Letter to United
cityfan.
Thank you thankyou.
You have explained it in laymans terms. I hope the rest "get it". I watched in horror for days as the attack dogs hired by the airline for some $11million tore into our side. The judge incredibly believed the smoke and mirrors and agreed that the union had to agree to terminate the pension. The union of course caved and thus my soul is owned by the PBGC. Those older than 53 when the pension was stolen (see my previous post re PBGC techniques) actually got an enhanced pension and only lost some 60% of their expected income.(the lump was naturally gone). The under 53s got as you suggest about $28K.
So once again get out while the going is good and for goodness sake have a back up plan.
Thank you thankyou.
You have explained it in laymans terms. I hope the rest "get it". I watched in horror for days as the attack dogs hired by the airline for some $11million tore into our side. The judge incredibly believed the smoke and mirrors and agreed that the union had to agree to terminate the pension. The union of course caved and thus my soul is owned by the PBGC. Those older than 53 when the pension was stolen (see my previous post re PBGC techniques) actually got an enhanced pension and only lost some 60% of their expected income.(the lump was naturally gone). The under 53s got as you suggest about $28K.
So once again get out while the going is good and for goodness sake have a back up plan.
CityFan: thank you very much.
Wake Turbulence: You are right, especially in a practical sense.
How does one copy off the bottom two or three pages of a long forum? Can this be explained to a "steam-gauge" guy?
Wake Turbulence: You are right, especially in a practical sense.
How does one copy off the bottom two or three pages of a long forum? Can this be explained to a "steam-gauge" guy?
Last edited by Ignition Override; 18th Oct 2005 at 16:03.
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Ignition Override said:
As for lump sums, based on everything I've read in the US media in the last few years, only the Delta pilots (at least until until now) were able to take out the entire retirement in one single lump sum.
Someone else correct me if me if I am wrong but I believe that Delta could only take half out as a lump sum and half as an annuity. AA can take all as an annuity, all as a lump sum, or half lump sum and half annuity depending on the A fund or B fund..
As for lump sums, based on everything I've read in the US media in the last few years, only the Delta pilots (at least until until now) were able to take out the entire retirement in one single lump sum.
Someone else correct me if me if I am wrong but I believe that Delta could only take half out as a lump sum and half as an annuity. AA can take all as an annuity, all as a lump sum, or half lump sum and half annuity depending on the A fund or B fund..
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....cityfan
Rightly so, because "they," the "Quango" is a taxpayer supported entity; and I, as taxpayer, object to having to subsidize the pension payments of employes of private, mismanaged, semi bankrupt airlines.
The PBGC is a Quango that provides "insurance" coverage for pensions. However, they are becoming INCREASINGLY irritated by companies seeking Chapter 11 protection almost SOLELY to unload their pension obligations.
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Glueball,
I'm not sure the PBGC receives any funds from general taxation at all. At least thats what it says on their WWW site.
It seems a little tautological to me though and I don't claim to understand how the whole edifice works. It seems like it funds failed DB schemes with the the funds of failed DB schemes! Whoever thought that one up should be congratulated on their wisdom.
Even the executive director of the PBGC writes:
I'm sorry but this malaise isn't confined to the US - it is prevalent in the UK too, but it appears at least Holland have it right.
Cityfan,
The composition of the Creditors Committee is obvious, but in the absence of an ESOP, which presumably means that employees do not get representation on such committees, it seems to me that employee benefits are always going to get hit first in bankruptcy proceedings. Is my understanding essentially correct?
Hence my comment earlier in the thread about how Creditors aren't about to give up the "protections" they are afforded in Ch 11.
For the conspiratorial amongst us, it does not take a genius to figure out the advantages that a degree of collusion between City and airline merit.
And therein lies the rub.
As an employee you make the wheels go round on a day-to-day basis, but the real game is being played on a higher stage.
I'm not sure the PBGC receives any funds from general taxation at all. At least thats what it says on their WWW site.
