Delta vs ASA

[Hutchman]

Subsidizing? HA! Thats a good one! Try bleeding airlines to death! An airline ticket is TAXED by the government at a rate higher than that of a bottle of booze or a carton of cigarettes. A sin tax on an airline ticket! It's a cash cow for the government at the expense of airline's and, ultimately, their employees. Remember, the ATSB was loan gaurantees ...not cash payments to airlines. A fact that most morons in the press forget too....

Please remember that the gov. does not build and finance the "booze" store. They do however build and remodel the airports. Airlines should pay for that. Taxes above this I agree are not helpful to the airlines. I do think it is unfair to have the airlines pay for the highest bidder contractor that the local gov. awarded the new runway construction in order to line thier next campaign fund. Get rid of the gov. and we have lowered the cost of airport construction (and passenger taxes) by 50%.

 

[DTW320]

Guarantee's, and I apologize to some up front, is what saved some of your pensions. Where does the money come from?

Where does the money come from? Financial Institutions. Lenders who would not normally accept the risk involved in lending to a troubled airline but WILL if someone guarantees that they will get repaid if said airline defaults on the loan.

Which airlines that received an ATSB backed loan have defaulted and caused the ATSB to spend taxpayer money to reimburse the lender? Specifically, whose pensions have been saved by their airline receiving an ATSB backed loan?

 

[benjakes]

Let me clarify:

Where does the money come from? Financial Institutions. Lenders who would not normally accept the risk involved in lending to a troubled airline but WILL if someone guarantees that they will get repaid if said airline defaults on the loan.

This is correct. the point I was trying to make is that it is a paper profit, as not all will be repaid. When someone defaults, the TAXPAYERS, not the financial institutions, cover the loss.

Which airlines that received an ATSB backed loan have defaulted and caused the ATSB to spend taxpayer money to reimburse the lender? Specifically, whose pensions have been saved by their airline receiving an ATSB backed loan?

I am refering to the post 911 loans/tax changes/allowances and subsidies which allowed the underfunded pensions to continue to exist and pay out until the bankruptcies. The airlines have been screwing the pooch on funding them for years, and your Union knew it and choose to not fight it. Now, the airlines can't/won't have to.

As a small example, Independance Air had a 25MM loan I believe as a starter.

Total gov't post 911 Airline funding is estimated at 10 Billion

I will post later web sited to verify the above later today.

 

[DTW320]

Let me clarify:



I am refering to the post 911 loans/tax changes/allowances and subsidies which allowed the underfunded pensions to continue to exist and pay out until the bankruptcies. The airlines have been screwing the pooch on funding them for years, and your Union knew it and choose to not fight it. Now, the airlines can't/won't have to.

As a small example, Independance Air had a 25MM loan I believe as a starter.

Total gov't post 911 Airline funding is estimated at 10 Billion

I will post later web sited to verify the above later today.

The only loss to the ATSB was about $20 million from a loan to ATA that they backed. Again, post 9/11 loans did NOT come from the government, they were guaranteed by the government. The expected profit to the ATSB is real and comes from sales of the equity they received in airlines in exchange for guaranteeing loans made to them by lenders, more than a third of it from their equity in USAir and AWA which they sold after the merger. All of the profit will go to the US Treasury.

As for the pensions, how could the unions have fought it? The plans grew underfunded after the stock market tanked in 2000 but the airlines were meeting minimum funding payment levels set by the US Government. If they weren't they would have been in default and would have been taken over by the PBGC. An underfunded plan CANNOT be terminated except for a distress termination in BK. If the airlines would have used corporate funds to bring the plans to fully funded status they could have been terminated and then the money used to buy annuities with a follow on defined contribution plan to make up the difference. Unfortunately unions don't have that kind of power over airline funds, especially with signed contracts in place.