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Old 10-11-2008, 02:53 PM
  #34  
Carl Spackler
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Joined APC: Apr 2008
Position: 747-400 Captain
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Originally Posted by flyguy1012 View Post
How can an airline be considered profitable with 3.3 billion and their pension plan be underfunded?
Because GAAP (Generally Accepted Accounting Practices) rules don't allow the use of pension over or underfunding in the determination of consolidated earnings. Pension over or underfunding is accounting for in balance sheet data and the company's net worth/stockholder equity.

And by the way NWA has a market cap that is very close to DAL even though NWA is 2/3 the size of Delta. This in spite of the fact that NWA has an underfunded pension plan hurting its net worth. A hurt that Delta does not have. It really says a lot for the value of the company DAL will be merging with.

Originally Posted by flyguy1012 View Post
Why isn't some of that 3.3 billion used to fund your pensions
At this time where credit is unavailable and cash is king, that would be a poor use of cash. The law allows a company to spread out the underfunding liability over a 17 year period. It would be nuts to spend your cash on this now.

Originally Posted by flyguy1012 View Post
How can the funding requirements for this quarter be zero, if it is underfunded?
Because the new legislation allows you to amortize (spread out) your underfunding of a pension over 17 years. Given the current level of underfunding and the money put into the pension so far this year, there is no more funding needs for this year.

Carl
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