NWAFA
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U.S. Government To Take Over United's Pensions

Sat Mar 12, 2005 2:13 am

Reuters
US to Assume United Airlines Pension Plan
Friday March 11, 11:53 am ET

WASHINGTON (Reuters) - The U.S. agency that backs corporate pensions on Friday said it was moving to take over United Airlines' pension plan for ground employees, saying the plan operated by the bankrupt airline was only 30 percent funded.

The Pension Benefit Guaranty Corp. said it would guarantee payment of an estimated $2.1 billion in benefits out of the plan's $2.9 billion shortfall. The plan has more than 36,000 active and retired employees, the agency said. UAL Corp. (OTC CTA (Switzerland)">BB:UALAQ.OB - News) is the parent company of United Airlines.

A PBGC spokesman said the agency was petitioning in federal district court to take over the ground employees plan.

"The decision to end a plan is never an easy one," PBGC's director Bradley Belt said in a statement. But the agency also needed to protect itself against more losses, he said.

The PBGC is itself in the red, with a $23 billion deficit. By moving to assume United's plan now, the agency said it saved itself at least $225 million in extra losses.

The United plan had only $1.2 billion in assets to cover $4.1 billion in benefit promises, and the company has missed $363 million in legally required contributions, the PBGC said.

It noted that United's management had repeatedly stated its intention to terminate the plan. United says it needs to replace its pension plans to exit bankruptcy.

United said it was reviewing the PBGC's actions and evaluating its options.
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NWAFA
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RE: U.S. Government To Take Over United's Pensions

Sat Mar 12, 2005 2:15 am

U..A. is still abusing the Bankruptcy process. The U.S Government should have changed the corporate BK laws yesterday instead of the personal laws.

So now we the tax payers get to pay for this! Before anyone starts with the "its the pension program that pays crap", we the tax payers pay into the Government Pension program.
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AA7573E
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RE: U.S. Government To Take Over United's Pensions

Sat Mar 12, 2005 2:35 am

Yet another example of the shameless abuse of the system by United. If you can't fix it in 2 plus years, it's a likely conclusion that it is broken beyond repair. Virtually any company could operate comfortably under BK protection for an infinite amount of time, however, the intent of BK legislation was to provide a reasonable amount of time for a company to get its house in order, and make a return to the market. Chapter 7 liquidation was created for companies that can not make it, after completing the Chapter 11 process. Both US and United are examples of extreme abuse of this system, at taxpayer expense. I don't care how much you like United and enjoy flying them, there is no rational argument supporting their abuse of the system.

Hopefully their continued abuse of the system will draw some attention from the legislature, and we can get some positive change to our corporate BK laws. In fact, I am quite surprised that senators from Texas, Georgia, Florida, Washington, Minnesota, and other states that have major airline hubs, have yet to bring this issue up in session. They usually lobby very hard for legislation that supports their 'home state carrier(s)', yet not one of them has raised a finger to point out the abuse that is being carried out by one of their 'home state carrier('s)' largest competitors.

United's abuse of the system will be a case study for many business school students in the near future. Perhaps the case will be called, "How to take a successful dominate airline, run it into the ground, and steal money from the taxpayers while you pretend to make it viable again."
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OzarkD9S
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RE: U.S. Government To Take Over United's Pensions

Sat Mar 12, 2005 3:06 am

As a taxpayer I don't mind that the government protects the pensions of retirees, or the needy or uninsured etc...PROMOTE THE GENERAL WELFARE!

If the government is willing to do away with social security and medicare why shouldn't UA be able to do the same? It's a brand new heartless world out there.
Next up: STL-OAK-RNO-LAS-ICT-STL
 
NWAFA
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RE: U.S. Government To Take Over United's Pensions

Sat Mar 12, 2005 3:14 am

And with the current dope in the white house is not worker friendly and only corporation friendly, you will keep seeing raping going on from the corporations to the employees. Screw the employee long live the company is W's motto
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OzarkD9S
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RE: U.S. Government To Take Over United's Pensions

Sat Mar 12, 2005 3:17 am

Amen NWAFA, welcome to my RUL!

