Go Back  Airline Pilot Central Forums > Airline Pilot Forums > Major > United
Profit Sharing shortfall >

Profit Sharing shortfall

Notices

Profit Sharing shortfall

Old 01-29-2015, 06:13 PM
  #1  
Banned
Thread Starter
 
Joined APC: May 2014
Position: Tom’s Whipping boy.
Posts: 1,182
Default Profit Sharing shortfall

I read today in Howie's missive how UAL accelerated interest payments last year, by pre-paying 1.8 billion in 2014. As I recall that is more than what we reported in net profits- sooo, according to my napking accounting, we would have received far more than double the profit sharing payout if they had not accelerated those interest payments.

In fact far more than double, if as I recall the profit sharing formula increases our payout once we pass a certain amount in annual profits.

Anyone care to check my figures?
BMEP100 is offline  
Old 01-29-2015, 06:21 PM
  #2  
Gets Weekends Off
 
awax's Avatar
 
Joined APC: Apr 2008
Posts: 1,799
Default

Paying down debt and "returning equity to shareholders", takes a bite don't it!?

awax is offline  
Old 01-29-2015, 06:35 PM
  #3  
Gets Weekends Off
 
Joined APC: Jun 2010
Position: 747 Captain, retired
Posts: 928
Default

Originally Posted by BMEP100 View Post
I read today in Howie's missive how UAL accelerated interest payments last year, by pre-paying 1.8 billion in 2014. As I recall that is more than what we reported in net profits- sooo, according to my napking accounting, we would have received far more than double the profit sharing payout if they had not accelerated those interest payments.

In fact far more than double, if as I recall the profit sharing formula increases our payout once we pass a certain amount in annual profits.

Anyone care to check my figures?
I'm not capable of such high mathematics but I just want to chime in with an "atta boy"
krudawg is offline  
Old 01-29-2015, 06:45 PM
  #4  
Gets Weekends Off
 
Joined APC: Nov 2013
Position: Gets weekends off
Posts: 1,168
Default

Originally Posted by BMEP100 View Post
I read today in Howie's missive how UAL accelerated interest payments last year, by pre-paying 1.8 billion in 2014. As I recall that is more than what we reported in net profits- sooo, according to my napking accounting, we would have received far more than double the profit sharing payout if they had not accelerated those interest payments.

In fact far more than double, if as I recall the profit sharing formula increases our payout once we pass a certain amount in annual profits.

Anyone care to check my figures?
So if 10% of your profits go to profit sharing, and you only have an 8% penalty to pay down debt early, its a better move to pay down that debt and lose the 8% to the creditors than to pay the 10% to employees.

I don't know the exact numbers, but profit sharing is an expense to the company, not a benefit to them.
pilot64golfer is offline  
Old 01-29-2015, 06:54 PM
  #5  
Banned
Thread Starter
 
Joined APC: May 2014
Position: Tom’s Whipping boy.
Posts: 1,182
Default

Originally Posted by pilot64golfer View Post
So if 10% of your profits go to profit sharing, and you only have an 8% penalty to pay down debt early, its a better move to pay down that debt and lose the 8% to the creditors than to pay the 10% to employees.

I don't know the exact numbers, but profit sharing is an expense to the company, not a benefit to them.
y

I'm not getting what you are saying about 8% penalty. Howard claimed it saved the company money.

In any case, I guess they could have pre paid or book an additional 1 billion of interest in 2014 and had to pay NO profit sharing.
BMEP100 is offline  
Old 01-29-2015, 06:58 PM
  #6  
Gets Weekends Off
 
Joined APC: Feb 2009
Position: 73 CA EWR
Posts: 514
Default

I'd be interested in the Union's take on this.
Blockoutblockin is offline  
Old 01-29-2015, 07:26 PM
  #7  
Gets Weekends Off
 
Joined APC: Nov 2013
Position: Gets weekends off
Posts: 1,168
Default

Originally Posted by BMEP100 View Post
y

I'm not getting what you are saying about 8% penalty. Howard claimed it saved the company money.

