NWA ALPA Allocation Claim Sale ?? HUH?

[Going2Baja]

Hi NWA guys - Anyone understand what's up with this sale? I got calls from other furloughed friends that said they put in and God knows I need the $$ so I put in as well.

What are the benefits of waiting or putting in immediately? Below is a copy of the email I received after I made my election. Does this really mean I'll get $72k after NWA comes out of BK?

====================================

XXX, you have completed your election to participate in the ALPA Claim Sale on 2007-01-13, 22:29:11 EST.

Your estimated claim allocation amounts are as follows:
Per Capita: $45100
Hourly Rate: $11400
Linear Ratio: $15800
Total Allocation: $72300

This choice is irrevocable, however you can revisit nwaalpaclaim.org to review the information pertaining to the Allocation Claim Sale.

 

[Diesel-9]

I'll try and keep it simple. You may elect to sell 20% of your claim ($14460). If everyone doesn't opt in you may get more than your 20% of the $176 mil sale. This sale has locked in .85 cents to the dollar. (very good) There may be another sale before exiting Ch-11 in a month or so. Has to be negotiated with NWA and the courts. NWA debt is trading very high right now. Next sale % unknown. The proceeds will go into your 2006 401K as an employer contribution against the $44000 limit. Excess amount toward 2007 $45000 limit. If you don't elect to sell now or next time you will receive new NWA stock at or soon after Ch-11 exit and it will also go into your 401K. When the 44k/45k limit is reached for 2006 and 2007 the remaining balance will be given to you as taxable income. And at that point the 3% and 5% 401K contributions on the paycheck will be paid to you as taxable income.

 

[Going2Baja]

Thanks for the reply....But all I can say is HUH? Mybe I missed something when iturned off all my NWA emailing from ALPA and the company. Where did this originate from? Is this about the freezing of our pension? Will this be paid out to guys on furlough and what if you leave the company and have no plans on returning?

Thanks in advance for replies and sorry for not being informed!!

Baja.

 

[Diesel-9]

This is from the $888,000,000 claim negotiated with the company in the restructuring. Try and get on the NWAAlpa website or company mail list, Have been numerous Across The Table and other mailings explaining it all. Depending on furlough date, recall dates etc... there are formula's to factor in actual benefit.

 

[nwaredtail]

Actually, the best thing for any furloughed guy to do is NOT OPT IN and get the stock. Thats what I am telling all the Captains to do. The stock will be worth a ton when we exit BK. Roll the dice.

On the down side, the would leave more money from the claim for me, but I can live with that!

 

[FDJ2]

Actually, the best thing for any furloughed guy to do is NOT OPT IN and get the stock. Thats what I am telling all the Captains to do. The stock will be worth a ton when we exit BK. Roll the dice.

This can all be very complicated stuff and I'm just going by what is happening over here at DAL, but it seems to be about the same deal when it comes to claim distributions and claim sales. So here is some food for thought on claims.

You probably will not get all your stock immediately upon exit, it could easily take over one year. You also will not necessarily get stock value equal to what is allocated to you.

How much stock you get depends on how many shares NWA will distribute to its creditors, how much of that claim is yours, and how large the claim pool is.

I believe the equation is:

(a/b)xc=d

a: your claim
b: the total amount of claims against NWA
c: the number of shares issued to the creditors by NWA
d: the number of shares of NWA shares you get issued

I know math in public can be dangerous, but here goes.

For example, assume you pre sell $100,000 in claims against NWA, the claim pool is $10,000,000,000, NWA distributes 100,000,000 shares to its creditors.

(100,000/10,000,000,000)x100,000,000=1,000 shares of NWA

Then assume the market value of a share of NWA upon exit. Let's say $50/share. You get $50,000 in NWA stock distributed over a period of time, probably over one year. Quite a bit can happen in a one year period after exit, another terrorist attack, another war in the middle east, oil could surge to over $100/barrel, NWA could slip back into BK, etc.

