Delta Owes Owes $3.15 Billion To Pension Fund

[michael707767]

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.

The DC retirement and my 401k are all I am counting on. I am 41 and will never see a penny of the DB plan. Gen, I have to agree with others here. The DB will have to go for Delta to survive. And go it will. I bet we loose it within a year.

 

[skykid]

The DB will have to go for Delta to survive. And go it will. I bet we loose it within a year.

There is someone who is in touch with reality. It means nothing if the legislation passes to extend the payments - absolutley nothing. The LCC competition doesn't pay a dime to defined pensions - soon you wont either.

 

[NuGuy]

Heyas all,

The General right. 'A' fund contributions/funding are complex and depend on a lot of factors.

The "funding" level is actually an actuarial "estimate" of a plans liabilites and not a real measure of the fund's immediate soundness. Unfortunately, it is this estimate that drives the deficit funding requirements.

Most 'A' funds were extremely sound (NWA's was funded almost to the %110 level), right up until the post 9-11 events where two things happened. The stock market tanked abruptly and interest rates took a nose dive to unprecedented levels. Now normally in a recessions, both of these can occur, but they usually ramp down gradually, and not both together.

To add to this, companies were PREVENTED by law from making contributions to overfunded pensions, because this was looked at as a tax dodge (contributions to defined benefit plans carries a tax deduction).

'A' Funds are actually a VERY effective retirement tool for employers as well as employees, despite what the current talking heads say. In other than dismal years, 'A' funds cost the employer nothing, as even small growth can cover funding requirements, and even if funding is required, it's tax deductable.

'B' funds or 401(k) funds require the company to make the same contributions regardless of how the fund performs. In average to good years, a comprable DC fund costs the company MORE than an 'A' fund.

Could the current 'A' funds actually recover on their own? Possibly...the losses WERE paper losses. If the stock market / interest rates skyrocket, sure. But another problem is that funding liability is based on a 3 year rolling average, and 2 of the last 3 years, well, sucked hard. But the funding deficits from those calculations are due NOW. Some funds have recovered a return of almost %15 in the last year, BUT the dismal 2 years prior is still driving insane funding requirements.

By streching out the funding requiremets over a period of time, you allow the funds to correct themselves and all the funding calculation catch up WITHOUT terminating the funds or dumping them on the PBCG. This is NOT a handout by the governement. The taxpayers aren't paying a dime. In fact, by chaging the antiquated rules, you are REDUCING the probability that they WILL be dumped on the PBGC.

Nu

 

[skykid]

NuGuy, based on your post, I guess we can expect VirginUSA to have a healthy "A" fund then. When are Jetblue, Frontier, Airtran, and Southwest going to start their A funds up so they too can save money by paying less in a good year than with a 401K? You are correct that defined pensions are complex and depend on a lot of factors, but they are a thing of the PAST. The good ole days were an A fund AND a B fund (which is a tricked-out 401K) - those days are gone. Delta can not compete and make those pension payments. I hope we do get some reform and they can spread out the payments, but that doesn't solve the problem. If Delta is going to have a shot at getting through the next year or so without Ch11 we are going to need jet fuel to come down about 50%. I'm hoping for that, but hope isn't going to cut it, you have to make the difficult changes.

 

[General Lee]

NuGuy, based on your post, I guess we can expect VirginUSA to have a healthy "A" fund then. When are Jetblue, Frontier, Airtran, and Southwest going to start their A funds up so they too can save money by paying less in a good year than with a 401K? You are correct that defined pensions are complex and depend on a lot of factors, but they are a thing of the PAST. The good ole days were an A fund AND a B fund (which is a tricked-out 401K) - those days are gone. Delta can not compete and make those pension payments. I hope we do get some reform and they can spread out the payments, but that doesn't solve the problem. If Delta is going to have a shot at getting through the next year or so without Ch11 we are going to need jet fuel to come down about 50%. I'm hoping for that, but hope isn't going to cut it, you have to make the difficult changes.

Who said we aren't making difficult changes? I thought $1 billion a year form 7000 pilots was one of them. We are also trimming our budget by $5 billion a year by 2006, with $3 billion done by the end of this year. What we are fighting for now is TIME.


Bye Bye--General Lee

 

[skykid]

The difficult changes include the pension payments, among other things, like realizing you have to pull some domestic seats. TIME for what, U to go Ch7? That would buy some time, but doesn't solve any long term problems, not with companies like JetBlue adding huge increases in seats year after year.

With those 1 billion in cuts by the 7,000 pilots, you guys made money hand over first last qtr, right? I tried to tell you several months ago it doesn't work that way, so you might as well quit talking about all the sacrifices and how it will just take time for them to kick in. Don't get me wrong, I'm on your side! I hope Delta is here 100 years from now.