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Delta gets court nod to end pilot pension plan
Reuters ^ | 05 Sep 06 | Reuters

Posted on 09/05/2006 2:24:20 PM PDT by TUAN_JIM

NEW YORK, Sept 5 (Reuters) - A U.S. bankruptcy court on Tuesday allowed Delta Air Lines Inc. (DALRQ.PK: Quote, Profile, Research) to terminate its pilot defined benefit pension plan, clearing a major hurdle in its restructuring plans

-snip


TOPICS: Business/Economy
KEYWORDS: airlines; dal; pensions
http://today.reuters.com/news/articleinvesting.aspx?type=governmentFilingsNews&storyID=2006-09-05T194143Z_01_N05372125_RTRIDST_0_AIRLINES-DELTA-UPDATE-1.XML
1 posted on 09/05/2006 2:24:21 PM PDT by TUAN_JIM
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To: TUAN_JIM
All this does is entice other "near bankrupt" corporations to keep tossing cash at the insoluable problem of declining revenues and higher costs.

If a few judges would simply direct the remaining assets into the support of the retirement program (thereby forcing the early sale of those assets to more deserving owners), you'd find fewer companies wasting their money.

Just a few years ago American Retail Group Inc., a privately-held company closed Uptons, its Atlanta-based department store chain, BEFORE they ran into financial problems so they could protect their capital, pay off all their creditors (and employees) and invest in more productive enterprise.

Courts should be encouraging companies to follow Uptons example.

2 posted on 09/05/2006 2:31:05 PM PDT by muawiyah
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To: muawiyah

Yes, it's a vicious cycle. Now other legacy airlines will be forced to jettison their pension plans to compete with Delta. The good news is that we taxpayers will pick up a good portion of the tab.


3 posted on 09/05/2006 2:38:43 PM PDT by TUAN_JIM (Sic Semper Tyrannis)
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To: TUAN_JIM

As an employee, I suspect it's more likely I'll collect Social Security 40 years from now than it is I'll collect my employer's pension. Bottom line: prepare to live entirely off your IRA, 401k, and other savings, because you can't count on an employer or the federal government to support you.


4 posted on 09/05/2006 2:42:12 PM PDT by NittanyLion
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To: TUAN_JIM
Actually, the airlines have to pay the government funds that, in effect, set up an investment annuity, that pays the retirement benefits up to a limit of something like $25,000 per year.

That means all long term employees get screwed out of their earned pensions.

Better that all the assets be sold to fully find the pensions.

5 posted on 09/05/2006 2:42:37 PM PDT by muawiyah
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To: muawiyah

that is not how the bankruptcy court works.

The question is whether the company can continue to operate and the benefit to those who actually still have jobs.

The pilots union was free to argue you points to the bankruptcy judge.

It really boils down to the benefits of an operating Delta Airlines vs a deceased Delta Airlines. Eastern Airlines has not employed many people recently.


6 posted on 09/05/2006 2:48:05 PM PDT by longtermmemmory (VOTE! http://www.senate.gov and http://www.house.gov)
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To: longtermmemmory
Exactly. If Delta is bankrupt, there's no pension plan and no one working for the airline. And the union knows that bottom line, its better to have Delta around than to collect zero.

(No more Olmert! No more Kadima! No more Oslo! )

7 posted on 09/05/2006 2:50:18 PM PDT by goldstategop (In Memory Of A Dearly Beloved Friend Who Lives On In My Heart Forever)
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To: TUAN_JIM

Delta's stock has gone from
45 dollars to 76 cents in 5 years,

time to invest


8 posted on 09/05/2006 3:02:47 PM PDT by greasepaint
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To: NittanyLion

I'm sure the executives have also cut their pensions as a sign of good faith that they want the company to suceed./s


9 posted on 09/05/2006 3:04:44 PM PDT by art_rocks
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To: longtermmemmory
Look, the folks working there continue to work "there" in any logical distribution or assignment of assets. After all, as far as bankruptcy is concerned they are simply part of an "asset".

The courts, however, should be concerned with "equity", and that should include deferred pay (called "pension benefits").

All I'm suggesting is that the current leniency shown these bankrupt companies simply leads to even more waste and corruption by other companies. At some point the courts should be required to dispose of ALL assets in a manner that preserves the residual value owned by the retirees.

Oh, yes, and this should include stripping company policy-makers and board members of their personal assets if necessary.

10 posted on 09/05/2006 3:13:51 PM PDT by muawiyah
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To: goldstategop

Investors and bondholders should take all the risks in corporate ventures.


11 posted on 09/05/2006 3:14:59 PM PDT by muawiyah
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To: muawiyah
All I'm suggesting is that the current leniency shown these bankrupt companies simply leads to even more waste and corruption by other companies. At some point the courts should be required to dispose of ALL assets in a manner that preserves the residual value owned by the retirees.

I could see the logic behind protecting "deferred wages" first and foremost, then on to bondholders and eventually stockholders.

Oh, yes, and this should include stripping company policy-makers and board members of their personal assets if necessary.

That's where you lost me. When policymakers and board members act illegally, the recourse is through criminal courts. But opening the possibility of seizing personal assets would send a chilling effect through all businesses. The ultimate effect would be to ensure no competent person is making policy for corporations.

12 posted on 09/05/2006 3:35:14 PM PDT by NittanyLion
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To: muawiyah

Your analysis is incorrect in that it assumes the airplanes will still keep flying and people remain at work.

If an airline "buys" the assets of another airline, it will eliminate duplicate work. This means counter agents, baggage handlers, computer workers are GONE.

Also it should be noted that airlines like delta are going HEAVILY into automated check in. I find it much easier to deal with the computer terminal. This means one person can cover FOUR lines.