It seems a little tautological to me though and I don't claim to understand how the whole edifice works. It seems like it funds failed DB schemes with the the funds of failed DB schemes! Whoever thought that one up should be congratulated on their wisdom.
Even the executive director of the PBGC writes:
You may have read about challenges facing the PBGC. As of the end of 2004, the agency has a shortfall of more than $23 billion. Rest assured, however, that it poses no near-term threat to PBGC's ability to pay current benefits, nor will it affect our commitment to quality customer service. Having said that, it is becoming ever clearer that changes in the system must be made to strengthen the defined benefit system for employees, create incentives for plan sponsorship and ensure that PBGC is able to fulfill its mission in the future. PBGC is actively engaged with Congress and the Administration to improve the retirement security of American workers.
Cityfan,
The composition of the Creditors Committee is obvious, but in the absence of an ESOP, which presumably means that employees do not get representation on such committees, it seems to me that employee benefits are always going to get hit first in bankruptcy proceedings. Is my understanding essentially correct?
Hence my comment earlier in the thread about how Creditors aren't about to give up the "protections" they are afforded in Ch 11.
For the conspiratorial amongst us, it does not take a genius to figure out the advantages that a degree of collusion between City and airline merit.
And therein lies the rub.
As an employee you make the wheels go round on a day-to-day basis, but the real game is being played on a higher stage.
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I believe the PGBC is technically operated in the style of an "insurance" pool, where recurring small fees charged to all eligible participant companies are intended to maintain the solvency of the fund over time. Whether that long-term vision will actually work, given the present cascade of pension plan abandonments, is anyone's guess.
The US has struggled to establish and maintain methods for funding basic 'life-support' pensions for the general working populace since the early 1930's. That system is under stress because of the pig-in-python effect of the post ww2 population surge and the longevity effects of improving sanitation and health care.
'Private pensions', operating supplemental to but independent of Social Security, have been viewed as a form of incentive compensation for the convenience of the employer's business goals. I remember very well hearing impassioned pleas for "portable pensions" in the early 1970's in the airlines and other 'growth' industries. Employers methodically used pension vesting as the principal method for locking-in key employees, so the owners opposed any plans for immediate incremental vesting and portability - leading to the wing-and-prayer system that now is failing so badly in the airline industry.
No compelling standards existed for pension administration and funding practices until modifications were made to the ERISSA rules (about 1987), with phased-in 'effective' dates in the early and mid 90's. Those rules required that pension promises be funded to some percentage of reality and the difference carried on company balance sheets as a liability. This was a sort of poison for companies that had methodically fudged the numbers, so companies began dumping the obligations any way they could, with cash buyouts and phenomenal projections re future rates of return being the main methods. Geniuses in the style of Michael Miliken and Ivan Boesky developed swift methods for wholesale cashectomy of companies that had any big money in reserve near the surface, however, so pension accounts became increasingly difficult in every regard. Companies in the US with consistent growth and profits are the only ones that have been able to sail through these vicissitudes with their pension promises intact.
The pain of all this as it plays out is palpable. It has the qualities of an inexorably unfolding Greek tragedy writ on the path that led us here. It follows, like night from day, from the willingness of employees, unions, and managers to rely on fluff and dreams about a prosperous future - instead of working with a less inspiring but more viable vision based on cold hard cash for modest but real pension accruals on deposit with independent fiduciaries.
The US has struggled to establish and maintain methods for funding basic 'life-support' pensions for the general working populace since the early 1930's. That system is under stress because of the pig-in-python effect of the post ww2 population surge and the longevity effects of improving sanitation and health care.
'Private pensions', operating supplemental to but independent of Social Security, have been viewed as a form of incentive compensation for the convenience of the employer's business goals. I remember very well hearing impassioned pleas for "portable pensions" in the early 1970's in the airlines and other 'growth' industries. Employers methodically used pension vesting as the principal method for locking-in key employees, so the owners opposed any plans for immediate incremental vesting and portability - leading to the wing-and-prayer system that now is failing so badly in the airline industry.
