UAL or NW Bankruptcy Claim?

[DrewBlows]

Will someone explain the process that the UAL and NW MEC used for distributing their bankruptcy claim? Comair is currently voting on a TA that includes a bankruptcy claim, and I'm trying to figure out if we can expect anything from the claim.

I'm guessing that NW pilots have yet to see anything, but I really don't know anything about it, so any information would be appreciated.

I'm really interested in the UAL situation. I've heard it's been a bit of a fiasco, and hope that the Comair MEC can avoid problems that have already occured elsewhere.

 

[Occam's Razor]

Dunno about UAL, but NWA allocated the claim based on a formula:

25% was based on seniority: #1 got a 2, and #last got a 1. Everybody else got something in-between based on relative seniority.

25% was based on a flat rate: Every pilot got an equal share of 25% of the claim.

50% was based on earnings: Higher paid means you got more.

 

[pb4ufly]

UAL.

I was furloughed and sold everything I had (no plans to return):

$16,000

After taxes it was about a $10,000 check. I could not do pre-tax into a 401(k) because I had no UAL income in 2006.

In believe NWA is working the tax option better.

PB

 

[DrewBlows]

Dunno about UAL, but NWA allocated the claim based on a formula:

25% was based on seniority: #1 got a 2, and #last got a 1. Everybody else got something in-between based on relative seniority.

25% was based on a flat rate: Every pilot got an equal share of 25% of the claim.

50% was based on earnings: Higher paid means you got more.

Thanks. What earnings was it based on? Past earnings or future earning potential (since the contract will affect you in the future)?

I'll be frank. I'm afraid that the payout at Comair will have little to do with actual damages and a lot to do with seniority (which the NWA model appears to be). Of course senior guys will have greater damages than junior guys, but it's not that hard to figure out actual damages based on a set model. For instance, if a guy retires the day after the deal is signed he obviously will not be affected as much as everyone else who actually has to live through the four years of the contract. Yet it appears to me that in the NWA model (at least if it were applied to Comair) the retireing guy would get a very large payout, with very little damages. Comair hasn't lost it's A plan (because one doesn't exist), so perhaps the NWA model isn't an appropriate.

Unfortunately I think a lot of guys are voting for this deal because of the bankruptcy claim. I can't vote for something I know nothing about (because the MEC won't or can't say anything about it), so I'm trying to get as much information as possible.

 

[acarpe3448]

Will someone explain the process that the UAL and NW MEC used for distributing their bankruptcy claim? Comair is currently voting on a TA that includes a bankruptcy claim, and I'm trying to figure out if we can expect anything from the claim.

I'm guessing that NW pilots have yet to see anything, but I really don't know anything about it, so any information would be appreciated.

I'm really interested in the UAL situation. I've heard it's been a bit of a fiasco, and hope that the Comair MEC can avoid problems that have already occured elsewhere.

We have the silo's at Delta! Similar makeup! I have been told the claim is selling for between 60 and 80 cents on the dollar! In my case it equals around $160,000! I think every pilot on our list will get a similar amount or more!

 

[Occam's Razor]

Thanks. What earnings was it based on? Past earnings or future earning potential (since the contract will affect you in the future)?

Past earnings. It is the only accurate measure of earnings. Anticipating future earnings is problematic: How do you know what each pilot will bid/hold? How much will they fly?

I'll be frank. I'm afraid that the payout at Comair will have little to do with actual damages and a lot to do with seniority (which the NWA model appears to be).

The NWA model (which is VERY similar to the DAL "silos") does favor senior pilots...to the extent the current pay-rates system already favors senior pilots! In some cases, relatively senior pilots are upseat that they aren't getting rewarded for "sandbagging" in F/O seats instead of checking-out as captains. I flew with an F/O on the A320 in December who was senior to me, but has chosen to fly uber-senior in his seat to grab the good trips and days off. He asked why I should get more money than he did, since he was SENIOR to me. I reminded him he chose QOL over money...and the claim sale is money.

He chose poorly...

Of course senior guys will have greater damages than junior guys, but it's not that hard to figure out actual damages based on a set model. For instance, if a guy retires the day after the deal is signed he obviously will not be affected as much as everyone else who actually has to live through the four years of the contract. Yet it appears to me that in the NWA model (at least if it were applied to Comair) the retireing guy would get a very large payout, with very little damages. Comair hasn't lost it's A plan (because one doesn't exist), so perhaps the NWA model isn't an appropriate.

You're correct that pilots about to retire score well in this system, while pilots being recalled from furlough are not scoring well. The "model" method can be broken or invalidated. The empirical method our MEC chose can be measured and verified.

It's sorta like the differences between performance and potential. One can be measured...one can't.

Unfortunately I think a lot of guys are voting for this deal because of the bankruptcy claim.

That's not a good thing. You should vote for/against this deal based on one factor only: Is it better than the alternative?

My W.A.G. is that the deal will pass with a 65-70% approval vote. The claim sale may have an impact on the vote, but I think that's a little short-sighted. The pragmatic voters will determine that they've got a split pilot group...and when the group's split, you would be better served by having a contract. Again, that's just my opinion, and worth every penny you're paying for it!

I can't vote for something I know nothing about (because the MEC won't or can't say anything about it), so I'm trying to get as much information as possible.

Good for you! Call Todd, or one of the other reps and share your concerns with them. You've got solid reps who are committed to getting you the best deal they can under the circumstances.

 

[ualdriver]

Will someone explain the process that the UAL and NW MEC used for distributing their bankruptcy claim? Comair is currently voting on a TA that includes a bankruptcy claim, and I'm trying to figure out if we can expect anything from the claim.

I'm guessing that NW pilots have yet to see anything, but I really don't know anything about it, so any information would be appreciated.

I'm really interested in the UAL situation. I've heard it's been a bit of a fiasco, and hope that the Comair MEC can avoid problems that have already occured elsewhere.

The UAL bankruptcy claim (i.e. the post banruptcy stock distribution which was our "claim" for concessions) was basically distributed such that the most senior guy in the company got twice as much as the junior guy and a "line" was drawn between the two seniority-wise. The higer you were on that line in the seniority list, the more stock you received. Further, the pilot group was given an opportunity to "pre-sell" their stock to outisde investors for a fixed price that turned out to be higher than expected and higher than the initial bankruptcy claim. Those that chose that option never really took possession of any stock and just received taxable cash. Everyone else received their stock in a brokerage account and could buy/sell as they pleased.

The "fiasco" at UAL concerned the bond money that we received in lieu of our lost pensions and didn't have anything to do with the stock distribution. I hope that helps.

 

[DrewBlows]

That does help. Thanks for the information guys.

Somehow I forgot about Delta... USAir too, I guess. What is the "silo" system?

I guess I was imagining a distribution system that was based on each pilot's individual damages over the course of the four year contract. Comair didn't lose an A-plan, there are only two aircraft types (for pay reasons anyway), and there are only about 1500 pilots, so it would be far easier to figure out than mainline. It would have to be based on some planned attrition and fleet plans, which would obviosly be an extrapolation after whatever the company currently has planned (which isn't particularly reliable anyway). There's no way that we could possibly know exactly what will happen in those 48 months, but at least everyone would be on the same page. The company and the union had to come up with some model when negotiating to determine the value of the cuts, so I figured why couldn't we do the same thing? Each pilot would be given a piece of paper with his individual damages which would determine his individual payout. In this example, the guy who retires the day after signing doesn't get a windfall, and the guy who upgrades that same day doesn't get screwed. It's based on forward looking assumptions, but at least everyone's payout is based on the same assumptions.

I was curious what my damages over the course of the contract would be so I set up an excel spreadsheet to get ballpark numbers. I went under the assumption that I would never upgrade, would never pick up open time, and would never be off reserve (75 hours, 200 TAFB). I then put in a Captain's pay who was already at full pay and held a line (after 18 years, I hope so). He also didn't pick up open time. When comparing the the 2001 contract to the 2007 LOA the Captain's damages were 2.35 times mine. The ratio fell to 2.23 when compared Comair's current pay rates. The numbers included retirement contributions, but not credits for work rule changes which would affect each differently (for instance reserve rules affected me, while changes to vacation benefits affected the Captain). I'm not really sure what this means, since I don't know how the money will be distibuted.

Shifting gears...

The MEC has said that the only option for payout is 401(k) contribution. They said that if even one pilot chose a cash payment that everyone had to pay taxes on it. Oh well, I would choose the 401(k) option anyway, but would like to be given the choice.