Your analysis is why we have bankruptcy courts and not debtor's prisons. Once the hemoraging stops, then the airline can go back to operating and growing its business.

The equities WERE considered by the bankruptcy judge. (it is also why corporations pay into the pension insurance)


13 posted on 09/05/2006 3:43:04 PM PDT by longtermmemmory (VOTE! http://www.senate.gov and http://www.house.gov)
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To: NittanyLion

Hence the point of forming corporations in the first place.


14 posted on 09/05/2006 3:44:48 PM PDT by longtermmemmory (VOTE! http://www.senate.gov and http://www.house.gov)
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To: longtermmemmory

The pilots have had good notice to bail out by retiring early and cashing out. I don't know how many did,,maybe they weren't elgible to retire and were stuck.
It is obvious that no defined benefit retirement plan can be counted on. A lot of big names have done down over the years.
I really think they should be outlawed..companies just find too many ways to underfund them to pump up their short term results.


15 posted on 09/05/2006 3:49:38 PM PDT by Oldexpat
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To: longtermmemmory

The pilots have had good notice to bail out by retiring early and cashing out. I don't know how many did,,maybe they weren't elgible to retire and were stuck.
It is obvious that no defined benefit retirement plan can be counted on. A lot of big names have done down over the years.
I really think they should be outlawed..companies just find too many ways to underfund them to pump up their short term results.


16 posted on 09/05/2006 3:49:44 PM PDT by Oldexpat
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To: longtermmemmory
The airplanes keep flying. With more planes a company may defer maintenance on its existing craft (and improve its safety record). Besides, most of the planes are under a mortgage, and that "goes with the plane".

An airline really has nothing more than the employee structure and its leases at air terminals ~ bankruptcy should serve to place that structure in more responsible hands.

17 posted on 09/05/2006 3:51:25 PM PDT by muawiyah
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To: NittanyLion

The company can, of course, purchase suitible liability insurance for its officers and board members.


18 posted on 09/05/2006 3:53:05 PM PDT by muawiyah
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To: muawiyah

Delta states that the pilots will receive an average of $75,200 annually once PBCG takes over the pension plan. That's still quite good, but not what was promised. It's also more than many active pilots at Delta bring home. It's about what a First Officer with 5 years makes. My friends at Delta work twice as hard for half as much money as they did pre-911. It is hoped that things will get better soon.


19 posted on 09/05/2006 4:11:54 PM PDT by TUAN_JIM (Sic Semper Tyrannis)
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To: TUAN_JIM
http://www.pbgc.gov/workers-retirees/find-your-pension-plan/content/page789.html#2006

You might look at thes tables. Looks like the maximum amount is less than $48,000 per year (for plans terminating in 2006).

Someone is telling your friends a fairy tail or there's money coming in from somewhere else.

20 posted on 09/05/2006 5:52:22 PM PDT by muawiyah
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To: muawiyah

I got that number from Bloomberg.com, which isn't allowed to be linked to here. BusinessWeek shows the same dollar amount. They don't say how the amount was calculated.


21 posted on 09/05/2006 8:16:25 PM PDT by TUAN_JIM (Sic Semper Tyrannis)
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To: TUAN_JIM

Thought so. I referenced the official government tables. Do you suspect a propaganda motive on the part of Bloomburg, or is it they don't want us copying their stuff lest our fact checkers demonstrate how wrong they are.


22 posted on 09/06/2006 5:42:44 AM PDT by muawiyah
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To: TUAN_JIM
Meanwhile, the executives get golden parachutes and pay increases on a scale of >= 20 percent.

Shareholders have an obligation to vote down lavish executive compensation packages especially when the company stock is performing poorly. A good example is Home Dept.
23 posted on 09/06/2006 5:50:22 AM PDT by CORedneck
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To: muawiyah

http://www.latimes.com/business/investing/wire/sns-ap-delta-hearing,1,7331296.story?coll=sns-ap-investing-headlines

The LA Times says about $75,000


24 posted on 09/06/2006 9:39:43 AM PDT by TUAN_JIM (Sic Semper Tyrannis)
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To: TUAN_JIM
No, LA Times didn't say that ~ Delta said that. However, the government's tables say differently.

Maybe Delta's lawyers lied? Or, maybe the "newsie" putting together this story didn't comprehend what 39% of existing retirement liability really means when the company is talking in the sense of "if the plan is terminated".

That 39% is about $30,000, or 2/3 of the maximum table value.

Remember, that would include existing and newly retired pilots as of 2006, on average, and the article has no information at all on what the current average really is.

All Delta has to pay when the plan is terminated is enough money to support an annuity that pays pilots annuities according to the government's schedule.

25 posted on 09/06/2006 9:50:24 AM PDT by muawiyah
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To: NittanyLion
live entirely off your IRA, 401k, and other savings, because you can't count on an employer or the federal government to support you.

My entire working career was for a corporation owned by an invidual. He didn't want the bother of "plans" of any kind, so he used the mindset of "you're all big boys and girls" and paid us much better than average with the idea that if we wanted benefits, etc., it was our choice.

In my case it worked well - wifey and I bought a vacation home as our retirement plan, and got it paid off....we live here now, and it's worth probably 6 times what we paid for it.

26 posted on 09/06/2006 9:55:00 AM PDT by ErnBatavia (Meep Meep)
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To: ErnBatavia
In my case it worked well - wifey and I bought a vacation home as our retirement plan, and got it paid off....we live here now, and it's worth probably 6 times what we paid for it.

Personally, I'd always rather be paid the extra money and control it myself. I don't trust my employer to manage my money better than I can.

27 posted on 09/06/2006 10:33:43 AM PDT by NittanyLion
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