No compelling standards existed for pension administration and funding practices until modifications were made to the ERISSA rules (about 1987), with phased-in 'effective' dates in the early and mid 90's. Those rules required that pension promises be funded to some percentage of reality and the difference carried on company balance sheets as a liability. This was a sort of poison for companies that had methodically fudged the numbers, so companies began dumping the obligations any way they could, with cash buyouts and phenomenal projections re future rates of return being the main methods. Geniuses in the style of Michael Miliken and Ivan Boesky developed swift methods for wholesale cashectomy of companies that had any big money in reserve near the surface, however, so pension accounts became increasingly difficult in every regard. Companies in the US with consistent growth and profits are the only ones that have been able to sail through these vicissitudes with their pension promises intact.
The pain of all this as it plays out is palpable. It has the qualities of an inexorably unfolding Greek tragedy writ on the path that led us here. It follows, like night from day, from the willingness of employees, unions, and managers to rely on fluff and dreams about a prosperous future - instead of working with a less inspiring but more viable vision based on cold hard cash for modest but real pension accruals on deposit with independent fiduciaries.
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United reports "improved results":
_________________________________________
UAL Loss Widens
Amid Costs Tied
To Restructuring
By ILAN BRAT
Staff Reporter of THE WALL STREET JOURNAL
November 1, 2005
United Airlines's parent, UAL Corp., reported a third-quarter net loss of $1.77 billion, its largest ever quarterly loss, as bankruptcy-related expenses offset its efforts to shift to more profitable routes, cut costs and emerge from Chapter 11 as a more nimble competitor.
The Chicago-based airline, the second-largest U.S. carrier by traffic after AMR Corp.'s American Airlines, said reorganization items reduced its bottom line by $1.84 billion, primarily from noncash expenses on the rejection of aircraft. UAL said it is common for a company to rack up losses associated with its reorganization as it approaches its exit from Chapter 11 of the U.S. Bankruptcy Code, and said it expects a large noncash gain after it emerges from bankruptcy protection, also stemming from accounting factors.
United, which filed for bankruptcy protection in December 2002, hopes to emerge in February as an efficient, competitive airline. In the latest quarter, United said, employee costs declined 21% from a year earlier, and its aircraft obligations fell 35%. However, fuel expenses rose 37% to $1.1 billion, meaning fuel has leapfrogged labor as its largest single expense.
United's results amount to $15.26 a share, compared with a net loss of $274 million, or $2.38 a share, in the year-earlier quarter, which included $115 million in reorganization items.
In the latest quarter, revenue climbed 8.1% to $4.66 billion from $4.31 billion a year earlier.
United has been cutting back on its domestic operations to put greater emphasis on international flights, which are less competitive and which allow airlines to charge higher fares. The company said mainline unit revenue, or the money brought in for each seat flown per mile, jumped 11% to 9.6 cents from 8.6 cents in last year's third quarter. In September alone, United's mainline unit revenue jumped 15% compared with September 2004.
The airline said it reduced the number of aircraft in its fleet by 10% compared with the year-earlier period. Seat capacity declined 5%, while the percentage of seats filled rose to 83.9% from 82.1%. The company expects its fourth-quarter mainline capacity to be down 3% from 2004's fourth quarter.
Glenn Tilton, UAL's chief executive officer, said that the improved results reflected cost controls. "The results we are reporting make it clear that we have done well this quarter in overall cost control, especially given the significant reduction in capacity."
_________________________________________
UAL Loss Widens
Amid Costs Tied
To Restructuring
By ILAN BRAT
Staff Reporter of THE WALL STREET JOURNAL
November 1, 2005
United Airlines's parent, UAL Corp., reported a third-quarter net loss of $1.77 billion, its largest ever quarterly loss, as bankruptcy-related expenses offset its efforts to shift to more profitable routes, cut costs and emerge from Chapter 11 as a more nimble competitor.
