info except a comment from a guy who stays up on the big picture who said the PBGC is going after at least some part of the UAL lumps. ONLY SCUTTLEBUTT... Maybe a UAL guy will comment...cuz I'd sure like to know. This would be a very bad precedent at the moment.

 

[KeroseneSnorter]

Do not know about UAL, but the lump sums already paid out at USAir were not touched. After all how would they go about such a thing? Steal it out of some guys bank account in the dead of night?

If it goes like U did....If you are in the process of getting your money now...you are hosed, If you already have it, you are fine.

Those on a pension(annuity) will be screwed, PBGC maximum is somewhere around 2500 a month or so. The only ones that made it out of USAir with anything more than that were the fortunate few that took the lump prior to BK.(And already had the transaction completed)

If U and UAL are any indication, do not expect any help from congress, they do not care unless it is their government pension.

 

[Flopgut]

This would be a very bad precedent at the moment.[/QUOTE]

Agreed. I continue to hear that possibility exists, but I don't have any hard info on it from anyone. Hopefully a USAir or UAL type could comment. I could see that being a HUGE pitfall to early retirement. CAL has a 100% lump sum, but the number of early retirements is still very low. I believe I would take the money and split!

I'm calling my rep also and trying to get some info, I'll let you know if I do. We need some interpretation on this pronto! If the PBGC is going to continue to not pursue these lump sum payments then about 25% of CAL pilots need to "squwak 1200"! Today!

Figuratively speaking: You (or anyone) retire early anyway (60), but due to the chaos you leave even earlier, get your money and go. Then the PBGC takes back your money and redistributes it among all other normal aged retirees making them more whole than a pilot retiree! Or stay and have that happen anyway but continue to draw a paycheck while you adjust your retirement plans. Sucks!

 

[NuGuy]

Heyas all,

Just reading this over, a lot of people really don't really understand DB plans ('A' funds) or how the funding requirements of the federal goverment work.

The plans are not insolvent or "bankrupt" (meaning they pay out more than they take in). At least at NWA, they have been doing very well this year, with almost a %15 return on captal. Up until the stock market dump of 2001, these funds were well over 100% funded, even by the governments stupid rules.

What is causing the "contribution crisis" are the unrealistic funding requirements of the federal government, which is based on an assumed interest rate and a calculation of future liabilities.

The problem is the assumed interest rate that the federal goverment uses is all out of wack with reality, considering that interest rates have been at historic lows in order to prop up the economy since 9/11. Because this is at such a disconnect with that the pension funding assumes, this generates these artificial funding requirements. Mind you, this has NOTHING to do with the return the plans themselves actually require to be solvent, only the money the federal government requires to be there.

The problem is that federal governement requires these payments, WHETHER THE FUND ACTUALLY NEEDS THEM OR NOT. And they require them RIGHT NOW, even though the plan has enough money in the interm.

To put this in perspective.... Say you have $200k morgage on your house. You've been good, and have been making your payments ok. You lose your job, but you have a lot of savings (but it's not generating the same reuturn, because interest rates tanked), but you are still making your payments. But the bank gets nervous, and calls the loan. Now you're screwed, because you don't have 200k to pay out right away. Did you have enough money to pay your payments? Sure. Are you going to get another job? Sure. Are interest rates going to go back up? Yep. But what caused your "crisis" is the bank wanting all their money RIGHT NOW.

What the proposed legislaton does is to allow for a more accurate interest rate/captal return assumption for the plans. It also allows a time span in which any deficit can be paid (instead of RIGHT NOW), however, chances are there won't be any payments, because the funds themselves will generate enough revenue, especially if they are frozen (IE no new benefits accrued).

DB plans are actually a VERY cost effective of provided retirement benefits, they they are managed properly. In average to high return years, they require NO contribution at all, since profits in the fund itself pay for the contributions.

Nu

 

[Flopgut]

NuGuy

So do you retire early or not right now? These plans are being terminated and the results are especially bad for pilot retirees at age 60. Do you know if the PBGC will ever seize a already paid out lump sum? Can a recipient properly tuck away the monies and keep them from the PBGC?

Thanks for the academic recap on the funding of A plans.

 

[skykid]

F9, you have made some good posts here and I certainly understand your position. That's what it's all about right, being able to see more than one side of the issue. I can definitely see what GL was getting at - F9 has no A or B plan, and arguably one of the worst retirement plans of the LCCs (401K match and profit sharing, correct me if I'm wrong), yet you are critical of Delta and others paring down to compete and survive. I certainly hope what Delta ends up with is better than F9's retirement plan. I'm hoping the future is B plans, like what United will keep if they make it and what Airtran has. I poured money into my B plan and the company matched 11% regardless of my contributions, even before 9/11. Much better than a 401K.

 

[F9 Driver]

F9, you have made some good posts here and I certainly understand your position. That's what it's all about right, being able to see more than one side of the issue. I can definitely see what GL was getting at - F9 has no A or B plan, and arguably one of the worst retirement plans of the LCCs (401K match and profit sharing, correct me if I'm wrong), yet you are critical of Delta and others paring down to compete and survive. I certainly hope what Delta ends up with is better than F9's retirement plan. I'm hoping the future is B plans, like what United will keep if they make it and what Airtran has. I poured money into my B plan and the company matched 11% regardless of my contributions, even before 9/11. Much better than a 401K.

Agreed! Things are going to get better - have got to (I hope!) - as things settle out. Our 11 year old company is gaining momentum, and our second contract is being negotiated right now. That seems to be the evolution of the beast. I don't think we'll ever get to the size or scope of the legacy carriers, but if I can have a good paying job till 60 I'm happy.

I understand what GL means. I just think being so close to the issue - understandably - blinds him to the corporate entitlement that I'm talking about. It's about keeping "my" company alive no matter what.

If you make all of the players small retail shops and look at this as a purely academic excersize you'll see my point. I certainly see yours. I don't want my or your job/retirement to go away, and never want to infer otherwise.