toltommy
Posts: 2485
Joined: Tue Dec 09, 2003 9:04 am

US Seeks To "reschedule" Pension Payments

Tue Aug 17, 2004 5:09 am

Looks like liquidity is still a problem at US... AFA and IAM members most hit by this plan.

http://biz.yahoo.com/prnews/040816/dcm053_1.html

"Rescheduling these payments will help US Airways to conserve its cash so that we have sufficient liquidity to operate the airline," said Jerry Glass, US Airways senior vice president of Employee Relations. "This is an important step as we work to ensure our survival and future prosperity."

Looks like US wants to take this years payments, and spread them out over the next 5 years. Didn't UA try this and get shot down in court?
 
A330323X
Posts: 2666
Joined: Thu Oct 09, 2003 4:06 pm

RE: US Seeks To "reschedule" Pension Payments

Tue Aug 17, 2004 5:18 am

You're allowed to post a whole press release. Or did you just want to pull out the worst-sounding paragraph?  Laugh out loud

I have no idea what UA did or didn't try to do, but this is apparently an IRS issue, not a PBGC issue.

-----------------------------------------------------------

US AIRWAYS SEEKS TO SPREAD OUT PENSION PAYMENTS

ARLINGTON, Va., Aug. 16, 2004 -- US Airways today said it will ask the Internal Revenue Service (IRS) for authority, as permitted under IRS rules, to reschedule contributions to the defined benefit pension plans for the Association of Flight Attendants (AFA) and the International Association of Machinists (IAM), representing mechanical and related employees.

"Rescheduling these payments will help US Airways to conserve its cash so that we have sufficient liquidity to operate the airline," said Jerry Glass, US Airways senior vice president of Employee Relations. "This is an important step as we work to ensure our survival and future prosperity."

A letter has been sent to employees in both work groups explaining the company’s action. The two plans would be treated the same under the proposed payment rescheduling.

Under IRS rules, US Airways is required to make contributions of approximately $67.5 million total to the AFA and IAM plans for the 2004 plan year. If the application for a waiver is approved, the company will be able to spread out these contributions for the 2004 plan year for up to five years, rather than the 18 months during which the contributions otherwise would have been made.

Because US Airways already has contributed $28.6 million to the AFA and IAM plans during 2004, the company intends to apply that amount toward the last 2003 plan year payment, which is due on Sept. 15.

The proposed payment rescheduling would have no impact on retirees. For current employees, pension benefits will still begin when an employee retires and continue throughout the employee’s lifetime.

Reporters needing additional information should contact US Airways Corporate Affairs at (703) 872-5100.
I'm the expert on here on two things, neither of which I care about much anymore.
 
toltommy
Posts: 2485
Joined: Tue Dec 09, 2003 9:04 am

RE: US Seeks To "reschedule" Pension Payments

Tue Aug 17, 2004 9:34 am

I didn't realize that I could post the whole article.

Given USAirways track record with pension funds, I'm sure I'd be nervous if it was my pension! Can you just imagine? "Hey we can't pay it now, otherwise we wouldn't have the liquidity (i.e. cash) that we need to do business. But trust us, we'll pay it back eventually..."

Sooner or later, the good folks at US are going to realize that they should get what they can now, because there won't be much left in the future. Leveraging the future to pay for today is a bad way to do business!
 
Mikey711MN
Posts: 1231
Joined: Fri Nov 07, 2003 4:19 am

RE: US Seeks To "reschedule" Pension Payments

Tue Aug 17, 2004 11:00 am

"Leveraging the future to pay for today is a bad way to do business!"

But an effective way to lead the country apparently...  Confused

(sorry, just had to...  Big grin)
I plan on living forever. So far, so good...
 
A330323X
Posts: 2666
Joined: Thu Oct 09, 2003 4:06 pm

RE: US Seeks To "reschedule" Pension Payments

Tue Aug 17, 2004 1:39 pm

http://www.washingtonpost.com/wp-dyn/articles/A6510-2004Aug16.html

"Randy Clerihue, a spokesman for the Pension Benefit Guaranty Corp., said that for the IRS to agree to such a request, the airline must make available appropriate collateral."

"Such requests of the IRS are not uncommon. Last year, Northwest Airlines Corp. won approval from the tax agency to stretch out payments of $454 million into its pension plan for its salaried and contract employees over five years."
I'm the expert on here on two things, neither of which I care about much anymore.
 
N801NW
Posts: 558
Joined: Mon Jul 12, 2004 8:56 am

RE: US Seeks To "reschedule" Pension Payments

Tue Aug 17, 2004 7:39 pm

The New York Times article pegs NWA's collateral as landing slots, Pacific route authorities, aircraft, and engines. Just in case the worst should happen.
 
ORD2PHL
Posts: 242
Joined: Sun Oct 19, 2003 9:15 am

RE: US Seeks To "reschedule" Pension Payments

Tue Aug 17, 2004 10:20 pm

The New York Times article pegs NWA's collateral as landing slots, Pacific route authorities, aircraft, and engines. Just in case the worst should happen.


And....of course the DC-9's.....sorry, just had to.


ORD2PHL
 
toltommy
Posts: 2485
Joined: Tue Dec 09, 2003 9:04 am

RE: US Seeks To "reschedule" Pension Payments

Tue Aug 17, 2004 10:34 pm

Mikey -

You and I agree on that issue. Too bad there was 30 years of examples to follow when the other party controlled Congress, huh?  Yeah sure

(I couldn't resist either!)
 
AA717driver
Posts: 1502
Joined: Tue Feb 12, 2002 8:27 am

RE: US Seeks To "reschedule" Pension Payments

Wed Aug 18, 2004 1:28 am

This is a common, but uncomfortable thing for airlines with cash flow problems to do. As much as we'd all like to see USAir fail Insane ...

Seriously, the high fuel costs have screwed up everyone's projections and this is a convenient way to save cash.TC
FL450, M.85

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