UAL says it has options on pension shortfall

[767jetz]

Here’s another one from the Denver Post:

United pushes for pension-plan help
WASHINGTON - United Airlines is pushing aggressively for legislation that would allow the company to defer payments to its massively under-funded pension plans, the company's chief executive said Thursday.
Winning changes to pension law is a top priority for the company, CEO Glenn Tilton said. He said that the company plans to address its pension crisis with a "combination of solutions," though he did not detail all the pieces of that approach. He said, however, that the company was pushing for legislative changes.
Deanne Brady, spokeswoman for Camp, said support is building because both pilots and the airline support the measure. Pilots said Thursday they were pleased to hear that Tilton considers the pension problem a top priority.
Tilton said he did not believe United would end up like US Airways, which while in bankruptcy court terminated its pension plan for pilots. The plan was turned over to the pension guarantee agency. But the Pension Benefit Guaranty Corp. would pay far less than what most United pilots would get under their plan. As part of the bankruptcy reorganization, pilots have agreed to significant wage cuts and changes in work rules that require them to work longer days and take fewer days off.
"Our situation is really very different from theirs," Tilton said of US Airways.
Tilton said the company's reorganization is not an attempt to get back to where it was before financial woes began, but rather a complete makeover. He said changes in work rules were necessary because "people in our company got used to being unproductive." He said securing those changes in work rules from the unions was more difficult than getting people to agree to cut their own pay. But the changes were crucial, he said.
"We are not working to get United back to the days that employees at the company remember fondly," he said. "This is not a process of restoration. This is a process of moving forward.â€￾
United could exit bankruptcy as early as the fourth quarter, Tilton said, but will probably wait until the second quarter of 2004, when the economy is likely to be more favorable.

 

[767jetz]

For all the gloom and doomers out there, (this means you,Chip) here is an article from Reuters for you.

UAL says it has options on pension shortfall
Thu July 24, 2003 05:36 PM ET
By John Crawley
WASHINGTON, July 24 (Reuters) - Bankrupt United Airlines is pressing Congress to let airlines stretch out their employee pension contributions, but the company''s chairman said on Thursday there were alternatives to a legislative fix.
We are working on a multiple combination of solutions, United chief executive Glenn Tilton told reporters after delivering a speech to industry and government officials.
Tilton said United''s situation, even with a massive shortfall of more than $6 billion, is far different from the case US Airways faced in bankruptcy proceedings last winter.
US Airways eventually terminated its pilots retirement plan and replaced it with a cheaper one after lawmakers refused to let the carrier amortize contributions to ease the financial burden of a substantial pension fund liability.
Our situation is very different from theirs, Tilton said when asked if United would have to terminate pensions if it could not extend payments. For instance, Tilton said US Airways had one alternative plan that became a crucial negotiating point in the final days of bankruptcy.
We don''t have that, Tilton said without identifying what options the airline and its labor groups might pursue if Congress does not give the industry more help. They could freeze pensions or negotiate other changes with its unions. US Airways considered these and other options for its pilots but found them unworkable.

 

[The Ronin]

censors.... how is s h e l l and s c r e w e d offensive?

 

[The Ronin]

It ain't going to happen folks. Very influential Senators and Congressman are not going to help UAL out of 6bn in obligations when GM just had to sxxxx out 17bn in bonds to cover theirs. Nor are any creditors including uncle sam going to give us one dime to cover our retirement obligations. Well uncle sam might think twice since the PBGC is WAY in the hole already. Its a debt that has to go folks, sorry, but in essence we are not the same company. Pre-BK UAL is dead, Post-BK UAL is a new company with a old brand name. So if you think they've xxxxxed ya, think again, you ain't seen nothing yet, including what you thought was your retirement. Sorry for the negative view, I know they're is not much positive on this board, but thats the way I see it.

 

[Todd B]

We are working on correcting this error.

 

[767jetz]

Ronin

I hear what your saying, but are a few other points you shold consider.

