Airline bankruptcy - pension dodge

gkainz said:
When Untied pulled it's "dump the pension obligation" scam a few months ago, I predicted that the competition would soon follow suit... well, toldja so...

http://www.avweb.com/eletter/archives/avflash/465-full.html#190599
Click to expand...

The pension dump is becoming quite worrisome, and not only from the airlines.

Industries far and wide are finding it a convenient way to clean up the balance sheet and remake the company. It has become part of the strategy.

The current PBGC deficit is something like $50 billion, and that's expected to widen five to tenfold over then coming years. A federal bailout may be the only answer.

We could debate who to blame, but I think it's shared by the government (for creating PBGC), the companies (who made promises they can't keep), and the employees (for demanding future benefits that are not sustainable). Once again, the taxpayer is stuck picking up the tab.

There's an article in yesterday's NY Times about the new head of Delphi and his potential plans to dump the pension. In that case, both the PBGC and GM (who guaranteed the Delphi pensions/benefits) will pick up the tab. I wonder if it is enough to push GM over the edge.
 
Korporate Amerika simply doesn't give a rats @*& about it's employees. Not even a little bit. If it wasn't illegal, they'd probably just shoot their expendable peasants at the end of the last day of work so there would be no fiscal obligation after that day. It wouldn't surprise me in the least if they're trying to get that legalized.

Backing out on promises...Where I come from, being called an indian giver (lose the PC nonsense, that's what it's called) is a serious insult, not an honorable behavior pattern.

A full out revolt needs to be instigated. I wonder how the airlines profit mongers would get their money if every single employee simply didn't go to work the next morning..or the next..or the next...or the next...and didn't come back. Same goes for the rest of Korporate Amerika.

If you don't want to pay someone something, you're not obligated to so until you say you will. Don't make the damn promise in the first place if you don't want to do it. If you do make the promise, fork it over and shut up.

Dispicable. Patooey! right on their slimy shoes...

Sigh.


Signed,
The Expendable Super Peasant
 
Last edited:
wsuffa said:
The pension dump is becoming quite worrisome, and not only from the airlines.
Click to expand...

Before long, everyone will have to take care of their own retirement. It sucks to have to do that, but I'd rather rely on myself than trust my retirement to some schmuck who will dump it to get his short term bonus.
 
Bill Jennings said:
Before long, everyone will have to take care of their own retirement. It sucks to have to do that, but I'd rather rely on myself than trust my retirement to some schmuck who will dump it to get his short term bonus.
Click to expand...

SWA employees really gave Kelleher a hard time when he convinced them that a defined contribution (401K-style) plan was best.

They're now seeing why it's best.
 
fgcason said:
Korporate Amerika simply doesn't give a rats @*& about it's employees. Not even a little bit. If it wasn't illegal, they'd probably just shoot their expendable peasants at the end of the last day of work so there would be no fiscal obligation after that day. It wouldn't surprise me in the least if they're trying to get that legalized.

Backing out on promises...Where I come from, being called an indian giver (lose the PC nonsense, that's what it's called) is a serious insult, not an honorable behavior pattern.

A full out revolt needs to be instigated. I wonder how the airlines profit mongers would get their money if every single employee simply didn't go to work the next morning..or the next..or the next...or the next...and didn't come back. Same goes for the rest of Korporate Amerika.

If you don't want to pay someone something, you're not obligated to so until you say you will. Don't make the damn promise in the first place if you don't want to do it. If you do make the promise, fork it over and shut up.

Dispicable. Patooey! right on their slimy shoes...

Sigh.


Signed,
The Expendable Super Peasant
Click to expand...

Frank,

What about the unions that promised employees "we can get this from employers, and don't accept anything else" - and then struck the companies for the benefits? I read about some union leader in the auto industry demanding that the government 'do something' because the Japanese and other companies have created a cost structure that doesn't have the pension overhang, making the 'big 3' uncompetitive.

Or the government, led by Congress, that created the PBGC and said, essentially, "if you go bankrupt, we'll pick up the pension". And then, created funding rules that allowed companies to reduce contributions during years where return rates were high.