OTOH, with claims selling at high values, assume $.80, that pilot would receive $80,000 upon exit and not have to wait over a year to get his entire $80,000 upon BK exit and can invest as much or as little as he wants in NWA stock.

The problem is, you don't know how many shares NWA will issue the creditors, or what the price of those shares will be when they are issued to you. We're all speculators/investors now and only time will tell if you made the right call. Good luck with whichever choice you make.

 

[MsFan]

Hey Diesel,
What happens to the funds of us furloughed guys if we opt in? As far as I know, I no longer have a pilot retirement fund with NWA. I assume this means they'll just send us a check which will be treated like taxable income. I don't imagine they'll hold the money to put into our 401k once furloughees come back on property. Which ain't happening, obviously, in a lot of cases. Any ideas?

Also, here's an excerpt from an ALPA e-mail I got yesterday:
Note: The initial sale is of 20 percent of the entire $888 million ALPA claim, not 20 percent of each pilot’s individual claim. The actual claim amount a pilot who participates in the claim sale will receive is dependent upon the total number of pilots participating in the sale. If you opt-in to participate in the claim sale, you are authorizing the sale of up to 100 percent of your claim.


I took this to mean that if I opt in, I'm authorizing the sale of my entire claim (71,600 in my case). Of that 71.6, I thought I'd get .82-.83 cents on the dollar pre-tax.


I'm glad somebody started a thread on this, because God knows I'm too lazy to contact ALPA and get the straight scoop. Why do that when all us experts can figure it out here on FI?

 

[JAM-BRO]

Hi NWA guys - Anyone understand what's up with this sale? I got calls from other furloughed friends that said they put in and God knows I need the $$ so I put in as well.

What are the benefits of waiting or putting in immediately? Below is a copy of the email I received after I made my election. Does this really mean I'll get $72k after NWA comes out of BK?

====================================

XXX, you have completed your election to participate in the ALPA Claim Sale on 2007-01-13, 22:29:11 EST.

Your estimated claim allocation amounts are as follows:
Per Capita: $45100
Hourly Rate: $11400
Linear Ratio: $15800
Total Allocation: $72300

This choice is irrevocable, however you can revisit nwaalpaclaim.org to review the information pertaining to the Allocation Claim Sale.

Someone correct me if I am wrong, but I think that furloughed guys have to be back in the property to get the money. MSP LEC rep mentioned something to that effect. If you stay at Alaska, you won't get it... Check on it, I may be wrong.

 

[furloughed dude]

Msfan,

I thought Fedex made you resign from your previous carrier. Did they stop doing this??

 

[gutshotdraw]

I had been led to believe only pilots on property as of June 1, 2006 were eligible for the program. Baja, your e-mail indicates that must not be the case. I will say this, take the cash. Take it now, and run as fast as you can. We are.

 

[recallsomeday]

If you opt in, you are authorizing sale of up to 100% of your share. Not just 20% of the claim.

 

[Going2Baja]

Can someone PLEASE confirm if you have to be on property or on the senority list to receive the $$$.

Baja.

 

[YourPilotFriend]

Can someone PLEASE confirm if you have to be on property or on the senority list to receive the $$$.

Baja.

Yes, you need to accept recall to be eligible for the claim. When you report for training your options will be discussed.

 

[titans10]

Yes, you need to accept recall to be eligible for the claim. When you report for training your options will be discussed.

NOt true. I listen to the conference call and if not on property yet it will be cash after taxes. They are looking into trying to set up a rsp for tax exemptions. They feel this is doubtful though.

MsFan are you KC from june 01?

 

[tailhookah]

Agree....

Don't have to be on property to get it. Whether it will be considered "qualified" money for the furloughed guys is still up in the air. If it is then there are ways to get the taxed money back by making up the difference yourself and then at the end of the year claiming the taxed ammount (you had to put into your IRA) back by the way you file your taxes. If they set up some kind of RSP then it's all moot, but I doubt NWA will pay for that to happen. Just to finally get a freakin dime out of them is all I care about... never did get my furlough pay, it's been over 5 years now on furlough and still no recall. I hope it's another year or two before I'm forced to make that decision.