I agree that the gov't is in no rush to help the airlines... UNLESS of course it is some how to their advantage to do so. And it might be. The PBGC is in the hole, and it would be to to their advantage if the airline's pension somehow survive. That way it will stay the airlines problem, and not theirs. If the pensions are terminated, it puts an even greater burden on PBGC. The airlines do not want the gov't to fund the pensions. They only want to ease some of the very stringent funding rules, and allow them to spread the payments over a longer period of time. This is where some of the momentum is building. ALPA and management of all airlines are on the same side on this one.

As for the Gov't not wanting to favor one industry over another... Didn't they bail out Chrysler once before? So it is not without precident.

Finally, notice that Tilton said that although they are pushing for legislative changes, they are working on a combination of solutions that do not include any legislative relief.

IMO we are far from having to write off the whole issue. We still have a fight left in this pension game. And fortunately for those of us at UA, we have a CEO who is now working with us on this issue.

 

[USA320Pilot]

767jetz:

I read the Reuters article and UA chief executive officer Glenn Tilton’s comments. The bottom line is a few week’s ago I predicted the UA underfunded pension problem because of reports I obtained from ALPA R&I, after I inquired with ALPA about the problem after the Rocky Mountain News article was published. After posting this information, you and other UA employees widely criticized me because you said your concessions would preserve your plan, but it appears your comments were in error without legislative relief.

I believe Tilton’s generic pension comments do not hold a lot of substance, just like UA’s Econ 101 four-part business plan that is a generic business plan for any company, in any industry.

Moreover, Tilton said on his weekly recorded message last Tuesday the new "collective bargaining agreements reduced pension obligations to some extent," clearly indicating that there would need to be either more employee retirement plan concessions or a legislative solution, which I am actively involved with on behalf of ALPA.

US management has been working vigorously with ALPA in support of the federal pension legislation, which would reinstate the US pilots' terminated defined benefit pension plan, keep other airline DB plans in place, and permit payments to be amortized over a 30-year period. The bill, HR 2719, has been introduced in the House of Representatives and has the support of all of the major U.S. air carriers, the AFL-CIO, ALPA, and other airline unions. With Congress headed home soon for their summer break, further action on this bill is unlikely until September, which could be part of UA’s decision to remain in bankruptcy probably until the second quarter of 2004 (which I also predicted and if my memory serves me correctly, but you disputed). Nonetheless, the legislation is proceeding normally through the legislative process and, in fact, this week acquired three more sponsors from House Ways and Means Committee members, two of whom are Republicans. This is a very positive development because legislative relief is becoming bi-partisan and could override Bush Administration objections..

Regardless, Tilton told employees on his weekly recorded message that "more needs to be done" on the legislative front, there was "opposition from some important members of Congress" to H.R. 2719, and the "pension plans are cash liabilities that must be met" before the company can successfully emerge from court protection.

Best regards,

Chip

 

[ual06]

VERY INTERESTING:

On 7/24/2003 10:24:04 AM a certain poster started the topic: "UAL Seeks to Stretch Out Pension Funding".

On 7/26/2003 4:06:03 PM the same poster wrote:

--- "US management has been working vigorously with ALPA in support of the federal pension legislation, which would reinstate the US pilots' terminated defined benefit pension plan, keep other airline DB plans" ---

VERY INTERESTING

But don't worry, as sure as the sun will come up tomorrow, U will save the day - or will it?

It is not easy to hold on to coattails when the coattails are moving quite fast.

 

[AirplaneFan]

The problems are many fold with U.S. govt relaxing restrictions on airline companies pension plans

1) Airlines did not continue to fund pension funds like many other companies did when the economy was much better in the late 1990's.

2) By allowing companies to handle the shortfall over 30 years, it allows senior pilots to retire with full benefits, but puts the junior pilots at a much greater risk that when they are ready to retire there will be nothing left. It is a BIG ASSUMPTION that many of the airlines will be with us in 10 years let along 30 years.

3) Kind of a bad precedent to be setting for all other US companies.

 

[iflyjetz]

This is why we need to universally get rid of all pensions:
http://www.theherald.co.uk/news/archive/17...3-23-53-11.html

The inhumanity of it all! They've raised the price of a pint by 10p because of their pension shortfall!

