NWA Plans termination of Pension if legislation not approved

[HighSpeedClimb]

This may be old news..

Northwest Air says it will end pensions without help
Tuesday June 6, 3:13 pm ET
WASHINGTON (Reuters) - Northwest Airlines (Other OTC:NWACQ.PK - News) said on Tuesday it would attempt to terminate its employee pensions in bankruptcy if Congress did not approve legislation giving airlines more time to finance those plans.

In a letter to House of Representatives Majority Leader John Boehner, an Ohio Republican, the carrier said delay in the pension bill on Capitol Hill threatened the progress of restructuring and that action was needed to save pensions.
Northwest previously said it was counting on the additional time of up to 20 years included in proposed pension legislation to help balance its pension accounts and avoid turning them over to federal pension insurers like US Airways (NYSE:LCC - News) and United Airlines (NasdaqNM:UAUA - News) did in bankruptcy.
But the airline firmed up its language in its letter to Boehner, who helped author the House pension bill and is a key negotiator with Senate lawmakers on a compromise measure.
"Without congressional leadership and action, the NWA pension plans will be terminated and the retirement security of over 70,000 men and women placed in jeopardy," wrote Douglas Steenland, the airline's president and chief executive.
Northwest would need permission from the judge in its bankruptcy case in New York to terminate its three pension plans covering pilots, all other union employees, and salaried and management employees.
Delta Air Lines, also bankrupt, has said it may terminate the pension plan covering its 6,000 pilots union to save money as it restructures.
Northwest said it hopes to emerge from Chapter 11 protection as early as 2007. It sought court protection in September.

 

[9rj9]

i thought they got to keep their pension since they gave up so much?,
How much does the government insurance pay on a pension, 70% or so? not too bad.

 

[MsFan]

Shocking. Almost as shocking as the sun coming up today.

 

[Hutchman]

i thought they got to keep their pension since they gave up so much?,
How much does the government insurance pay on a pension, 70% or so? not too bad.

Your kidding, right?????????

 

[General Lee]

Ooooops. Did they get something to back that up if they have to dump it? I think we all know that if they can dump a huge debt like their pensions, they will do it.


Bye Bye--General Lee

 

[castle bravo]

What a surprise. Smile now, Red Book folks.

 

[HighSpeedClimb]

i thought they got to keep their pension since they gave up so much?,
How much does the government insurance pay on a pension, 70% or so? not too bad.

Let me familiarize you with the Pensions being dumped. Most pre-1980 airlines had a "A" fund and a "B" fund. The A fund was a percentage the company had to fund for you RETIREMENT. The B fund was somewhat similar where the company put in a percent of your pay to a fund. For us, it is 6% of the companies money. After 30 years you would have a nice retirement of roughly $10,000 per month. The A fund was about $7500 of that and hence the B $2500, give or take a few numbers. With the PBGC, they are only going to pay you roughly $29,000 per YEAR, or $2400 per month for the A fund.

B fund $2500 + PBGC $2400 =$5000/mo
B fund $2500+ A fund $7500 = $10000/mo

This is huge.. $5000/mo in today's dollars. The PBGC would pay $10,000 more a year if we could fly to 65, but we can't.

This is not a 30% cut, its roughly over 50%, with some pilot's circumstances causing the numbers to be almost 70% cut.
No bid deal ehhh :angryfire

 

[Dizel8]

They overwhelmingly voted yes, even though the loss of the pension was and is indeed a real possibility, so they must have given it some thought!

 

[Rez O. Lewshun]

Alpa-pac?

 

[GuppyWN]

Airline management has no scruples. Let the taxpayer foot the bill.

I'm not slamming any legacy pilot that has lost your pension but I sure get tired of passing to buck to the taxpayer.

Gup

 

[320AV8R]

And you are surprised by this because.....................

 

[81Horse]

Not surprised.

And the Company gets to throw its virtual hands up in the air and say, "Gosh -- we tried. It's all mean old Congress's fault!"