I seem to recall somewhere that one company has something like 11,000 current employees, who must make enough profit to cover something like 40,000 retirees? That pig don't float in the long term.

Don't look now, but the same thing is happening to Social Security....

There is plenty of blame to go around, and I hold companies in as much contempt as the other groups. (that is to say, I agree with your premise about promises and responsibility).
 
wsuffa said:
What about the unions that promised employees "we can get this from employers, and don't accept anything else" - and then struck the companies for the benefits? I read about some union leader in the auto industry demanding that the government 'do something' because the Japanese and other companies have created a cost structure that doesn't have the pension overhang, making the 'big 3' uncompetitive.

Or the government, led by Congress, that created the PBGC and said, essentially, "if you go bankrupt, we'll pick up the pension". And then, created funding rules that allowed companies to reduce contributions during years where return rates were high.

I seem to recall somewhere that one company has something like 11,000 current employees, who must make enough profit to cover something like 40,000 retirees? That pig don't float in the long term.

Don't look now, but the same thing is happening to Social Security....

There is plenty of blame to go around, and I hold companies in as much contempt as the other groups. (that is to say, I agree with your premise about promises and responsibility).
Click to expand...

I don't know too much about all this since I don't go over their books but to me it looks like too many promises and hyped up fake glory hard headedness going around from too many directions. No one is doing their long term homework. This is a simple balanced equation issue. Pluses have to be balanced with minuses. Even as a little kid in 2nd grade math class I figured out that if you have 1,000,000 retired people still on the payroll and 10,000 people working for you, it'll catch up to you eventually.

Wecome to eventually. :yes:

Everyone trying to get more and set up systems to help protect if it failed is a big part of the problem. Employers saying 'ok, sure' definitely didn't help matters.

What a mess. I'm glad I'm not part of it beyond the SS scam.

And I want my SS $$$ back so I can protect myself in the long run instead of letting someone else steal it like I currently am. It's the same situation.

Don't be making promises you can't keep...or I'll spit on your shoes.


Then again, I may be too dumb to realize why this can really work as advertised. But I'm just not seeing it right now.
 
Last edited:
fgcason said:
I don't know too much about all this since I don't go over their books but to me it looks like too many promises and hyped up fake glory hard headedness going around from too many directions. No one is doing their long term homework. This is a simple balanced equation issue. Pluses have to be balanced with minuses. Even as a little kid in 2nd grade math class I figured out that if you have 1,000,000 retired people still on the payroll and 10,000 people working for you, it'll catch up to you eventually.

Wecome to eventually. :yes:

Everyone trying to get more and set up systems to help protect if it failed is a big part of the problem. Employers saying 'ok, sure' definitely didn't help matters.

What a mess. I'm glad I'm not part of it beyond the SS scam.

And I want my SS $$$ back so I can protect myself in the long run instead of letting someone else steal it like I currently am. It's the same situation.

Don't be making promises you can't keep...or I'll spit on your shoes.


Then again, I may be too dumb to realize why this can really work as advertised. But I'm just not seeing it right now.
Click to expand...

Votes! Votes! I'll sell you my Votes and give you Promises! :hairraise:

Tell me lies
Tell me sweet little lies
(tell me lies, tell me, tell me lies)
Oh, no, no you can’t disguise
(you can’t disguise, no you can’t disguise)

-Fleetwood Mac
 
wsuffa said:
Frank,

What about the unions that promised employees "we can get this from employers, and don't accept anything else" - and then struck the companies for the benefits? I read about some union leader in the auto industry demanding that the government 'do something' because the Japanese and other companies have created a cost structure that doesn't have the pension overhang, making the 'big 3' uncompetitive.
Click to expand...

[Rant on]
The management of those companies should never have agreed to the concessions in the first place. Look at the major league baseball owners who agree to pay outrageous salaries then complain that players are making too much. Unions get their power from the groups of unhappy employees who are not willing to move to another job/company. Unions will lose their power over these companies when either (1) management declares a position that they will never back down from even at the risk of closing and putting EVERY employee out of work. or (2) employees are given goals/expectations/compensation packages that are well defined and they have assurances that they are not being lied to with regard to long term employment (layoffs just around the corner because the stock dipped $.02 per share this quarter).
Companies are far too focused on the next few weeks and how the stock market is going to "punish" them. Investors in this day and age are far too concerned with the short term. Just a few years ago, when everyone was seeing record gains in the dot coms, money flowed away from long term stocks like Union Pacific Railroad, for example. UP's stock suffered, and as a result, to prop up their stock, they cut costs to the bone. They cut maintenance budgets, and laid off train crews like mad. Well, now the track infrastructure is in poor shape and they are suffering derailments that cost $millions each, and they are having to hire new crews as fast as they can (because business is booming) and train them because their service is suffering for lack of qualified locomotive engineers. Those crews are new hires and have to be trained from scratch, and that costs a lot of money and time too. The old crews simply got other jobs because they were tired of being treated like rental tools.
If business looked a little further down the road, and employees didn't think everybody needed to live like lottery winners I suspect we might be in a little less leaky boat.
Also CEO's do not need to be paid like rock stars (neither do the rock stars, for that matter :) ) even if they fail to provide the service for which they are paid.
See this article regarding the Polaroid debacle.

http://www.american-reporter.com/2,726W/142.html

From that article:
"


In April, the remains of Polaroid were sold for $426 million. Polaroid chairman Jacques Nasser (if the name sounds familiar, he was at the helm of Ford during the spate of fatal accidents involving the Explorer SUV in 2000 that ended up costing the carmaker millions in lawsuits and lost sales) will receive $12.8 million for his shares in the company. CEO J. Michael Pocock will get $8.5 million. And 6,000 Polaroid retirees will get $47 each. "

**Please note that I just googled "polaroid retirement" and did not pick this article for it's political slant, just it's factual financial stuff.
How in the world can American business justify this kind of reward for this kind of performance?

How were the interests of the shareholders, to whom these guys report enhanced?

[/Rant]
 
Keith,

No disagreement in concept.

WRT to the union issues, remember that this started back in the 60's and 70's where the unions were a lot stronger and able to bring a company to its knees with a strike. They would pick one of the 'Big 3' auto companies to strike.

Later, the Big 3 needed union concessions to accomplish cost savings and efficiency improvements.

Yep, it was short-sighted. OTOH, the companies would be dead and buried by now had they taken the strikes to the bitter end. There is a very long list of companies with bad labor relations.

Labor and management share the blame.

As for executive compensation, I think it's out-of-line in many cases.

I am pleased to have noted that Fidelity withheld all their votes for the directors of my former employer because the employment contracts of the Chairman, CEO and CFO were far out of line (especially on severance provisions). Fidelity controls something like 15% of the shareholder vote. I also note that Fidelity provides the 401K plans for the company employees, making the withheld vote particurlarly significant - wanna place bets as to whether Fidelity will remain the 401K provider when the contract expires???
 
Taking Frank's thoughts up one level..

""A full out revolt needs to be instigated. I wonder how the airlines profit mongers would get their money if every single employee simply didn't go to work the next morning..or the next..or the next...or the next...and didn't come back. Same goes for the rest of Korporate Amerika.""

Every worker in the US takes two weeks unpaid leave of absence. No taxes for two weeks would scare the Congress to its very foundations.

Do you folks realize that the interest on the national debt would buy everyone in the US a blue cross blue shield policy?

I tried to do the math on that, but my computer won't go that high.
 
NC19143 said:
Every worker in the US takes two weeks unpaid leave of absence. No taxes for two weeks would scare the Congress to its very foundations.
Click to expand...

Tom, be serious. Congresscritters are only concerned what happens before they retire.

$5 billion in GRANTs to airlines that go bankrupt? Yes!
$50 billion in loans to airlines that go bankrupt? Yes!

$500 billion to rebuild Iraq? Yes!

$50 billion to rebuild New Orleans? Yes!

$2.5 billion for a bridge in Alaska that serves an island with 50 residents on it? Yes. He's due!

Aren't we TAKING THE LEAD ON THIS? AREN'T WE RESPONDING?
PSSSSST...The repeal of the estate tax has to go on schedule, too...

Deficits don't matter if the impact can put off until the others guys are in charge.
 
Last edited:
NC19143 said:
Do you folks realize that the interest on the national debt would buy everyone in the US a blue cross blue shield policy?
Click to expand...

Actually, it won't :

The US population (based on 2000 numbers) for age 16+ is approximately 224 million.

Assuming a national debit of 7,924 billion, interest is as follows :

3.5% : 277Bn per year ($1238 per person)
6.5% : 515Bn per year ($2299 per person)

Large numbers, but not quite a BC-BS policy as best I can tell.

The total debt represents somewhere around $35,375 per person, slightly below the average annual wage.

Of course, if we could clear up this rather large chunk of credit-card debt, we could probably pay to keep Social Security going quite comfortably ;) Or we could simply remove the artifical FICA cap, or raise the rate from 12.4 to 14.2, and wipe out the Social Security deficit completely for the next 75 years or so....
 
SJP said:
Actually, it won't :

The US population (based on 2000 numbers) for age 16+ is approximately 224 million.

Assuming a national debit of 7,924 billion, interest is as follows :

3.5% : 277Bn per year ($1238 per person)
6.5% : 515Bn per year ($2299 per person)

Large numbers, but not quite a BC-BS policy as best I can tell.

The total debt represents somewhere around $35,375 per person, slightly below the average annual wage.

Of course, if we could clear up this rather large chunk of credit-card debt, we could probably pay to keep Social Security going quite comfortably ;) Or we could simply remove the artifical FICA cap, or raise the rate from 12.4 to 14.2, and wipe out the Social Security deficit completely for the next 75 years or so....
Click to expand...

the faulty asumption is that you and I are going to pay the dept.

Taxes collected will pay the debt, we need to overhaul the IRS as we know it, to get EVERY one to pay their fare share. By simply declaring ALL tax code now on the books null and void, we close all loop holes, then a 1% tax collected at the bank of transfere, on EVERY electronic money transfer would pay the national debt in 5 years, and the other 50 years or so we would have given the arabs interest on their money, would be the money to fix our problems at home.

Can you picture:
no April 15 dead line?
no tax forms?
no dodging your taxes.
no more tax laws that allow your home to be conficated?

Just think
Even the congress critters get to pay, right along with the drug dealers, the hookers, Toyota/etc, the oil companies that pay abroad. the arabs who buy thier planes and mega buck boats. they all get to pay. NOT just us working stiffs, even the welfare grabbers get to pay. Want to pay cash? that OK too, you got to get that money out of the bank some how.

Widen the tax base and pay off the national debt. What this amounts to is simply a federal sales tax collected at a level no one can dodge.

You get taxed 1% getting your pay into the bank, you pay 1% getting it out. that amounts to a 2% income tax.

YOU LIKE ?

Now here are the best part, there would not be 25,000 IRS agents collecting pay checks, that alone will pay the blue cross policy.
 
Last edited:
Thu Sep 15, 2005 5:43 PM ET
NEW YORK (Reuters) - Delta Air Lines Inc. (DAL.N: Quote, Profile,
Research) will send a letter to some 3,500 retired pilots informing them
of its inability to make their October pension payments, Delta lawyer
Marshall Huebner said in a hearing on Thursday.

The letters saying there is a good chance the October payments will not go
out will only be sent to pilots above a certain salary level, Huebner said
during the hearing in U.S. Bankruptcy Court in Manhattan.
 
