DL expects 70% rise in yearly pretax profit this year---article

[BILL LUMBERG]

And yet, they still can't get around this:

Our substantial indebtedness may limit our financial and operating activities and may adversely affect our ability to incur additional debt to fund future needs. We have substantial indebtedness, which could:
-make us more vulnerable to economic downturns, adverse industry conditions or catastrophic external events;
-limit our ability to borrow additional money for working capital, restructurings, capital expenditures, research and development, investments, acquisitions or other purposes, if needed, and increasing the cost of any of these borrowings;
-limit our ability to withstand competitive pressures; and/or
-limit our flexibility in responding to changing business and economic conditions, including increased competition and demand for new services, placing us at a disadvantage when compared to our competitors that have less debt, and making us more vulnerable than our competitors who have less debt to a downturn in our business, industry or the economy in general

As of December 31, 2012, our defined benefit pension plans had an estimated benefit obligation of approximately $21.5 billion and were funded through assets with a value of approximately $8.2 billion.

http://www.delta.com/content/dam/delta-www/pdfs/about-financial/DeltaAirLines_10K_2012.pdf

You make it sound like paying a pension is a crime!

Your airline never paid one and now we are all swirling in the toilet bowl of benefits all thanks to the LUV!!

 

[General Lee]

GL you do realize that for all your cheer leading DAL isn't go to even remember your name 5 minutes after you walk off the property? How'd that unyielding loyalty work out in bankruptcy?

Well, it worked out ok for me. I didn't have more than 10 years at the time, others lost a lot more. But, as USAir tried to buy DL during the BK, the creditors got more money "on the dollar" because DL had to offer more to satisfy the creditor committees, so they wouldn't support the US takeover attempt. The pilot group was actually a large creditor, thanks to giving up the pension. So, in the end, I got about $300K. They filled up the 401Ks to the max allowable for the three previous years, then the rest was taxed. I still got about $80K in cash after filling the 401Ks and paying taxes. My 401K has done really well since then, and now there is a DC fund (direct contribution) of about 14% of what you make each month, now in my name. I still have plenty of time to get a nice retirement, and I do well because I am senior in category, getting double pay trips (GS).



Bye Bye---General Lee

 

[General Lee]

And yet, they still can't get around this:

Our substantial indebtedness may limit our financial and operating activities and may adversely affect our ability to incur additional debt to fund future needs. We have substantial indebtedness, which could:
-make us more vulnerable to economic downturns, adverse industry conditions or catastrophic external events;
-limit our ability to borrow additional money for working capital, restructurings, capital expenditures, research and development, investments, acquisitions or other purposes, if needed, and increasing the cost of any of these borrowings;
-limit our ability to withstand competitive pressures; and/or
-limit our flexibility in responding to changing business and economic conditions, including increased competition and demand for new services, placing us at a disadvantage when compared to our competitors that have less debt, and making us more vulnerable than our competitors who have less debt to a downturn in our business, industry or the economy in general

As of December 31, 2012, our defined benefit pension plans had an estimated benefit obligation of approximately $21.5 billion and were funded through assets with a value of approximately $8.2 billion.

http://www.delta.com/content/dam/delta-www/pdfs/about-financial/DeltaAirLines_10K_2012.pdf

Howie,

There are 20 more years to pay for it, and when interest rates eventually rise, the problem will get better, fast. Also, with the amount of revenue and profit being produced currently, it may all be paid off within 20 years anyway. Thanks for caring! Good luck at FLL against the "real" LCCs too...


Bye Bye---General Lee

 

[HowardBorden]

You make it sound like paying a pension is a crime!

Sorry pal but those words came directly from Delta's 2012 10K not me.

Paying a pension isn't a crime, but NOT paying one should be. Pension promises shouldn't be made if they aren't intended to be paid. Don't pawn off the obligations to the PBGC so it becomes all of our problems! If they were taking some of those massive profits and funding their pension plans it wouldn't be an issue! Currently they are underfunded by a staggering $13.1 BILLION.

 

[HowardBorden]

Howie,

There are 20 more years to pay for it, and when interest rates eventually rise, the problem will get better, fast. Also, with the amount of revenue and profit being produced currently, it may all be paid off within 20 years anyway. Thanks for caring!

I wouldn't worry too much about it, like you said it's going to get better, I'm sure of it! Unfortunately not everyone has the financial evaluation skills that you do.

Delta's financial position is getting worse not better. The growth of the company's off-balance-sheet liabilities is larger than the reduction in the company's on-balance-sheet debt.
Most of the off-balance-sheet liabilities are related to employee benefits, which have a senior claim to the company's cash flows over any debt. Here's the scoop: DAL boosted its 2011 earnings by increasing its expected return on plan assets (EROPA) assumption for its pensions to 8.93%, up from 8.82% in 2010. Page 78 in DAL's 2012 10-K filing has the details. For readers who wonder whether 8.93% is abnormally high, the answer is yes. Out of the 1,021 companies with pensions that I cover, 98% of them have a lower EROPA. Only 96 of the 1,021 raised their EROPAs in 2012 while 525 lowered and 400 made no changes. In other words, DAL's EROPA assumption is not only among the highest but it is also rising when the majority is falling. Assuming such a high EROPA lowers the amount of money that DAL has to pay into its pensions, which lowers the company's overall expenses and increases accounting earnings. One could argue that stretching the limits of EROPA and minimizing the amount of money it pays into its pensions is a fair and good strategy for a company whose pensions were adequately funded. That argument does not hold water for Delta as its pensions were under-funded by $14.1 billion

In Over Their Heads

These companies have pension liabilities that equal or exceed their market value. Below, each firm's liability as a percentage of market cap.
AK Steel 917%
Unisys 562
Resolute Forest Products 516
United States Steel 439
Exelis 228
Navistar International 196
Alcoa 179
Goddyear Tire and Rubber 174
Huntington Ingalls Industries 174
General Motors 173
RR Donnelley & Sons 171
J.C. Penney 148
Northrop Grumman 142
Lockheed Martin 133
Delta Air Lines 132
Sears Holdings 118
Raytheon 116
ALLEGHENY Technologies 105
Textron 100
Boeing 100

Market capitalization data as of July 5, 2013.

http://online.barrons.com/article/S...578573313679938382.html#articleTabs_article=1

 

[General Lee]

I wouldn't worry too much about it, like you said it's going to get better, I'm sure of it! Unfortunately not everyone has the financial evaluation skills that you do.

