UAL Pilots Agree to Scrapping Pension!

[RJP]

UAL Pilots Agree to Scrap Pension!

Pilots agree to United scrapping pension plan -WSJ
Fri Dec 17, 2004 04:51 AM ET

NEW YORK, Dec 17 (Reuters) - Leaders of the United Airlines pilots' union have approved a tentative contract with the bankrupt No. 2 U.S. carrier and agreed not to fight UAL Corp.'s (UALAQ.OB: Quote, Profile, Research) bid to scrap the group's pension plan, the Wall Street Journal reported on Friday.

As part of the agreement, once it emerges from bankruptcy protection, United Airlines' parent UAL Corp. would issue $550 million in convertible notes to the union, Stephen Presser, the union's investment banker, told the newspaper.

The pilots could then sell the notes in the capital market to raise money that would make up some of the shortfall they would experience because of the termination of their defined-benefit pension plan, he added.

Negotiators for the Air Line Pilots Association (ALPA) reached the tentative contract deal earlier this week but did not disclose details at the time. Leaders of the union attended a meeting on Thursday to review the deal and approved it, the Journal reported.

The five-year agreement -- which would save UAL about $180 million to $190 million more a year -- will go to ALPA's membership for a vote early next month, the Journal said.

The pilots' concession over the pension plan could become a model for the industry, the paper added, quoting Presser as saying that "it could be replicated for other work groups."

The agreement only applies to active pilots, not those who are retired, according to the Journal.



© Reuters 2004​

 

[Peanut gallery]

From the MEC

December 16, 2004

Dear Fellow Pilot,

Today, following months of analysis, study and deliberation of United Airlines’ current legal and financial situation, the United MEC unanimously accepted and endorsed for your ratification a tentative agreement with the Company in lieu of the Company’s Section 1113 term sheet proposal. It was a decision which none of the MEC members reached lightly, and it came only after the group realized that a negotiated settlement - not a litigated outcome - best serves you and your career.

All of you are well aware of the challenges the past two years have brought to our pilot group. Losses in revenue and oil prices still at or higher than envisioned in the 2005 and 2006 UAL business plan have dealt a crippling blow to an airline already beleaguered by financial instability.

Following the ratification and implementation of a Restructuring Agreement in May 2003 which brought dramatic wage cuts and changes to our work rules, the last thing we expected – or desired – was the prospect of another round of concessionary negotiations. Current economic realities that place our Company in a precarious financial situation required the MEC to make this difficult decision.

We were faced with a difficult choice regarding the Company’s 1113 term sheet: negotiate with the Company to reach a consensual agreement that would inevitably involve further concessions or proceed in the bankruptcy court where we faced a dangerous risk of an imposed, and totally unacceptable, outcome. Your MEC, following careful study and analysis, determined that the responsible approach to protecting what we have left in our current collective bargaining agreement was to enter into a consensual agreement with the Company.

Included with this letter is a copy of the Tentative Agreement that the MEC endorsed, along with a summary of its contents and a comparison to the Company’s term sheet. It is now up to you to determine which direction we will take regarding the Company’s 1113 proposal. If you ratify this TA, it modifies the collective bargaining agreement, subject to approval of the court. If not, there will be litigation in the bankruptcy court where the company will seek to reject our current agreement. Voting will begin shortly, and will close early in January. ALPA will mail to each of you voting instructions prior to the opening of balloting.

Please study this tentative agreement carefully. We are supplying you a great deal of information to help you make an informed decision. Your council representatives will be available in operations to answer your questions. We will be conducting a series of “road shows” in each domicile over the next couple of weeks to explain this tentative agreement in greater detail, and to address your questions. We urge you to carefully monitor your e-mail and the MEC website, as new information and updates will be provided as they become available.

It is important for you to ask the necessary questions to gain a full understanding of the issues. You have an obligation to make an informed decision based on facts – not emotion, speculation or rumor.

As a union, our goal has always been to do the right thing based on the circumstances we face at the time, and this situation is no different. The decisions that await us are not easy ones. But, together, we can provide the leadership to help free our Company from the crippling grip of bankruptcy and restore it to its rightful place as the world’s preeminent airline. As I have said to you previously, this is your union, and your Company.

I urge you to exercise your right to decide responsibly.

Fraternally,

Captain Mark Bathurst
Chairman, UAL-MEC
December 16, 2004

AND NOW FOR THE REAL STICKER SHOCK

3-B-1-a Hourly Rates
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[/font]161.43 161.43 132.29 112.42 112.42
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[/font]162.35 162.35 133.30 113.39 113.39
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3yr​

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[/font]163.19 163.19 134.53 114.39 114.39
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[/font]164.08 164.08 135.42 115.47 115.47
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5yr​

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[/font]165.01 165.01 136.49 116.55 116.55
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6yr​

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[/font]165.86 165.86 137.51 117.59 117.59
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7yr​

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[/font]166.78 166.78 138.42 118.63 118.63
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8yr​

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[/font]167.89 167.89 139.58 119.68 119.68
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9yr​

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[/font]168.81 168.81 140.50 120.58 120.58
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10yr​

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[/font]170.19 170.19 141.95 122.08 122.08
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11yr​

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[/font]171.48 171.48 143.48 123.49 123.49
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12yr​

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[/font]173.03 173.03 144.83 124.96 124.96
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First Officers
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1yr​

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[/font]29.72 29.72 29.72 29.72 29.72
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2yr​

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[/font]67.70 67.70 55.58 47.28 47.28
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3yr​

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[/font]97.91 97.91 80.61 68.64 68.64
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4yr​

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[/font]103.54 103.54 85.45 72.86 72.86
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5yr​

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[/font]105.69 105.69 87.42 74.66 74.66
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6yr​

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[/font]108.13 108.13 89.65 76.67 76.67
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7yr​

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[/font]110.65 110.65 91.84 78.71 78.71
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8yr​

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[/font]113.32 113.32 94.22 80.78 80.78
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9yr​

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[/font]114.28 114.28 95.12 81.64 81.64
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10yr​

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[/font]115.64 115.64 96.46 82.95 82.95
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11yr​

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[/font]116.95 116.95 97.86 84.21 84.21
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12yr​

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[/font]118.18 118.18 98.92 85.35 85.35
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[Boeingman]

As the bar continues to fall. Unreal. Other management teams will be (fill in the blank) themselves to start the process to destroy and abrogate their pilots contracts to "stay competitive".

I feel for anyone starting out in this industry. Between the courts, and inept mangement they have destroyed a once worthwhile career. The silence within ALPA national is nothing short of a betrayel.

At what point do people simply say no? When is enough going to be enough? Does anyone here think UAL's plan (when announced) is viable to the point where they will emerge from bankruptcy? Sounds to me like this is underwriting a black hole.

My guess is within the year, after more losses, they will be right back after the employees for more of their hide. Just like USAIR.

Those who do not learn from history are bound to repeat it.

 

[Jim Smyth]

Wow, this is not good. I really feel for you United guys! Our union always used your pay scales as well as the other big carriers to get our wages up there during our own contract negotiations. It's a shame to see all the hemorrhaging going on in the industry. I hope things turn around soon for all our sakes. I have alot of close friends flying the friendly skies. Best wishes to you all on your uphill battle.

 

[TWA Dude]

Those who do not learn from history are bound to repeat it.

You presume that this economic slump is that same as every one predeeding it, but this one is different. The paradigms have changed and the industry has changed. It suks beyond belief but it's the new reality. There's a reason why nobody is able to "hold the bar up" anymore. Perhaps someday things'll pick back up but right now it's pure self-preservation. I don't like it either but that's the way I see it.

 

[Boeingman]

You presume that this economic slump is that same as every one predeeding it, but this one is different. The paradigms have changed and the industry has changed. It suks beyond belief but it's the new reality. There's a reason why nobody is able to "hold the bar up" anymore. Perhaps someday things'll pick back up but right now it's pure self-preservation. I don't like it either but that's the way I see it.

At what point does one stop blaming the economic slump and someone (anyone) start making these extremely well compensated, management teams accountable and liable for gross mismanagement?

I remember being in a self preservation mode once as well. There were quite a few UAL and USAIR guys telling us to fall on our swords for the "bar". Odd that I don't hear that same talk now from them.

Self preservation comes with a price.

 

[SWA/FO]

never! Its all about luck & the economy.

 

[Boeingman]

This is interesting

http://www.hoovers.com/free/news/detail.xhtml?ArticleID=NR200412161180.3_ede80021c33713ec


Take note of this:

**Meanwhile, United must maintain a cash balance of at least $750 million, according to the agreement with lenders. But the company expects its cash balance to fall below $900 million for most of the first half of next year and below the $750 million floor in early May. The January and February levels are too close to the minimum in the volatile airline industry, the company said.**

This already after the cuts?

 

[SDF2BUF2MCO]

http://www.hoovers.com/free/news/detail.xhtml?ArticleID=NR200412161180.3_ede80021c33713ec


Take note of this:

**Meanwhile, United must maintain a cash balance of at least $750 million, according to the agreement with lenders. But the company expects its cash balance to fall below $900 million for most of the first half of next year and below the $750 million floor in early May. The January and February levels are too close to the minimum in the volatile airline industry, the company said.**

This already after the cuts? Hello? Does anyone see a problem here?

The cash burn is accelerating and the company is STILL under bankruptcy protection.

Yep. And they won't increase revenue to pick up the slack since the competitors will pounce. Which kind of falls back to TWADude's and SWA/FO's comments. Meanwhile, all is fine at the Ivory Tower.

 

[Boeingman]

Meanwhile, all is fine at the Ivory Tower.

What was that saying? While Rome burned Nero fiddled?

I do know what they meant but, sheesh, at some point you have to start preserving something, somewhere. People must held accountable making these management decisions that are destroying lives & careers. Meanwhile they just waltz off with their golden parachutes amidst the wreckage.

 

[SuperFLUF]

................The silence within ALPA national is nothing short of a betrayel.............

United IS ALPA national. Its United's union with everyone else along for the ride.

....At what point do people simply say no? When is enough going to be enough?........

They tried that allready. Remember "full pay to the last day!"? Then the choice of job or no job set in and they caved.

 

[TrimixDeepDiver]

What a shame...United pilots first to worst, bringing the industry down to new lows, one step at a time. Unfortunately this "pension termination" will eventually flow over into other industries...

 

[#1 Windmilling]

Great point about the economy. Below is a table showing the GDP (as calculated by our government) in yearly and quarterly increments. A recession is supposedly defined by two sequential quarters of "negative growth". The pundits will say the economy is bad, but GDP has been growing for about 2 1/2 years. While it may not be as fast as the 90s, there has been growth nonetheless. Interesting times as pay rates for a UAL captain on the A320 are now lower than Jet Blue. Good luck and Merry Christmas and Happy Holidays! Festivus!

#1W

GDP in billions of current dollarsGDP in billions of current dollars19999,268.4 2000q19,629.420009,817.0 2000q29,822.8200110,128.0 2000q39,862.1200210,487.0 2000q49,953.6200311,004.0 2001q110,021.52001q210,128.92001q310,135.12001q410,226.32002q110,338.22002q210,445.72002q310,546.52002q410,617.52003q110,744.62003q210,884.02003q311,116.72003q411,270.92004q111,472.62004q211,657.52004q311,810.0

 

[FDJ2]

Does this TA "terminate" the plan, or "freeze" the defined benefit plan? Will there be a Defined Contribution plan?

 

[#1 Windmilling]

oops. The tables didn't come out very well now, did they? Here's the link:



http://www.bea.doc.gov/bea/dn/gdplev.xls

 

[skykid]

Unfortunately this "pension termination" will eventually flow over into other industries...

Is that a joke? Have you been watching what is going on with pensions in other industries, and even in the military, for the past few decades? Guess not. Do you think AirTran, JetBlue, and Frontier will terminate their defined pensions now? Gee, I wonder why the legacy carriers are going to lose their defined pensions.

What a shame...United pilots first to worst, bringing the industry down to new lows, one step at a time.

Or on the other side of the arguement you could blame all the folks willing to start out at airlines that pay about what we are going to end up at, that never had a defined pension to get rid of. Better yet, I wont blame them and don't blame me for wanting to keep my job.

Boeingman, I would argue the current mgt team is not mismanaging anything. To go from a full press to get the ATSB, and then in a few short months having the pilots not even fight over the pensions - I wouldn't have believed that. Look at the government service rankings and see who is consistently leading the industry, even in these rough times. I would argue the incentive pay for things such as intent to repurchase has been critical in at least beginning to change some mindsets. Which airline has positioned itself to best take advantage of the booming Asian economies? There's a few highlights of the plan that doesn't exist. It is easy to want to believe United has no plan and keep posting it here like SWA/FO, but that is an uninformed view.

You could argue UAL mgt put too much effort into getting the ATSB backing. I would argue there is no way they could have bypassed that step and had any chance at the cuts needed to get exit financing.

 

[canyonblue]

Or on the other side of the arguement you could blame all the folks willing to start out at airlines that pay about what we are going to end up at, that never had a defined pension to get rid of. Better yet, I wont blame them and don't blame me for wanting to keep my job.

I don't blame anyone for wanting to keep their job, but go back a few years ago and the pilots at United did not have the best reputation for treating fellow pilots as equals. Many UAL pilots would treat other airline pilots as second class, below the mighty UAL pilot. I remember sitting in the jumpseat of a UAL 737 commuting home in June of 2001, when we started chatting about the rumors in the industry. I told them that a friend of mine at Delta had just told me they stopped interviewing. The F/O turned and looked at me and said "Well I guess your road to the Majors just got a lot longer". I told him I just interviewed with Southwest in May and was awaiting the decision board result. The captain then turned around and asked "What do they pay?". I said I did not memorize the pay scale but it was fair enough for me to apply, besides working at Southwest was more than about money. He then turned to me and said "Let me tell you, I have been at United 6 years and I make $193 an hour". It is sad when the only good thing you can say about you job is the money, because if that is taken away, what do you have left to go to work for. If I ever get to that point, I hope my wife just hits me with a shovel.