Wake me in Nov 08.
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7e72004
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RE: U.S. Government To Take Over United's Pensions

Sat Mar 12, 2005 3:30 am

In other words, it is us (taxpayers) who have to pay for United's abuse of the bankruptcy process...that is bull$hit!  mad 
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NWAFA
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RE: U.S. Government To Take Over United's Pensions

Sat Mar 12, 2005 3:31 am

7E72004,

The hard working employees of UA have paid the most, and now we the rest of the country get to pay some too.
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7e72004
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RE: U.S. Government To Take Over United's Pensions

Sat Mar 12, 2005 3:33 am

I think it is wrong...UA has abused the process to a point where they should be "kicked out." I should not have to pay for someone else's mistake.
The next generation of aircraft is just around the corner!
 
adh214
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RE: U.S. Government To Take Over United's Pensions

Sat Mar 12, 2005 3:42 am

"We the taxpayer's get pay for this."

Whatever, would you prefer for UA to tell there 36,000 employees and retirees "tough luck no more pension checks." Grandma might be a little upset that she will be spending her last days eating dog food in poverty.

If you don't want the PBGS to be in place to protect your pension and mine that is a separate conversation. United is just using the system that is in place. I feel a lot better about my pension because the PBGC backs a portion of it.

Andrew
 
7e72004
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RE: U.S. Government To Take Over United's Pensions

Sat Mar 12, 2005 3:44 am

If the government wants to start down this road, then i think it is only fair to let airlines consolidate.
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StevenUhl777
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RE: U.S. Government To Take Over United's Pensions

Sat Mar 12, 2005 3:54 am

I'll bet Mariner is going to rip me a new a-hole for this post, but here goes anyway:


According to the article:
The Pension Benefit Guaranty Corp. said it would guarantee payment of an estimated $2.1 billion in benefits out of the plan's $2.9 billion shortfall

The PBGC is itself in the red, with a $23 billion deficit. By moving to assume United's plan now, the agency said it saved itself at least $225 million in extra losses

Ok...let me see if I understand this government logic in this whole issue.

* United first applied to the ATSB for a $2B loan guarantee. Upon review, the ATSB said the business model and $'s weren't realistic, and the request was denied.

* United then reworked it's application, lowered the request to $1.6B and modified it's analysis and business plan. The ATSB again reviewed it, cited its faults, and once again, denied the request for the logan guarantee.

* Facing it's last time up to bat after the ATSB "invited" United to resubmit its request, United once again lowered it's request down to $1.1B. This time, it wasn't so much the #'s were off base, but the ATSB determined that United was doing so well all of a sudden, that United didn't NEED a loan gurantee. 3rd time...request denied. ATSB closes shop for good, UAL must now to turn to other options. Dubya is happy becuase he didn't approve a $1B loan guarantee backed by the government.

Fast forward to today. Now, the US Government plans to take over $2.1B in pensions for ground employees.

What am I missing here? First, the government denies the original ATSB request for $2B, as well as subsequent requests, thinking it's saving the taxpayers money.

But wait! Now the government is willing to back United's pensions, valued at $2.1B? So the government really didn't save anything at all in the end, did they?
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supa7E7
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RE: U.S. Government To Take Over United's Pensions

Sat Mar 12, 2005 6:00 am

Remind me to go get a union job so I can bargain for a fat pension nobody else gets. Then when it bankrupts my company, remind me to transfer that ill-gotten sacred cow to the U.S. government. That way, I will have guaranteed retirement even though I didn't merit it on the job market. Thanks.
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FriendlySkies
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RE: U.S. Government To Take Over United's Pensions

Sat Mar 12, 2005 6:11 am

I don't think a lot of you have read this correctly. UA didn't move to eliminate them yet, the PBGC is moving to take them over. In other words, PBGC wants this right now, UA would probably prefer to wait.

This is good for UA and it's employees, even though it seems bad. It will give UA a better chance at survival (with $2.1 billion less debt) and let the 36,000 employees covered keep their jobs and most of their retirement. They aren't losing their pension, they're just not getting everything they expected. It's not great, but it's better than nothing.

UA isn't abusing anything. They're taking advantage of a system set up many years ago, and following the rules.
 
