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
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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.
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.
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.
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.
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.
(No more Olmert! No more Kadima! No more Oslo! )
Delta's stock has gone from
45 dollars to 76 cents in 5 years,
time to invest
I'm sure the executives have also cut their pensions as a sign of good faith that they want the company to suceed./s
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.
Investors and bondholders should take all the risks in corporate ventures.
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.
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)
Hence the point of forming corporations in the first place.
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.
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.
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.
The company can, of course, purchase suitible liability insurance for its officers and board members.
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.
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.
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