In any case, I guess they could have pre paid or book an additional 1 billion of interest in 2014 and had to pay NO profit sharing.
Debt is secured and guaranteed a ROI for the purchaser. If you buy it back early, they stop earning interest, so there is a repayment penalty.
pilot64golfer is offline  
Old 01-29-2015, 07:49 PM
  #8  
Gets Weekends Off
 
Joined APC: Dec 2008
Position: 320 Captain
Posts: 631
Default

Originally Posted by BMEP100 View Post
I read today in Howie's missive how UAL accelerated interest payments last year, by pre-paying 1.8 billion in 2014. As I recall that is more than what we reported in net profits- sooo, according to my napking accounting, we would have received far more than double the profit sharing payout if they had not accelerated those interest payments.

In fact far more than double, if as I recall the profit sharing formula increases our payout once we pass a certain amount in annual profits.

Anyone care to check my figures?

Prepayment, or payment of debt, does not affect the amount of our profit sharing.

Our profit sharing is based off of pre tax income, exclusive of any special charges (this year it was early outs for flight attendants, hedging losses etc)
C11DCA is offline  
Old 01-30-2015, 07:19 PM
  #9  
Banned
Thread Starter
 
Joined APC: May 2014
Position: Tom’s Whipping boy.
Posts: 1,182
Default

Originally Posted by C11DCA View Post
Prepayment, or payment of debt, does not affect the amount of our profit sharing.

Our profit sharing is based off of pre tax income, exclusive of any special charges (this year it was early outs for flight attendants, hedging losses etc)
Not certain, but I don't think that is correct, unless profit sharing is not calculated on EBITA.
BMEP100 is offline  
Old 01-31-2015, 09:00 AM
  #10  
Gets Weekends Off
 
Joined APC: Dec 2008
Position: 320 Captain
Posts: 631
Default

Originally Posted by BMEP100 View Post
Not certain, but I don't think that is correct, unless profit sharing is not calculated on EBITA.
3-H-3 For profit-sharing based on the years 2014 and beyond, the Company profit sharing plan shall be funded with ten percent (10%) of pre-tax profit up to a pre-tax margin of six and nine-tenths percent (6.9%) plus twenty percent (20%) of pre-tax profit in excess of a pre-tax margin of six and nine-tenths percent (6.9%).

3-H-4 Special and unusual items shall be excluded from pre-tax profit when making the calculations in Sections 3-H-2 and 3-H-3.
We earned $1.97 billion for 2014. If they used payment of debt to offset income as you suggest, then our "profit" should have been ~$3.8 billion. No where in our numbers over the year has that been possible. Sorry, it doesn't pass the common sense test.

And for comparison sake, Delta has been paying down debt even more then us. So then add $1.5 + billion to Deltas 2014 profit, as you want to do with UAL's. Are you saying Delta is hiding profit too? The net result is the same, we trail Delta by a large margin when it comes to profitability.

http://ir.delta.com/files/4Q/Earning...001_f67r8q.pdf

Delta ended the quarter with adjusted net debt of $7.3 billion, including cash that is being held by counterparties as hedge margin. The company has achieved nearly $10 billion in net debt reduction since 2009, resulting in a roughly 50% reduction in annual interest expense.
The simple fact is Delta made more profit then us, triggering their 20% clause, which resulted in a much larger profit sharing check.
C11DCA is offline  
Related Topics
Thread
Thread Starter
Forum
Replies
Last Post
HSLD
United
46
02-17-2013 01:58 PM
A320
United
59
01-31-2012 06:40 PM
GreenArc
United
13
01-11-2012 09:27 PM
windrider
Major
4
01-17-2011 01:18 PM
Indy
Money Talk
5
12-18-2010 06:32 PM

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are On
Pingbacks are On
Refbacks are On


Thread Tools
Search this Thread
Your Privacy Choices