FriendlySkies
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RE: U.S. Government To Take Over United's Pensions

Sat Mar 12, 2005 6:18 am

Quoting NWAFA (Reply 1):
So now we the tax payers get to pay for this! Before anyone starts with the "its the pension program that pays crap", we the tax payers pay into the Government Pension program.

http://www.thestreet.com/_forbes/sto...m_ven=FORBES&cm_cat=FREE&cm_ite=NA

"...Although it is a federal corporation, the PBGC receives no tax revenue. Instead, it functions like an insurance company, receiving premiums from companies with defined-benefit pension plans."
 
AA7573E
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RE: U.S. Government To Take Over United's Pensions

Sat Mar 12, 2005 6:28 am

I would rather UA go out of business than have the burden of supporting their retirees fall upon me. The PBGC receives Federal money, not directly from tax revenue, but in appropriations - which come from taxes revenue. Call it what you want.

It is not our job to support 36,000 people who work for a broke company. It is unfortunate that they are in BK, but they are. If they can not come out, I feel no responsibility to support their family. I have enough to do in order to support mine. It's all part of a market economy. You win some and you lose some. They, it seems, are losing one, and taking it from you and me on the way out the door.
See you up front!
 
KabAir
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RE: U.S. Government To Take Over United's Pensions

Sat Mar 12, 2005 6:39 am

Ozark D9S said: "If the government is willing to do away with social security and medicare why shouldn't UA be able to do the same? It's a brand new heartless world out there."

Huh, last I checked "W" actually started one of the biggest government entitlements ever with this new monster Medicare perscription deal-e-o. And as far as I can tell, Social Security still exists and will continue to exist. Well, actually if Dems get their druthers it won't exist by the time I'm 65 (according to what THEY told me 5-10 years ago before they suddenly become so pro-current system without any explanation). Someone still has yet to explain to me WHY - if Dems are so caring about our seniors - Mr. Clinton in 1993 SIGNIFICANTLY RAISED taxes on social security recipients. Ah, but what do I know. I'm just a "dumb red state redneck"  Smile

Supa 7E7 said: "Remind me to go get a union job so I can bargain for a fat pension nobody else gets. Then when it bankrupts my company, remind me to transfer that ill-gotten sacred cow to the U.S. government. That way, I will have guaranteed retirement even though I didn't merit it on the job market. Thanks."

Man, I'm with you. The high majority of employers don't even offer pensions in the first place.... Welcome to America - land of the free (ride), home of entitlements.
wow, there sure are a lot of expert economists on this forum....
 
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mariner
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RE: U.S. Government To Take Over United's Pensions

Sat Mar 12, 2005 6:49 am

Steven:

Rip you a new one? I didn't think I'd been that tough on you.  Smile

I think they (the ATSB and the PBGC) are two separate issues and I am amazed that you are still confused about the role of the ATSB.

However, it would seem the ATSB was right. United keeps on losing money, and they are fast running out of excuses.

So I am struck by the difference between United and Jetsgo. United seeks bk protection, continues operating and continues losing money - billions.

Jetsgo seeks bankruptcy protection, stops operating and stops losing money.

Guess which side I am on.

cheers

mariner

[Edited 2005-03-11 22:51:23]
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F9Animal
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RE: U.S. Government To Take Over United's Pensions

Sat Mar 12, 2005 6:52 am

Why can't the governement force UA to sell some of its assets to pay the pension fund? How many planes could UA sell to take care of its responsiblities? Seems like UA wants to throw the responsibility on the tax payers. I think it is time for the Bankruptcy judge to force UA to either s**t or get off the pot.

I am sickened at watching the employees of the airline getting hit over the head repeatedly.

I don't want to see UA go under, but I also don't want to support poor business decisions either.
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bennett123
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RE: U.S. Government To Take Over United's Pensions

Sat Mar 12, 2005 7:25 am

How long has the fund had a 70% deficit for.

I think that the key questions are who knew what and when did they know it?.
 
ltbewr
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RE: U.S. Government To Take Over United's Pensions

Sat Mar 12, 2005 7:39 am

The PBGC exists to protect to some extent the pensions of workers of companies that cannot be continued for reasons beyond any fault of their own by their current or former employer. It makes sure that monies that were put in good faith between the employer and the employees are there when the employee gets to retirement.
What I wish was that the PBGC would require that high executives would have to sacrafice the contributions to their pensions to those of the line workers.
Times and businesses change. Only a few businesses last more that a few years. The Airline business has radically changed. The idea of pensions is becoming obsolete for many reasons. For many, their pension is the difference between a modest retirement and poverty. Their children cannot be expected to always cover their parent's retirement needs for a variety of reasons. That is why we have a PBGC.
 
