AMFA Update:
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22 July 2004
Information Meeting with UAL regarding Pensions and other AMFA related issues Chicago 7/21/2004
Briefing notes from Doug Butz AMFA Local 9 Treasurer
In attendance from UAL: Pete Kain, Al Koehler, Greg Hall, Mary Ann Derken and Larry Deshawn
The meeting started with Pete Kain laying out the ground rules which were as follows: We will answer any questions that you have in regards to the pension plans rules, regulations or why we did not make the 72 Million dollar payment last week, but we will not nor are we able to at this time give you any information on what we are working on, our current strategy or what we will be doing in the future. He stated that he knew it was a frustrating position to be in but there are certain things that no one is privy too until it is announced publicly. He also stated that UAL will make its best effort to inform our national office of any pending announcements if and when there are any announcements to be released.
Mary Ann Derkin gave a run down on why UAL did not make the 72 million dollar payment last week. She stated that pension funding requirements are regulated by the IRS code and ERISA. These regulations have built into them flexibility and that flexibility allows UAL to defer the payments for the year 2004 until September 15 2005. If the payments are not made by September 15th 2005 then there is a 10% penalty that will be due to the IRS. By deferring the payment of the 74 million last week they will have to pay an interest penalty, but all those funds will be payable to the current plan adding value to the fund. UAL also has another 74 million dollar payment for the year 2004 due on October 15, 2004 and they can also defer it until September 15th 2005.
This September 15th UAL will have to pay the deferred payments from 2003 in the amount of 400 million or face a 10% penalty to the IRS. (40 mil.)
The company is currently required to make payments for the Ground employees, Flight attendants and Management /Salaried groups funds. The pilots plan still has credits so they are not required to make any payments into their plan until next year.
We requested from UAL data on current funding levels for all pension plans as well as the monthly payouts from the plans. They assured us that the data would be forthcoming.
They confirmed that the PBGC has been evaluating all of UAL’s pension funds and they have been since the bankruptcy filing in 2002. As a matter of law UAL must keep them up to date on the status of the plans. The PBGC is also on the creditors committee.
We asked the company to confirm rumors that UAL will be asking for an extension to come out of chapter 11 until the summer of 2005, they would not confirm. They did state their next court date will be this Friday, July 23rd.
Greg Hall gave an update on United Services. He stated the following:
The fleet will be reduced by 23 737’s in September. This reduction in the fleet size could cause up to 220 furloughs. The actual number will be announced after the outcome of the Air Canada LOA vote is known. (This vote schedule is pending, and will be announced soon). The actual number would be reduced by 30 if the LOA passes. He also stated that about half the possible furloughs would come from SFO.
The number of United engines in the jet shop may increase due to the fact that all engines on lease return aircraft must have boroscope inspections accomplished. The inspections often find bad engines and UAL is required to return all engines in a serviceable condition.
UAL will not be replacing the 737’s with A320’s at this time.
The new landing gear shop at SFO will be complete by the end of September this year. UAL expects a workload increase in 2005 for this shop. The number of UAL gear needing overhaul next year will increase.
UAL is currently bidding on Virgin Airlines line maintenance work, component work, check work and avionics work.
UAL may lose some check work from America West due to them cutting their schedule at SFO.
UAL is in discussions with Lufthansa to do all of their line maintenance work at US stations. They would do all our line work in Europe
Larry Deshawn SVP Ground Ops made the following statements:
UAL is looking into farming out all field service work for the GQ group (Traveling Mechanics). They will also in the near future be looking at the feasibility of farming out some GQ and plant Maintenance work. He stated that this is all preliminary and that they have no idea if there are any vendors that can be competitive or supply the quality that they are looking for. They also are looking to in-source customer work at some stations.
There will also be an unspecified number furloughs of GQ people in September due to the reduction of ground equipment as a result of the fleet reduction. (23 737’s) He did not have any numbers at this time and stated that the process is ongoing.
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