Tail

 

[FDJ2]

Can someone PLEASE confirm if you have to be on property or on the senority list to receive the $$$.

Baja.

I strongly recommend that you call the NWA MEC if you have any questions regarding the claim model and distribution.

 

[MsFan]

MsFan are you KC from june 01?

Yup, who dat?

Fedex does require you to resign your seniority, but I think the claim period is Oct '05 and before, and I wasn't purple yet. Plus I don't know if NWA even recognizes resignation letters. I keep getting letters telling me what a great opportunity I have if I come back and elect to go fly for Compass. uke:

 

[thruthemurk]

Well, hopefully it will go better for your furloughees than it did for United's. They made a quickie deal at the MEC to BONE the furloughees and increase the haul for themselves. 95% went to pilots actually on property and 5% went to furloughees (over 25% of the seniority list at the time.)

Even if you had the seniority to be back - you were not covered unless you went back immediately (<2 days to make decision, and that was only if you were tuned in to what was going on).

Eating the young - gotta love it.

 

[castle bravo]

Agree....

. I hope it's another year or two before I'm forced to make that decision.

Tail

What decision? The only thing for someone to do who is currently at B6 is to defer recall as long as possible....

 

[Going2Baja]

1st payment going to be made on Feb 14th!!! I was giving this a 40% chance of happening. Glad to see ALPA did something good!

What's everyone going to do w/ their $$$?

I'm adding wood floors to the upstairs - new leather sectional downstairs and a family cruise to Mex from Long Beach this month!!! STOKED!!!

Baja.

 

[xjhawk]

at mesaba, I decided to opt in for our sale for one reason and one reason only. Trust. I know the money is there for us, but in the bnkruptcy it seems that there are hidden rules. So I decided our 90 cents on the dollr floor ws good enough for me. That way I will get my money and not have to worry about some new court decision which would prevent me from getting my money. I think who ever buys our claim would have a better chance at getting the money

 

[NuGuy]

at mesaba, I decided to opt in for our sale for one reason and one reason only. Trust. I know the money is there for us, but in the bnkruptcy it seems that there are hidden rules. So I decided our 90 cents on the dollr floor ws good enough for me. That way I will get my money and not have to worry about some new court decision which would prevent me from getting my money. I think who ever buys our claim would have a better chance at getting the money

Heyas XJ,

Agreed. I took the money from my claim sale and bought a new car.

Bad investment, I know, but hey, live for the moment.

It's a new Dodge Charger with the Hemi in it. Total fan-boyish, but it goes like a scalded cat, and it feels good to be driving American iron again.

Nu

 

[ExAF]

Huh?

How are you guys buying toys and funiture? Doesn't the money go into your 401K? Are you taking it out and paying the penalties or what? Just curious.

 

[NuGuy]

How are you guys buying toys and funiture? Doesn't the money go into your 401K? Are you taking it out and paying the penalties or what? Just curious.

Nah, it's a matter of liquidity. I had the $$$ in another account, and with the claim sale proceeds, I could do something else with the money I already had.

Nu

 

[Occam's Razor]

How are you guys buying toys and funiture? Doesn't the money go into your 401K? Are you taking it out and paying the penalties or what? Just curious.

I had to put mine in the RSP (Retirement Savings Plan) because I had room available for last year and this year. Even though I max'd my contributions to the 401k ($15,000) for 2006, along with the other money that was jammed in there (about $5,500 from the start-up 5% DC, and about $4,200 from the 3% direct-invest we have), there was still room available before hitting the cap for 2006: $44,000.

So the claim sale filled that up, and put the rest into my 2007 RSP. The next claim sale will fill that up.

Pilots who made larger contributions (after tax) to the 401k for 2006 could have max'd it with more "spill over".

Some folks are upset that we weren't able to take all of it as a cash payment, but that time will come. The amount we'll pull out of this is will waaaay more than most of our pilot group expected.