Delta's financial position is getting worse not better. The growth of the company's off-balance-sheet liabilities is larger than the reduction in the company's on-balance-sheet debt.
Most of the off-balance-sheet liabilities are related to employee benefits, which have a senior claim to the company's cash flows over any debt. Here's the scoop: DAL boosted its 2011 earnings by increasing its expected return on plan assets (EROPA) assumption for its pensions to 8.93%, up from 8.82% in 2010. Page 78 in DAL's 2012 10-K filing has the details. For readers who wonder whether 8.93% is abnormally high, the answer is yes. Out of the 1,021 companies with pensions that I cover, 98% of them have a lower EROPA. Only 96 of the 1,021 raised their EROPAs in 2012 while 525 lowered and 400 made no changes. In other words, DAL's EROPA assumption is not only among the highest but it is also rising when the majority is falling. Assuming such a high EROPA lowers the amount of money that DAL has to pay into its pensions, which lowers the company's overall expenses and increases accounting earnings. One could argue that stretching the limits of EROPA and minimizing the amount of money it pays into its pensions is a fair and good strategy for a company whose pensions were adequately funded. That argument does not hold water for Delta as its pensions were under-funded by $14.1 billion

In Over Their Heads

These companies have pension liabilities that equal or exceed their market value. Below, each firm's liability as a percentage of market cap.
AK Steel 917%
Unisys 562
Resolute Forest Products 516
United States Steel 439
Exelis 228
Navistar International 196
Alcoa 179
Goddyear Tire and Rubber 174
Huntington Ingalls Industries 174
General Motors 173
RR Donnelley & Sons 171
J.C. Penney 148
Northrop Grumman 142
Lockheed Martin 133
Delta Air Lines 132
Sears Holdings 118
Raytheon 116
ALLEGHENY Technologies 105
Textron 100
Boeing 100

Market capitalization data as of July 5, 2013.

http://online.barrons.com/article/S...578573313679938382.html#articleTabs_article=1

Howie,

Thanks for all the digging. You forgot the one thing that has the most debt and pension liability, the US Government. We are all hosed eventually, and then Mars will attack.

Good try, and I'll enjoy my profit sharing checks and higher rates than yours. Huge profits each year will pay down those pension liabilities, plus higher interest rates will help eventually. You know that! Thanks for doing the research Jimmy Kramer!


Bye Bye---General Lee

 

[JT12345]

Sorry pal but those words came directly from Delta's 2012 10K not me.

Paying a pension isn't a crime, but NOT paying one should be. Pension promises shouldn't be made if they aren't intended to be paid. Don't pawn off the obligations to the PBGC so it becomes all of our problems! If they were taking some of those massive profits and funding their pension plans it wouldn't be an issue! Currently they are underfunded by a staggering $13.1 BILLION.

That is bull ********************. Some companies act like banks in October 2008 I guess.

 

[HowardBorden]

That is bull ********************. Some companies act like banks in October 2008 I guess.

????????

 

[HowardBorden]

Howie,

Thanks for all the digging. You forgot the one thing that has the most debt and pension liability, the US Government.

So, you're planning another run through the bankruptcy process then?

PBGC has determined that the plan sponsor and each of its corporate affiliates have satisfied at least one of the following financial distress tests though not necessarily the same test:

• A petition has been filed seeking liquidation in bankruptcy;
• A petition has been filed seeking reorganization in bankruptcy, and the bankruptcy court (or an appropriate state court) has determined that the company will not be able to reorganize with the plan intact and approves the plan termination;
• It has been demonstrated that the sponsor or affiliate cannot continue in business unless the plan is terminated

 

[General Lee]

So, you're planning another run through the bankruptcy process then?

PBGC has determined that the plan sponsor and each of its corporate affiliates have satisfied at least one of the following financial distress tests though not necessarily the same test:

• A petition has been filed seeking liquidation in bankruptcy;
• A petition has been filed seeking reorganization in bankruptcy, and the bankruptcy court (or an appropriate state court) has determined that the company will not be able to reorganize with the plan intact and approves the plan termination;
• It has been demonstrated that the sponsor or affiliate cannot continue in business unless the plan is terminated

Howie is smoking dope again? Where are the drug tests when he needs one? He must have missed the article:

Dec 11 (Reuters) - Delta Air Lines Inc : * During investor day webcast, carrier says it expects $2.6 billion pretax profit for 2013, up 70 percent over 2012 * Carrier sees 'some modest global economic improvement' taking shape in 2014 * Passenger unit revenue is expected to rise 2 percent to 3 percent in
fourth quarter * Carrier expects revenue of nearly $40 billion in 2014.




Ummm, the plan will be paid off early at the rate these profits are coming in. Add raises, profit sharing, and paid off pension debt and long term debt. Did you know DL paid down $2.1 billion in debt this year according to the conference call? There is also $500 million in profit sharing for employees alone. Generating that type of cash and paying down debts, you really don't have to worry..... Thanks anyway...


Bye Bye---General Lee