 

[vc10]

It's more fundamental than that. Current rules require adding cash to the underfunded NWA pension funds in the next couple years at volumes that NWA cannot possibly manage, assuming it exited bankruptcy without ditching the pensions. Consequently, there's no way that a bankruptcy reorg plan could possibly be approved in the absence of a chance in legislation, because no one would fund the plan because an immediate return to bankruptcy is certain.

So, unless the legislation is changed, there are only two choices for NW:

1) liquidate (in which case the pensions are taken over by the PBGC) or
2) distress terminate the pensions (in which case the pensions are taken over by the PBGC) and re-organize the company.

Astute observers will notice that unless the legislation is changed, pensions will be taken over by the PBGC -- and it's not NW's choice. Well, OK, it could choose to liquidate, but that would suck even worse for pilots, no?

Who bears responsibility for this cluster****? Congress, for the current state of pension law that allows a situation like this to develop, ALPA for stupidly insisting on "defined benefit" programs that purport to offer pilots certainty but instead hang them out to dry (the alternative would be 401(k) type programs that hand over cash into pilot pension accounts over time, which is a better idea in a risky business because the pilot has the cash no matter what happens to the airline), and to some degree management as well.

I say "to some degree" because tax law puts all sorts of disincentives in the way of "overfunding" pensions (i.e. to save for a rainy day), so even if management were inclined to add more than the minimum any one year, even in really good times there are large obstacles to doing so.

Not surprised.

And the Company gets to throw its virtual hands up in the air and say, "Gosh -- we tried. It's all mean old Congress's fault!"

 

[Tejas-Jet]

Airline management has no scruples. Let the taxpayer foot the bill.

I'm not slamming any legacy pilot that has lost your pension but I sure get tired of passing to buck to the taxpayer.

Write to your congressman....however, how many congresspersons want to be tagged with taking away the income of a 75 yr old and his wife?

Wonder how well that would go over in his district.

Tejas

 

[81Horse]

vc10: Your observations notwithstanding -- and they're crystal clear -- the Company has walked the line of seeming to promise the safety of the frozen pension plan, if only Congress will have a heart. The Company's sham commitment to pushing for pension funding relief legislation, IMO, persuaded a lot of mid- and upper-seniority pilots to vote for the TA.

 

[Rez O. Lewshun]

Write to your congressman....however, how many congresspersons want to be tagged with taking away the income of a 75 yr old and his wife?

Wonder how well that would go over in his district.

Tejas

Why not empower ALPA-PAC? :beer:

 

[Lear70]

The Company's sham commitment to pushing for pension funding relief legislation, IMO, persuaded a lot of mid- and upper-seniority pilots to vote for the TA.

BINGO!

"My momma always said, "Stupid is as stupid does"."

NWA pilots have nothing to complain about if this happens. I spoke to several of them who were voting yes and they all firmly believed that the government was going to vote in pension reform in time to save their pensions.

Wasn't EVER going to happen, you guys were smoking crack thinking you were keeping them. Like Forest Gump says...

 

[xjhawk]

did anyone read that the cost for the bankruptcy filing was almost 1 billion dollars.......does that mean the lawyers got most of that? Or does the judge get any i have not figured out how all these judges can be so pro big company......or wait, thats right, the law makers must get some...

 

[castle bravo]

vc10:" The Company's sham commitment to pushing for pension funding relief legislation, IMO, persuaded a lot of mid- and upper-seniority pilots to vote for the TA.

"


And even a 3 year old could have seen this coming, hence any sympathy for red book and senior green book people who voted for this garbage should be non-existent.


Occam, you have been quiet lately.

 

[HalinTexas]

Why not empower ALPA-PAC? :beer:

Because ALPA is worthless. Like B-funds, I'd rather keep my money.

 

[SIG600]

You know... with as many crazy people there are out there, I can't beleive that some airline employee that's been totally screwed by mgmt., hasn't gone on a killing spree yet of top mgmt.

 

[Going2Baja]

I would love to see the lawyer bill! Maybe that's a little light bulb going off in my head? LSAT - Law School - Back to work at an airline - make $$$$ - Get run over crossing the street by the Karma Train - No Thanks!!