Just in case you think it was an amazing coincidence that both NWA and Delta filed for bankruptcy at the same time:

CHICAGO (Reuters) - The same-day bankruptcy filings by Delta Air Lines (DAL.N: Quote, Profile, Research) and Northwest Airlines (NWAC.O: Quote, Profile, Research) this week may be coincidental, but some experts on Friday said the two carriers could be eyeing a merger that would see them re-emerge as the largest U.S. airline.

http://today.reuters.com/business/N...NESSPROIND-AIRLINES-NORTHWEST-PINNACLE-DC.XML
Click to expand...
Well, I agree we SHOULD merge but we gotta get rid of those pensions first...
EXCEPT OURS of course! BWAHHAHHAHAHAHAHAHAHAHA!!!!
 
Last edited:
mikea said:
Just in case you think it was an amazing coincidence that both NWA and Delta failed for bankruptcy at the same time:


Well, I agree we SHOULD merge but we gotta get rid of those pensions first...
EXCEPT OURS of course! BWAHHAHHAHAHAHAHAHAHAHA!!!!
Click to expand...
GM is eyeing the same thing, I hear.....how to dump the pension with our aging workforce.....sigh.
 
bbchien said:
GM is eyeing the same thing, I hear.....how to dump the pension with our aging workforce.....sigh.
Click to expand...

If Delphi spits theirs out, I'll almost guarantee GM will have to. Just like dominos.

House of cards.
 
mikea said:
Just in case you think it was an amazing coincidence that both NWA and Delta filed for bankruptcy at the same time:


Well, I agree we SHOULD merge but we gotta get rid of those pensions first...
EXCEPT OURS of course! BWAHHAHHAHAHAHAHAHAHAHA!!!!
Click to expand...

DL and CO wanted to merge some time ago, but DOJ stood in the way.

Chapt 11 makes it easier to make a case in favor of merger.

This is not free market.
 
NC19143 said:
t<snip>
Click to expand...

I'd love a flat tax - however, you'll never get it in place while those who stand to lose the most control the system that has the power to put it in place.
 
Keith Lane said:
Just a few years ago, when everyone was seeing record gains in the dot coms, money flowed away from long term stocks like Union Pacific Railroad, for example. UP's stock suffered, and as a result, to prop up their stock, they cut costs to the bone. They cut maintenance budgets, and laid off train crews like mad. Well, now the track infrastructure is in poor shape and they are suffering derailments that cost $millions each,
Click to expand...

That has as much to do with using Dabco rather than Sperry for rail testing.
 
Henning said:
That has as much to do with using Dabco rather than Sperry for rail testing.
Click to expand...

I do know that UP, BNSF and CSX still use "Sperry Cars" for rail testing, however even those are used only as much as is required by the FRA (Federal Railway Administration).
More importantly, it has to do with raising the gross weight of rail cars in service from 263,000 lbs to 286,000 lbs while at the same time running longer trains, and faster trains with locomotives capable of extremely high tractive effort values. All this while cutting their track maintenance budgets to the point where four 4-man track crews are responsible for 100+ miles of triple mainline track carrying 140 trains per day, such as the Kearney subdivision in Nebraska. While all these things do save on fuel and labor costs, it will bite you down the road, as it is doing so right now with alarming regularity.
But as with any vertically managed major industry, each department could give a rats a** how it affect the other guy's department's budget. At the railroads, it's Track dept. vs. Mechanical Dept. vs. Operating Dept. in a smackdown. The culture of the railroad is set up much like the government. It matters less how well we perform, just as long as the other guys look worse. Decisionmakers at the railroads cannot make the connection that a $10 Million derailment could have done a lot of track work, or purchased 5 new locomotives.
 
SJP said:
I'd love a flat tax - however, you'll never get it in place while those who stand to lose the most control the system that has the power to put it in place.
Click to expand...

THAT is exactly why we need a peoples say in government, such as was prop 13 in California.

Tell Congress to bend over, we'll show you where your tax laws belong.
 
NC19143 said:
THAT is exactly why we need a peoples say in government, such as was prop 13 in California.

Tell Congress to bend over, we'll show you where your tax laws belong.
Click to expand...


Wait a second - isn't our government supposed to be representative of the people ?

Silly me ! :D
 
You must log in or register to reply here.
Back
Top