It could all be avoided with a deal with the NWA MEC and the company.

All,

Bk is not an option. There is no briefcase Bk. If you go into Bk you'd better have debter in posession financing, which doesn't exist right now. Your cash in hand is in play to protect your creditors. The NWA pension got a 17 year extension to be fully funded. The numbers state we are underfunded if you use their figures for funding i.e all pilots retire at 60 then live 17 years. Anything short of that renumbers the figures. I.E Billy Cole, a guy that was a 400 captain for over a decade and then roped up in ANC for four years, finally retired, then died of a heart attack less than a month later never cashing one pension check.

If there are any BK filings it won't be chapter 11 but chapter 7 and all airlines, and businesses are at risk of that right now. NWA has a great agreement and feed with KLM, our NRT base has kept this airline around and we are sitting on over 3B in cash. So, with all the international investors that will pump money into this airline be careful what you wish for. It might not be NWA that heads for BK.

Further, for those that pulled out of the market it is interesting to note that a lot of the investment banks and billionaires are putting their money in Swiss Francs and Yen. (at least according to CNBC) Ergo, look into forex.com. I digress, another example of how valuable NRT is to NWA.

OK, I'm looking but I still don't see it yet.

Our management tried to spin it as an incredibly generous gift to not go for a termination of our pensions. In truth, it was strictly a numbers game. As you point out, NWA's pension fund was half as underfunded as the DAL plan. When they crunched the numbers and saw what the PBGC would get in equity, it didn't make sense to give away that much especially with the new law allowing a 17 year timeframe for funding. It was strictly a numbers game and the underfunding was less than the give away required by PBGC.

I've not seen numbers that high from our side. I do know that the funding requirements for the most recent quarter were zero.

Nothing here but your opinions Sailingfun. I understand that a good portion of the fund is in municipal bonds, etc. But since I'm not managing the fund, I don't know that for sure. The break up fee is $165 million, so I guess that would go a long way toward funding our pensions for some time to come. ;)

Carl

It's $165 million.

That's why it wasn't done the first time around. The "chunk" that the PBGC gets is so big, it is not commensurate with the amount of underfunding. Also, Congress was frequently calling this the NWA pension saving legislation. They pretty much did it just for us and a lot of political capital was spent. Another BK now would make a crazy amount of enemies on Capitol Hill. IMO.

Carl

What kind of a deal are you suggesting? NWA MEC knuckle under and accept the DALPA SLI, and we won't file a BK that we never intended in the first place?

Carl

Oh no it would have nothing to do with us.

I still think that DAL would rather take on the pension. They may want to modify some of the payouts, but more than likely it will be status quo.
What I am saying is that, what Sailing makes sense from the weird things that I have been hearing the last 48 hrs. Literally things are all over the place.
I am not saying that it is plausible, just possible.

I guess anything is possible, but I don't think BK now is worth the risk for NWA just to end pensions. First of all, I think a judge would see it for what it was and block it. A profitable airline with 3.3 billion in cash would have a very difficult time making the case to a judge that they're in trouble. Unless they have already shopped for a judge and have the judge's assurance that he/she would rubber stamp all requests, they would be taking an enormous risk. I rate the chances of this at near zero.

Carl

I agree, that is why I think that if these pensions are such an issue, they could be modified out of court.

How can an airline be considered profitable with 3.3 billion and their pension plan be underfunded? Why isn't some of that 3.3 billion used to fund your pensions? How can the funding requirements for this quarter be zero, if it is underfunded?

I just had someone explain the NWA pension funding to me. It will not be an issue. Even with the markets of late DAL will be in for no more than 3-4 million more a year.
Not worth it. But you never know with these guys.