Are there any furlough guys that are wanting to go back after all this settles? I'm really trying to justify commuting to DTW from SoCal for 40% less $$$, no pension, more hours, and a very unhappy environment. Any other furloughees have any ideas? United has a way to accept recall, go on LOA due to a training contract and accrue pay seniority while continuing to work for another flight Dept. That would be nice?!?!?

Baja.

 

[XJohXJ]

Occam, you have been quiet lately.

Maybe he was in Management. He sure talked like it.

 

[redflyer65]

Wasn't the air carriers themselves that lobbied Congress in the 70's to only the fund the pensions at a certain percentage? And Congress bought off on it, and this is what we have.

And now the carriers are back before Congress screaming foul. Hey, if they would have just funded them like they should have, we wouldn't even be talking about this.

They just used the pension money that should have been going into the fund, for just about anything else. Planes, gates, bonuses, etc.....

 

[Rez O. Lewshun]

Wasn't the air carriers themselves that lobbied Congress in the 70's to only the fund the pensions at a certain percentage? And Congress bought off on it, and this is what we have.

And now the carriers are back before Congress screaming foul. Hey, if they would have just funded them like they should have, we wouldn't even be talking about this.

They just used the pension money that should have been going into the fund, for just about anything else. Planes, gates, bonuses, etc.....

Airline management lobbying Congress? Maybe we should too.....

ALPA-PAC and CAPA-PAC....

• ALPA helped prevent the appointment of a presidential emergency board in the ’98 Northwest Airlines strike and mounted a congressional campaign to block Frank Lorenzo from reentering the airline business. Due to ALPA’s excellent relations with pro-labor decision-makers in Washington, ALPA was consulted prior to the appointment of top officials at FAA, the Departments of Transportation and Labor, the National Transportation Safety Board, the National Mediation Board and other key Administration posts.

​

Money talks... something else walks...

When it comes to the PAC two things speak volumes: dollars and participation. So with one dollar you can speak volumes!

2005 ALPA-PAC PARTICIPATION BY AIRLINE​

United 30%
Delta 29
ASTAR 28
Northwest 23
FedEx 18
Alaska 16​

Hawaiian​

16​

ALPA 15​

Aloha 12
Continental 10
Mesa Air Group 9
US Airways 7
ATA 5
ExpressJet 5
Mesaba 5
American Eagle 2
Spirit 2
America West 1
Piedmont 1
Atlas Air <1
Atlantic Southeast <1
Comair <1
Midwest <1
Pinnacle <1
PSA <1
TSA <1​

 

[Lear70]

Occam's not the only one who's quiet,,, seems like most of the proponents of this T.A. and people who defended its signing afterwards are pretty quiet.

In that thread I think I remember telling them THEN that they were crazy to think they'd keep their pensions... some people are just too desperate to grow a spine.

Sig600, I've wondered that myself a couple times, but evidently pilots are too chickensh*t about THAT, too. I've heard of several pilots who get really screwed over then kill THEMSELVES,,, seems like an odd way to go, especially if you weren't the cause of your own plight and could pin it on some CEO (Lorenzo) as a direct cause, but... whatever.

Rez, you're smokin' crack, too. ALPA has been spending hundreds of thousands of dollars toward lobbying congress and urging the senate and the Pres to sign off on pension reform and it STILL hasn't happened. Throwing more money at the situation isn't going to help if it hasn't helped by now...

 

[Rez O. Lewshun]

Rez, you're smokin' crack, too. ALPA has been spending hundreds of thousands of dollars toward lobbying congress and urging the senate and the Pres to sign off on pension reform and it STILL hasn't happened. Throwing more money at the situation isn't going to help if it hasn't helped by now...

Lear,

Even though you aren't at an ALPA carrier anymore, you can still contribute to CAPA-PAC.

Why would the President sign off on Pension reform? Are you smokin' some of the ATL hoochie coochie weed? The phone line from ALPA/APA/SWAPA to the White House was severed in 2000. The players that pay off W. won't stand for any support of pension reform..they want it all gone....

I guess you perspective is one way to look at it. Or perhaps the effectiveness is due in part that there isn't enough participation. I mean look at those particpation rates....