 

[Boeingman]

Boeingman, I would argue the current mgt team is not mismanaging anything. To go from a full press to get the ATSB, and then in a few short months having the pilots not even fight over the pensions - I wouldn't have believed that. Look at the government service rankings and see who is consistently leading the industry, even in these rough times. I would argue the incentive pay for things such as intent to repurchase has been critical in at least beginning to change some mindsets. Which airline has positioned itself to best take advantage of the booming Asian economies? There's a few highlights of the plan that doesn't exist. It is easy to want to believe United has no plan and keep posting it here like SWA/FO, but that is an uninformed view.

You could argue UAL mgt put too much effort into getting the ATSB backing. I would argue there is no way they could have bypassed that step and had any chance at the cuts needed to get exit financing.

I completely disagree. To be blunt, TED has been a failure, there is no plan yet, cash is burning rapidly and the company is finally starting to admit things are bleak. Look at the ending projected cash balance year over year. Just because the UAL pilots are capitualing means nothing about a valid restructuring plan in the works. It only means they are scared. Or was the MEC privy to material not made public?

The service rankings and such while a nice measure, they don't pay the bills and the creditors could care less about them. To be even further brutally honest, a couple of Asian routes are not going to save UAL. The proof is in the financials and the trends. They do not look good and the numbers coming from the company look even more bleak.

It was stupid for UAL management to put all their eggs in the ATSB basket whom many said was a bad move. It was patently obvious long before the ATSB officially turned UAL down the signals were not good they would get the loan. If anything, the smart thing to have done would be to develop a contingency 2 tracked plan. You guys should be hanging these people for complete lack of strategic planning.

How many extensions has Tilton asked for? That is why many, including the creditors think no real bonafide plan that will work exists.

When you have lessors trying to repo airplanes, there is some thing wrong. When your company starts suing it's creditors, not only is something wrong financially, someone at the upper end of the food chain there is clueless!
You do not bite the hands keeping you alive because others will not put their hands near your mouth again!

The retirement deal is another thing of beauty. Convertible notes for your pension? Is your MEC stupid or are they just scared? Why do I say that? Have them research what Lorenzo did with Eastern with these "notes" Good god man this book has already been written. The MEC should also have some snap back provisions. A deal until 2009? No way. what if you guys start making moeny hand over fist? Do you they think management will say, "gee thanks....here is more money we sure appreciate it". They will tell you a contract is a contract and the cash will flow for bonuses at the top. Guarenteed.

What a sad situation. I honestly mean that. I know a lot of those arrogant SOB's are long gone and some good people are going to get burned very badly. Trouble is, they don't really see it,or believe it is coming. It is, and it is not far off.

Why finance it further?

 

[skykid]

canyonblue,

I know jerks at every airline, including yours. There's a bunch of great people here, just like at your airline.

Boeingman,

We will agree to disagree. Go ahead and argue that they have a bad plan, or no plan will work with $45-50/barrel oil, but UAL mgt knows exactly what they are doing. What is going on in Asia is more than a few flights, and includes alliances that will shape the future of flying over there for a long time to come. United has flooded the domestic market with about 600 LESS flights in the past few years, and will cut another 11% Jan 6. At the same time international seats are being increased by 14%.

Its not enough for you to just say TED is a failure with nothing to back it up. I know a bunch of people want it to fail, but that alone is not going to be enough. United has changed the product with TED and the new Premium Service (another facet that happened randomly with no plan) and I think the changes are good. Fact is, if United wasn't responding to changing consumer groups, there would be even more naysaying.

Since it was stupid for mgt to put all the eggs in the ATSB basket, I guess you can tell me what plan B should have been? W/O ATSB backing, there wasn't then, now, or in the future going to be any exit financing with the defined pensions. Period. So you think mgt is going to convince all these unions that there is no hope for the ATSB so we have to ditch the pensions now? I don't think that was going to happen.

You think the company is just now saying things are bleak? I don't know how to argue against that. I read the business sections from all our hub newspapers every morning and the WSJ - they've been saying its bleak for about 3 years and 1 month.

I've got several hours of research to do to analyze the convertable note deal. I wouldn't argue one way or the other until then, except to say I couldn't care less about it. I care about my 401K and IRAs, and don't put any hope in anything else that I don't have complete control over. Take care.

 

[ilinipilot]

Something is fishy....

Something occured to me today as I was reading all about these paycuts. The way ALPA didnt put up a fight about the pension changes makes me believe that maybe UAL and ALPA national are in bed on another hotbed issue...................

The age 60 retirement.


Wy ALPA didnt fight this harder?????

Maybe they said listen UAL get this through and we will raise the retirement age to 65.

Thoughts

DISCLAIMER this is mere speculation and I only posted this here to see what others thought of my conspiracy theory.

And I posted this same thought on another thread. so you are ready this twice.