Merger under reconsideration? - Page 2 - Airline Pilot Central Forums

#11

Check Essential , 10-10-2008 05:58 PM

Works Every Weekend

Quote:

Originally Posted by Opus

I believe a lot of the NWA pension is in bonds.

Hopefully not those fancy "mortgage-backed" bonds the Wall Street boys were selling.

#12

PaintCan , 10-10-2008 06:02 PM

Line Holder

It is a possibility that NWA could flie BK again to "dump" any pensions remaining. A fire sale for DAL and another chance at union busting. Right sizes the fleet.

If I were NWA pilots, I'd get to an agreement before the banks open Tuesday morning. There is no contract until signatures happen. Too bad the NW MEC are infighting. They are wasting valuable time and is putting the entire NWA pilot group at risk.

Of course the CEO's will still get the golden parachute, so it makes no difference to them how long it takes.

JMHO

#13

Bucking Bar , 10-10-2008 06:31 PM

Can't abide NAI

Quote:

Originally Posted by Holly Hegemon, Plane Business Banter

Food For Thought: Airlines and Pensions

I had an errant thought yesterday as I watched the Dow fall and not get back up again.

And that thought concerned pensions. And the airlines that still have pension plans for their employees.

Remember that the last time the airline industry had to deal with the "pension issue" was following the market meltdown that followed the "internet bubble" that burst in 2000.

(If you note a bit of sarcasm in that description...good.)

Going into 2001 and 2002, airlines were suddenly looking at pension plans that required more and more in cash infusions -- because the value of the underlying securities in the pension funds had declined so precipitously.

Rewind the clock. Start it over again.

We are now looking at exactly the same situation. With equities in a free-fall -- all pension funds are gasping for air.

Tuesday, Congress' top budget analyst estimated that Americans' retirement plans have lost as much as $2 trillion in the past 15 months. And you can add more to that total, because you can bet his number crunching did not take into consideration the free fall in the market during the last two weeks.

Public and private pension funds and employees' private retirement savings accounts - like 401(k)'s - have lost some 20% overall since mid-2007, said Peter Orszag, the head of the Congressional Budget Office.

So just a little red flag for the radar screen.

Airlines such as American Airlines and Continental Airlines that have worked hard to keep their employee pension plans in place are going to face tough times ahead -- as pension plan funding requirements balloon.

Then again, an airline like United, which was successful in blowing up its employee pension plans as part of their bankruptcy proceedings, won't have to worry.

Something just doesn't seem right about all this, does it?

Posted by Holly at 1:06 PM |

-----

Holly Hegemon's comments a week ago. I'm down around another 20% this week alone. I'd like to see the numbers on NWA's unfunded liabilities.

#14

cencal83406 , 10-10-2008 07:24 PM

Gets Weekends Off

Since when has a trip to BK court been bad for a company? Bad for the employees, yes, but the companies get off scot free.

#15

Carl Spackler , 10-10-2008 09:14 PM

Back on TDY

Quote:

Originally Posted by sailingfun

I am sure you are kidding in this post. Read your own 10Q reports. The pensions were underfunded by billions before the market meltdown.

I just re-read the 10-Q and I couldn't find a reference to how many billions the pensions are underfunded. Could you post the reference or tell me where to find that in our 10-Q?

Carl

#16

sailingfun , 10-11-2008 03:05 AM

Gets Weekends Off

Carl, I should have said annual report. It was put out that the pilot fund at NWA was underfunded by 1.8 billion. That compares with the Delta pilot fund underfunded by about 3.2 billion at termination. There were around 1.8 billion in assets and approx. 5 billion in liabilites. To suggest the NWA pension fund is in good shape is a bit strange. Your MEC agreed to a hard freeze on the plan yet there were no real funding issues? NWA management agreed to all the restrictions in the pension relief bill yet they had no real problems?? DALPA put out many times that the ongoing funding requirements by Delta for the NWA frozen pilot plan only were 20 to 30 million a year assumming a reasonable investment performance. They said with a poor performance that number could ballon to over 100 million a year. What is the number now that we have had a meltdown? I can assure you that its not pretty unless your pension plan was all in cash which is unlikely.

#17

acl65pilot , 10-11-2008 03:41 AM

Happy to be here

It is not good, but a deal breaker? I do not know. There are other legal issues at play here with DAL bailing on this.

#18

Check Essential , 10-11-2008 04:51 AM

Works Every Weekend

Quote:

Originally Posted by acl65pilot

It is not good, but a deal breaker? I do not know. There are other legal issues at play here with DAL bailing on this.

I'm sure there's a break-up fee. Peanuts compared to inheriting those pensions.
Alternatively, they could do a pre-packaged "briefcase bankruptcy" prior to DCC. Just NWA and the PBGC. No other creditors. Quick and dirty. Problem is, the PBGC would want a big chunk of the NWA equity in return.

#19

flyguy1012 , 10-11-2008 06:10 AM

Line Holder

Quote:

Originally Posted by Check Essential

The "Break up" fee is 250 million, if I remember correctly. However, it's hard to believe that at this phase of the process Delta Management would pull out now.

#20

acl65pilot , 10-11-2008 07:18 AM

Happy to be here

Well actually it is not that they would pull out, they would just have a ch 11 filing before DCC.
Funny thing is that after a few discussions, this fits with a quick CH 11 filing and then DCC on Q1 of '09.
Read, change in AE, and what it I will accomplish.