Check out how much these companies (management give to politicans)(2004 Cycle)..

4.8 million from companies who have Air Line Pilots, including Airtran

http://www.opensecrets.org/pacs/industry.asp?txt=M01&cycle=2004


Now check out ALPA, APA, UAL Pilots PAC and SWAPA-PAC

http://www.opensecrets.org/pacs/industry.asp?txt=P03&cycle=2006

1.8 million

So management is 4x more effective dollar wise.... and you say DON"T contribute? Yeah, that is a real good solution.

The NPA even thinks you should give money to thier PAC......


Everything that effects our career is determined on CapHill, but you want to ignore that...... is ignorance bliss?

 

[ExAF]

Duhhhhh

I'm surprised it took them this long to start the process. I guess they wanted to give the impression they "really weren't going to do it all along." I'm only sorry previous posters beat me to the lines:
1. Almost as surprising as the sun coming up today.
2. Stupid is as stupid does.
3. Yeah...Right...Congress did it.
4. And you are surprised by this because......?
uke:

 

[Lear70]

Why would the President sign off on Pension reform? Are you smokin' some of the ATL hoochie coochie weed? The phone line from ALPA/APA/SWAPA to the White House was severed in 2000. The players that pay off W. won't stand for any support of pension reform..they want it all gone....

OK, since you're talking out both sides of your face, I'll call you on it.

The President won't sign off on pension reform you say. Then why bother to throw more money at it? Might want to wait until there's a different leader in office and see how he/she/it responds to pension reform issues?

Why throw good money after bad?

Check out how much these companies (management give to politicans)(2004 Cycle)..

Getting into a "whose is bigger" contest with management isn't a wise idea... their pockets will ALWAYS be deeper than ours, it's simple math.

We up the ante to 4 Mil, management takes their contribution to 8 Mil, and so on and so forth.

I'm not playing the "who can throw money away faster" game, that's pure stupidity.

The NPA even thinks you should give money to thier PAC......

And when I see any of the PAC committees actually making REAL LEGISLATION CHANGES that I support (incidentally if I remember correctly, none of the unions support the age 65 increase either, but I digress), I'll rethink my position. Until then, I see no real benefit.

Everything that effects our career is determined on CapHill, but you want to ignore that...... is ignorance bliss?

Just as you are ignoring the FACT that nothing for our benefit is ACTUALLY GETTING DONE in Washington, or at least none that I can see that has any tangible, calculable value.

Rest rules haven't changed, age rules haven't changed, pension reform hasn't come about, FFDO rules haven't changed... I could go on and on, but there's really no need.

 

[Rez O. Lewshun]

OK, since you're talking out both sides of your face, I'll call you on it.

The President won't sign off on pension reform you say. Then why bother to throw more money at it? Might want to wait until there's a different leader in office and see how he/she/it responds to pension reform issues?

Why throw good money after bad?


Getting into a "whose is bigger" contest with management isn't a wise idea... their pockets will ALWAYS be deeper than ours, it's simple math.

We up the ante to 4 Mil, management takes their contribution to 8 Mil, and so on and so forth.

I'm not playing the "who can throw money away faster" game, that's pure stupidity.


And when I see any of the PAC committees actually making REAL LEGISLATION CHANGES that I support (incidentally if I remember correctly, none of the unions support the age 65 increase either, but I digress), I'll rethink my position. Until then, I see no real benefit.



Just as you are ignoring the FACT that nothing for our benefit is ACTUALLY GETTING DONE in Washington, or at least none that I can see that has any tangible, calculable value.

Rest rules haven't changed, age rules haven't changed, pension reform hasn't come about, FFDO rules haven't changed... I could go on and on, but there's really no need.

Maybe the rest rules haven't changed to 7.5 hours mins rest because the line is being held. Maybe not. FFDO rules haven't changed? How did the cargo guys get included after they were initially excluded. How did the carry rules change? I could go on an on, but then again you could just educate yourself...

Apathy and resigned to fail without even trying......

Talk about self defeating.... why not just blow your brains out now? :beer: