UAL might have largest pension default in history

[Mugs]

A couple of other points regarding G4G5s belief that the government would rather pursue a liquidation of UAL's assets. How much are those assets worth? How much would they be worth in a chapter 7 firesale? Would it come anywhere near covering the shortfall? Let's assume for the sake of your argument that it would in fact "solve" the UAL pension issue for the PBGC. What happens then to UAL's liquidated assets? I bet they come back into the market operating at about 6 cents a mile or less. A nice fresh explosion of ultra low cost competiton for the surviving carriers still struggling to pay for their surviving pension plans to worry about. Further downward pressure on revenue will result and the noise about having to dump the plans to compete will start all over again. Unless you can permanently get the excess capacity out of the system, there will be no revenue premium. Thus, the pressure on funding pensions is unlikely to let up regardless of whether UAL survives or not.

 

[InclusiveScope]

This issue if FORCING out many of our senior guys, and they have until Feb 1st to leave or lose 1/2 of their pension (or lump sum). Some of them (at random or if they are currently a line check airman) will stay until their replacement is trained. This might cause an exodus of 500-800 senior Captains. If United pulls the plug on thier pension, Delta will follow. I can forsee a "cash balance" type program being set up---which is just one large lump sum (maybe large, maybe not) when you retire, and then no monthly pension after that. It will never be as good as the guys who are getting that "defined benefit" program now---1/2 lump and then a monthly pension on top of that.



Bye Bye--General Lee

General,
Sounds like you have changed your tune. Here is what you said a while back:


http://forums.flightinfo.com/images/icons/icon26.gif
inclusivescope,


You seem giddy. That is weird. As the Stock market grows, the pension shortfall---even in this industry---will get smaller. The Dow is expected to grow a lot over the next five years, and hopefully, with the right investments by our crackpot team in ATL---the shortfall will get smaller. Time for you to get off caffeine.

Bye Bye--General Lee
__________________
"Ride the Snake"

---Jimmy Tango's quick weight loss
Plan

(Jim Carey on SNL)


Which is it General?

 

[G4G5]

The gov would sooner liquidate UALs assets then be left holding the bag for every major airline employe's pension.

That makes the PBGC's statement to United employees defining what they will cover seem a little odd then, doesn't it? I'm not an expert on the PBGC by any means. I have read everything I can on the issue for the past several months. What I see from every source is the gov has less say in the matter than you think. G4G5, I would love to see some precendent or law backing up your statement if you have it. Thanks.

One needs to look no further then what the gov had to say when Eastern tried to do the same thing.

 

[G4G5]

A couple of other points regarding G4G5s belief that the government would rather pursue a liquidation of UAL's assets. How much are those assets worth? How much would they be worth in a chapter 7 firesale?
Somehting is better then nothing but what really is at stake is every pension for every legacy carrier (and some believe that this could eaisly go outside the airline industry). If the PBGC let's UAL get away with it then they are opening the flood gates.

Would it come anywhere near covering the shortfall? Let's assume for the sake of your argument that it would in fact "solve" the UAL pension issue for the PBGC. What happens then to UAL's liquidated assets? I bet they come back into the market operating at about 6 cents a mile or less. A nice fresh explosion of ultra low cost competiton for the surviving carriers still struggling to pay for their surviving pension plans to worry about. Further downward pressure on revenue will result and the noise about having to dump the plans to compete will start all over again. Unless you can permanently get the excess capacity out of the system, there will be no revenue premium. Thus, the pressure on funding pensions is unlikely to let up regardless of whether UAL survives or not.

I don't believe that the revenue premiums will ever return. The excess capacity will be removed by those who can't compete at the current LCC CMS's.

 

[General Lee]

inclusivescope,


I have changed my tone somewhat. This problem has grown and a lot of what I said previously was due to stuff I read in articles at the time. I didn't just make that stuff up. I think our pension problem is one that now won't go away easily, and our current pension program will vanish soon. Those days of huge lump sums and then annuity payments monthly on top of that will soon be history. I think many of our senior guys can see that now, and will bail out with at least a lump sum and a chance at some monthly payments.


Bye Bye--General Lee

 

[skykid]

One needs to look no further then what the gov had to say when Eastern tried to do the same thing.

That doesn't exactly mean much to me - the gov has had a lot to say in the current situation and most of it seems to be pleadings and suggestions. Again, I would love to see some precendent or law backing up your statement if you have it. Thanks.

 

[vc10]

Blame, in part, ALPA. Defined Benefit pension is almost an article of faith at ALPA because, so the rationale goes, it eliminates uncertainty (as opposed to a 401(k) program, where the employee has to invest the money him/herself, and therefore the potential returns are uncertain).

Yeah, defined contribution pensions may be uncertain in some ways, but in one way they're very certain---they money is yours, all yours, and even if the company goes belly-up, that money can't be taken away from you.

In retrospect, defined benefit pension plans (as currently structured) were a really bad idea, and ALPA should rethink its retirement benefit goals for its members.

This really sucks! Imagine working for several years expecting to get a nice retirement, and all of a sudden management says, "we're sorry, but we can't afford to pay for your retirement anymore".


I guess the bottom line is, we can't rely on a pension to support us in retirement. We all need to make sure we have our own retirement plan in place. I'm glad I have a few years to get one in place. I feel sorry for the folks who are about to retire or who have just recently retired.

Good luck all!

 

[100LL... Again!]

Exactly.

Everyone believed that their airline would always remain profitable and that the retirement money would always be there.

What this really is: A huge market correction from an unsustainable business model.

 

[46Driver]

What this really is: A huge market correction from an unsustainable business model.

A very succinct and accurate statement.