On a serious note, just about every defined benefit plan has a shortfall. Worldwide. I challenge Chip or anyone else to find me 10 companies in the Fortune 500 with defined benefit plans that are not underfunded.
Pensions are part of the pay and compensation package negotiated between management and workers. Management has never put enough money into defined benefit plans to be fully funded in event of plan termination. This is mereley the latest scam perpetrated by management on workers. Too bad some are blind to the scam.

 

[Busdrvr]

"The problems are many fold with U.S. govt relaxing restrictions on airline companies pension plans

1) Airlines did not continue to fund pension funds like many other companies did when the economy was much better in the late 1990's."

Oh really?! FYI at the end of 1999 the industry's defined benefit plans were funded at an average rate of 102%.

"2) By allowing companies to handle the shortfall over 30 years, it allows senior pilots to retire with full benefits, but puts the junior pilots at a much greater risk that when they are ready to retire there will be nothing left. It is a BIG ASSUMPTION that many of the airlines will be with us in 10 years let along 30 years."

You assume that the market will stay bearish and interest rates will stay low.

"3) Kind of a bad precedent to be setting for all other US companies."

An even worse precedent would be for the government to foolishly declare just about all the defined benefit plans in the country in distress during some of the lowest interest rates in history and one of the worst bear markets. Then the taxpayer could unneccesarily foot the bill for plans that would have recovered with the economy. I'd think we would have learned something from the S&L, RTC debacle.

 

[767jetz]

Chip,


Blah, blah, blah... I knew it wouldn't take long for you to chime in with some negative spin on this thread. However you conveniently did not comment on the part about where Tilton said "that the company plans to address its pension crisis with a "combination of solutions," though he did not detail all the pieces of that approach." Of course I don't expect you to know anything about the alternatives, since UA does not make it's plans public, and certainly is not going to share it with you.

Your posts have gotten so predictable, you are starting to bore us. Don't you have somewhere else to be, like counting your money or coaching a soccer game, or posting over on the US board where people actually care about what you may have to say? Please don't get offended if I just choose to ignore you in the future.

 

[AirplaneFan]

1. That 102% that you refer is that the end of the year balance or what UAL contributed in the year 1999?
2. If the shortfall is as temporary as you indicate than why are is UAL and ALPA asking for 30 years to make it good? Why not just ask for an extra year or two, when the next bull market will push the balances back up?

----------------
On 7/26/2003 11:12:28 PM Busdrvr wrote:

"The problems are many fold with U.S. govt relaxing restrictions on airline companies pension plans

1) Airlines did not continue to fund pension funds like many other companies did when the economy was much better in the late 1990's."

Oh really?! FYI at the end of 1999 the industry's defined benefit plans were funded at an average rate of 102%.

"2) By allowing companies to handle the shortfall over 30 years, it allows senior pilots to retire with full benefits, but puts the junior pilots at a much greater risk that when they are ready to retire there will be nothing left. It is a BIG ASSUMPTION that many of the airlines will be with us in 10 years let along 30 years."

You assume that the market will stay bearish and interest rates will stay low.

"3) Kind of a bad precedent to be setting for all other US companies."

An even worse precedent would be for the government to foolishly declare just about all the defined benefit plans in the country in distress during some of the lowest interest rates in history and one of the worst bear markets. Then the taxpayer could unneccesarily foot the bill for plans that would have recovered with the economy. I'd think we would have learned something from the S&L, RTC debacle.





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[Busdrvr]

"1. That 102% that you refer is that the end of the year balance or what UAL contributed in the year 1999?"

That was the combined funding level for the ENTIRE industry, not just UAL, and not 1999 contributions

"2. If the shortfall is as temporary as you indicate than why are is UAL and ALPA asking for 30 years to make it good? Why not just ask for an extra year or two, when the next bull market will push the balances back up?"

UAL would like to COMPLETELY remove the pension issue as an impediment to BK emergence. Paying off a 30 year "loan" is much easier than paying a balloon payment

 

[casual rat]

If there's one thing that I've learned in this industry, it's that unless you have it in your hand, it doesn't mean a thing. You are required to rely on yourself, because the (use your own negative adjective) executives that run this industry, would sooner kill you off the day before you retire, than pay you a dime of the retirement they promised you. Their problem lies in the fact that killing is still illegal--at least, the last time I checked...