skykid said:
I appreciate your post B-man. I already have researched quite a bit about this process and already know a lot about Eastern. To follow your explanation would mean every company that has applied to have a pension taken over is completely liquidated through Ch7 - not the case. What the PBGC is stating is that UAL has pension plans in place, is not funding them, and needs to fund them or take steps to terminate them. The reason every newspaper in the country didn't run the headline last week - 'United to be Liquidated by PBGC' is because its not true. There will be months of negotiations and litigation to sort this out. I don't have a clue how it will end. United can't dump all 4 pensions with no cost or consequences and they know that.
I would hope the reason ALPA has not been to the courthouse is because they are not stupid, or as stupid. Airlines with these defined pension plans are not going to be around much longer in that form. When you have a generous defined plan AND a 401k like United and other majors I know of, you aren't going to compete long with with those that don't. It stinks, but trying to force mgt to keep funding the plan, even if it means giving up the means to produce revenue, is illogical. "I lost my pension plan, but at least I'm unemployed too."
Skykid:
You're correct factually, but I am speaking only of an absolute worst case scenario and it's potential only. I didn't clarify that and at face value you're correct, I made it a bit myopic. However, the problem in UAL's case I believe it would be the largest distressed termination in the history of the PBGC. The rest kind of flows financially from there. With the amount of money needed and UAL's cash position there would be no other alternative but forced asset sales or attachments if (and this is a big IF) the PBGC decided to go that route.
Again, I'm only talking about a worst case scenario but my gut feeling says this is going to get very, very ugly between UAL and the PBGC. Especially now that UAL made an agreement with major creditors predicated on not paying into thepension. Another words, on the surface, it would seem management has really backed themselves into a corner.
Unknown what the lawyers and upper managment are planning. Correct statement it will be a litigation nightmare to sort it out. I still can't believe that all these high powered attorney's on all sides didn't get concerned about stopping funding during a pension shortfall. I mean you're talking about federal law and major tax implications as well. Tilton made their plans known during the creditor negotiations as evident by the agreements struck and were contingent upon non payment. Something just doesn't smell right about this whole thing.
These lawyers are not fools, that's why on the surface it seems incredulous.
Interesting second paragraph. While the concept I agree will eventually happen throughout the industry, UAL ALPA at the present time should not just roll over and play dead on a benefit already accrued. You have a contractual benefit and UAL has an obligation to honor that, or negotiate with your union. To just stop paying is unethical, illegal and immoral.
I was also under the impression that UAL already promised employees there would be no changes to the pensions in exchange for concessions. Is this not correct? If it is, this is a major change in the status quo and hopefully not indicative of what is in store for future talks between labor and management.
Either way, I urge everyone to never, I mean never rely on their employer for your retirement. The only contracts senior management teams ever honor are their own.
