Welcome to Flightinfo.com

  • Register now and join the discussion
  • Friendliest aviation Ccmmunity on the web
  • Modern site for PC's, Phones, Tablets - no 3rd party apps required
  • Ask questions, help others, promote aviation
  • Share the passion for aviation
  • Invite everyone to Flightinfo.com and let's have fun

Delta Owes Owes $3.15 Billion To Pension Fund

Welcome to Flightinfo.com

  • Register now and join the discussion
  • Modern secure site, no 3rd party apps required
  • Invite your friends
  • Share the passion of aviation
  • Friendliest aviation community on the web

TheDonger

She Bangs, She Bangs
Joined
Dec 20, 2004
Posts
77
Delta Puts Figures to Its Pension Bill
Airline Owes $3.15 Billion
From 2006 Through 2008;
Cash Is Sufficient, for Now

By EVAN PEREZ
Staff Reporter of THE WALL STREET JOURNAL
May 5, 2005

Delta Air Lines, shedding light on its escalating pension troubles, said it must pay $3.15 billion to fund its employee-retirement plans over the next three years.

The third-largest U.S. airline in terms of traffic said in a Securities and Exchange Commission filing yesterday that in addition to the $450 million it will spend this year to meet its minimum funding obligations, it now estimates its funding obligations to retired workers will grow to $600 million in 2006, $950 million in 2007 and $1.6 billion in 2008. Delta hasn't disclosed its funding obligations previously, though the carrier has warned in the past that its growing obligations posed a threat to its efforts to restructure and avoid a bankruptcy-court filing.

The disclosure comes as Delta struggles with high fuel costs and weak ticket prices brought on by competition. Delta recently reported a first-quarter loss of $1.07 billion. The airline narrowly avoided a bankruptcy-court filing last autumn, but it is likely to again face cash concerns later this year if it can't raise more financing through asset sales or the equity market.

The company said it had $1.8 billion in unrestricted cash at the end of March. But with the busy summer travel season approaching, Delta isn't likely to face an immediate cash crunch.

Of the $3.15 billion, about $2.6 billion stems from its defined-benefit pension plans, which are the subject of pension-relief legislation pending in the Congress. Delta, Northwest Airlines and several other airlines are pushing the legislation, which would allow the loss-plagued airlines to stretch out the time they have to fund their obligations to 25 years and switch some employees to cheaper retirement-benefit plans. In its SEC filing, Delta said if the pension-relief legislation becomes law, its funding obligations would be significantly lower, but it didn't say by how much.

The airlines and their supporters in Congress have said that the legislation would help the airlines avoid having to possibly seek a taxpayer-funded bailout by government insurer Pension Benefit Guaranty Corp. Rival carriers UAL Corp. and US Airways Group Inc. both have moved to dump their pensions on the PBGC. Critics of the legislation, including discount airlines, call the legislation an unfair bailout of the big airlines.

Delta's pension plans are underfunded by about $5.3 billion, meaning that even with the estimated required payments Delta's pensions would still be short of their full obligations. Airline pensions are underfunded by about $31 billion and have added to worries that the PBGC may be unable to guarantee benefits promised to workers.

Separately, Skyway Airlines, a unit of Midwest Airlines, said it ended discussions with Delta to operate a fleet of regional jets. Delta announced it was signing on Mesa Air Group Inc. to operate regional jets on connecting flights.

Write to Evan Perez at [email protected]
 
No problem. All they have to do is make $1 billion in profits for each year, then take the rest out of petty cash....


Nu
 
And this is a news story that Delta Airlines the one airline says they are strong in customer service yet they cant even provide a retirement for thier employees?
 
Notice that they are talking about pension obligations for retired employees. They have already re-structured the pension for current employees. If the old DB plan lasts more than a year I would be shocked. To steal a promised payment from a retired employee is actually a federal crime, but somehow the airlines are getting away with it and we are stuck with the bill as taxpayers in the form of the PGBC. Fack me.
 
Hey now, there is pending legislation to help this problem---for the Govt (PBGC) and retirees. If Delta has to dump these pensions, it will be bad for both. That is why Sen. Isaccson from GA and Sen Rockafeller (Sp?) from WV sponsered this bill, to help airlines and other industries also (car manufacturing for example) to EXTEND the payments---not stop them. This way, everyone wins---the retirees still get paid, Delta and others get time to pay, and the PBGC doesn't get even more underwater. Will it pass? Anyone who doesn't vote for it (Senate, House) will have TV commercials against them in the next election stating that they voted away pensions for senior citizens. What great ammo for their competitors... Even Grinstein said it best----this could be a "Govt bailout" because this will create an even larger burden for the PBGC if it doesn't pass.


Bye Bye--General Lee
 
Hey General, are you eligible for early retirement?

I wonder if all the vice-presidents' pensions are fully funded.:rolleyes:
 
English said:
Hey General, are you eligible for early retirement?

I wonder if all the vice-presidents' pensions are fully funded.:rolleyes:

Nah, I am only 40 and you have to be 50. We had 160 or so Captains leave on May 1st, and total we have had 1200 leave since last May. I have moved up on the list and can hold ATL INTL 767 easily as an FO, and almost at 777 or 764 FO. Not bad. As far as the VPs---most of those dirt bags have left, and now we really do have a team left that WANTS to be here. They had better---they have A LOT OF WORK TO DO. No doubt there. This is an uphill battle, and our current team seems like they are up to the challenge----we can only HOPE they are doing what is best and creating a good strategy to get out of this hole. "You gotta have faith, a faith, a faith, you gotta have FAITH...." (Or smoke the Chronic, which I do NOT)


Bye Bye--General Lee
 
hope you plan on not having your portion of the DB pension because they have been underfunding that thing for longer than the last four years. No way it survives. They could have 100 years and they wouldn't be able to repay the 3 billion plus debt. Your management team is biding time and making sure they get theirs..................yeah, they look like they are working to restructure the company but it's unfortunate and impossible to repair the hole in the side of that sinking ship.
 
seefive said:
hope you plan on not having your portion of the DB pension because they have been underfunding that thing for longer than the last four years. No way it survives. They could have 100 years and they wouldn't be able to repay the 3 billion plus debt. Your management team is biding time and making sure they get theirs..................yeah, they look like they are working to restructure the company but it's unfortunate and impossible to repair the hole in the side of that sinking ship.

Thanks Seefive, your insight is wonderful. You really don't know what you are talking about. Stretching out payments until the uptick in the cycle will help the situation. And, we don't have a DB program anymore for any current employees, we have a DC program in our own names.


Bye Bye--General Lee
 

Latest resources

Back
Top