7e72004
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RE: U.S. Government To Take Over United's Pensions

Sat Mar 12, 2005 7:39 am

AA7573E--I completely agree with you. I am single right now but i have enough on my plate than to have my tax money used for this purpose. The management should be fired, and the airline should be liquidated. ENough is enough.
The next generation of aircraft is just around the corner!
 
7e72004
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RE: U.S. Government To Take Over United's Pensions

Sat Mar 12, 2005 7:42 am

and you can't tell me that it takes 2.5 years (and counting) for a company to get out of bankruptch; there is no reason why UA could not have been through the process.
The next generation of aircraft is just around the corner!
 
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ODwyerPW
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RE: U.S. Government To Take Over United's Pensions

Sat Mar 12, 2005 8:10 am

Gee,
I run a small company. Wonder if I could get the Gov't to fund a pension plan for my guys? Gotta love the corporate well fare.
learning never stops.
 
scotron11
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RE: U.S. Government To Take Over United's Pensions

Sat Mar 12, 2005 12:04 pm

The PBGC is being prudent. Just like it was when it moved to take over UAL's pilots scheme in December. The thing is, UAL is still there operating under court protection, and that protection is pretty extensive.

The full PBGC guarantee on the pilots pension didn't kick in until May this year, and UAL agreed with their pilots that they wouldn't terminate it until then. But by May, the full guarantee would have cost the PBGC an additional $140M, so that was why they moved to take it over.

That issue is still before the bankruptcy judge.

These issues aside, I have still to learn of any "concrete" plan by UAL to get out of this "thing". You would think they at least could have filed a reorganization plan with the court by now, stating when and under what conditions they will exit bankruptcy.
 
kanebear
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RE: U.S. Government To Take Over United's Pensions

Sat Mar 12, 2005 1:12 pm

Welcome to politics. Retirees vote in greater numbers than younger demographic groups. Thus, save their pensions, get their vote. This is oversimplified but rest assured that if the bloc in question wasn't politically relevant (unions and retirees/pensioners) this wouldn't be happening. Before anyone goes off about W this or W that, it would be just as likely under a democratic administration.
 
StevenUhl777
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RE: U.S. Government To Take Over United's Pensions

Sat Mar 12, 2005 1:37 pm

Quoting 7E72004 (Reply 22):
and you can't tell me that it takes 2.5 years (and counting) for a company to get out of bankruptch; there is no reason why UA could not have been through the process.

Yes I can. Before 2002, United has been in business, following different variations of the same business model for decades. A combination of factors got them to Ch. 11. What YOU CAN'T TELL ME is how a company that has done business essentially the same way for decades can all of a sudden stop on a dime and dramatically change the way they do business in a little over a year. Forget UA for a moment...what if it were AA? Or DL? Could they fix all the problems in a short period of time like you seem to think they could? From the get-go, UA's management said that this will be a complicated bankruptcy case, and it will take time to change/reject leases, analyze and implement a new business plan, and get workers to accept painful cuts and accept the new way. If you run a small business, say 15-20 people, that's somewhat easy. But a corporation the size of UAL? You clearly don't know much about business.

Has UA taken advantage of the Ch. 11 process? Are you or anyone else here a qualified enough expert to make that determination? I'm certainly not, and I highly doubt you are, either. What I do know is this: a company, ANY COMPANY, in ANY industry, in bankruptcy can't afford to leave even a penny on the table that could be eliminated when it exits from protection. UA is making sure they cover ever base and cut every penny before they do, because CFO's as intelligent as Jake Brace (Univ. of Chicago MBA) know that if they don't...they'll be in Ch. 11 within two years, if not sooner. The chances of emerging from Ch. 11 a SECOND time are REALLY low. I can only think of two airlines that have. Only one (CO) has survived. A company can't exit a day too early (like US did, now they're in Round II) or leave a day too late. Since neither of us here are bankruptcy experts, we don't know when exactly UA has crossed this line. Does the media? Hardly. How about "airline industy analysts"? HARDLY, but more so than the armchair CEO's on this forum.

Quoting Mariner (Reply 17):
Steven:

Rip you a new one? I didn't think I'd been that tough on you.

I think they (the ATSB and the PBGC) are two separate issues and I am amazed that you are still confused about the role of the ATSB.

Mariner: Ok, Ok...I admit I was being a bit facetious when I wrote that, but what I really meant is that I figured you'd have plenty to say in response.

I am somewhat confused about the role of the ATSB, yes. I know and understand their decisions vis a vis UAL, and to some extent, agree with those decisions, but overall, it seems pointless they were even created to begin with! IIRC, they were allocated some $20B to help stabiliize the industry after 9/11. Several airlines that easily could have applied for ATSB assistance determined (and rightly so) that it wasn't in their short-term/long-term interests to bother with it, and more so, didn't want Uncle Sam involved in their business in any way shape or form. UAL instead opted to seek a loan guarantee after CEO Goodwin shot off his mouth in late 2001/early 2002 by prematurely saying UAL would "perish" and in the process closed the doors to whatever access they could have had to the capital markets in 2001. Of the $20B allocated, only F9 and US (I think maybe one other airline as well) applied and received funds, for a combined $1-$2B. F9 quickly squared their account, and are now free and clear of the ATSB, and US has repaid a chunk of it, in June 2004 if I recall. UA applied for $2B, and as we now know, the rest is history. By the time the ATSB closed up shop, the vast majority of the funds they were 'allocated' to dole out as possible loan guarantees were never even issued in the first place. Again, why did the government even bother with the ATSB?
And the winner for best actress is....REESE WITHERSPOON for 'Walk the Line'!!!!!!!!
 
gigneil
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RE: U.S. Government To Take Over United's Pensions

Sat Mar 12, 2005 2:00 pm

Its very clear that almost nobody here understands the role of the PBGC.

If United were to have gone completely out of business, the PBGC would have still assumed their pensions. That's their job, they guarantee pensions. They're an insurance company, they get paid premiums to cover plans and then, if a plan fails, they pay out.

The PBGC actually wishes they'd taken over UA's pension plans earlier. Would have saved money.

Its always fun to hear the self centered among us bitch that they have too much on their plate for the plight of the misfortunate. You pay taxes one way or the other, surely you'd prefer they be spent on something meaningful? Its not like the PBGC is fully government funded.

N

[Edited 2005-03-12 06:02:17]
 
MaverickM11
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RE: U.S. Government To Take Over United's Pensions

Sat Mar 12, 2005 2:08 pm

"And with the current dope in the white house is not worker friendly and only corporation friendly, you will keep seeing raping going on from the corporations to the employees"

How would you have solved UA's inability to fund pensions? What does the current "dope in the white house" have to do with any of UA's problems?
E pur si muove -Galileo
 
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mariner
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RE: U.S. Government To Take Over United's Pensions

Sat Mar 12, 2005 2:23 pm

Steven:

Yes, I knew you were being facetious. A wee bit, so was I.  Smile

As to the ATSB, your info is a little off. Several other airlines applied and were approved, including America West, ATA and Aloha.

As you say, Frontier repaid their loan in totality, and I believe America West and Aloha have paid down some.

US Airways had not repaid anything - or not much - when the second blk happened, and the ATSB revised their terms of their loan.

US is now using taxpayer guaranteed loan money yo fund their day to day bread and butter operations.

So I could agree with you - perhaps it might have been better if the ATSB had never been created.

It was formed (after 9/11) largely in response to Gordon Bethune of Continental telling Congress that the US airlines were in crisis. It was an attempt by Congress to help.

Sadly, many airlines refused to admit the truth about their circumstances (and some of that continues to this day), and did not apply, believing they would survive withoput help.

As we have seen with Delta over the last twenty four hours, this was a lethally arrogant response.

United did admit the truth - that they needed help - but not the whole truth. They tried to snow job the ATSB with optimistic earnings projections and unrealistic expense statements.

One day, one hopes, United will come clean.

But thew fact remains that no other major even applied to the ATSB, and that the industry is considerably less stable than it was then.

So maybe we should call it the ATDB - the Airline Transportation Destabilization Board.

cheers

mariner
aeternum nauta