The Chicago-based airline, the second-largest U.S. carrier by traffic after AMR Corp.'s American Airlines, said reorganization items reduced its bottom line by $1.84 billion, primarily from noncash expenses on the rejection of aircraft. UAL said it is common for a company to rack up losses associated with its reorganization as it approaches its exit from Chapter 11 of the U.S. Bankruptcy Code, and said it expects a large noncash gain after it emerges from bankruptcy protection, also stemming from accounting factors.
United, which filed for bankruptcy protection in December 2002, hopes to emerge in February as an efficient, competitive airline. In the latest quarter, United said, employee costs declined 21% from a year earlier, and its aircraft obligations fell 35%. However, fuel expenses rose 37% to $1.1 billion, meaning fuel has leapfrogged labor as its largest single expense.
United's results amount to $15.26 a share, compared with a net loss of $274 million, or $2.38 a share, in the year-earlier quarter, which included $115 million in reorganization items.
In the latest quarter, revenue climbed 8.1% to $4.66 billion from $4.31 billion a year earlier.
United has been cutting back on its domestic operations to put greater emphasis on international flights, which are less competitive and which allow airlines to charge higher fares. The company said mainline unit revenue, or the money brought in for each seat flown per mile, jumped 11% to 9.6 cents from 8.6 cents in last year's third quarter. In September alone, United's mainline unit revenue jumped 15% compared with September 2004.
The airline said it reduced the number of aircraft in its fleet by 10% compared with the year-earlier period. Seat capacity declined 5%, while the percentage of seats filled rose to 83.9% from 82.1%. The company expects its fourth-quarter mainline capacity to be down 3% from 2004's fourth quarter.
Glenn Tilton, UAL's chief executive officer, said that the improved results reflected cost controls. "The results we are reporting make it clear that we have done well this quarter in overall cost control, especially given the significant reduction in capacity."
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And here is another way to analyze the same numbers:
UAL Corporation Reports Third-Quarter 2005 Results
Monday October 31, 10:16 am ET
- Third-Quarter Operating Earnings of $165 Million, a $245 Million Improvement Year-Over-Year Despite Higher Fuel Prices Negatively Impacting Fuel Expenses By $405 Million
- $68 Million Net Income, Excluding Restructuring Charges
- Predominantly Non-Cash Bankruptcy Related Charges of $1.8 Billion Result in Net Quarterly Loss of $1.8 Billion
- Mainline Passenger Unit Revenue up 11 percent
- Mainline Unit Costs Up 5 percent on 5 percent Lower Capacity Excluding Fuel, Mainline Unit Costs Down 5 percent
CHICAGO, Oct. 31 /PRNewswire-FirstCall/ -- UAL Corporation (OTC Bulletin Board: UALAQ - News), the holding company whose primary subsidiary is United Airlines, today reported its third-quarter 2005 financial results.
UAL reported third-quarter operating earnings of $165 million, $245 million better than the same quarter last year, despite higher fuel prices for the mainline and regional affiliates negatively impacting fuel expense by $405 million year-over-year. UAL reported a net loss of $1.8 billion, or a loss per basic share of $15.26, which includes $1.8 billion in reorganization items. The company believes the best indicator of United's post-reorganization financial performance is provided by reviewing operating and net earnings excluding restructuring charges. Excluding the reorganization items, UAL earned a net profit for the third quarter totaling $68 million.
Reorganization items were primarily driven by $1.7 billion in non-cash aircraft rejection charges. It is common for the results of operations of companies progressing through Chapter 11 to be impacted by non-cash charges related to their reorganization, especially as restructuring work nears completion. Charges based on the claims of our creditors are recorded at the amount expected to be allowed by the court. However, as shown in our Plan of Reorganization, these claims are expected to be settled at exit for a minor fraction of the amount of the charges recorded. Looking forward, the company is expected to record a large gain at exit in 2006 when these claims are settled for less than the amounts originally recorded. It is important to note that this is a matter of accurate accounting, and that neither the aircraft rejection charges recorded at this time nor the gain expected to be recorded at exit in 2006 have any significant impact on the company's cash position.
UAL Corporation Reports Third-Quarter 2005 Results
Monday October 31, 10:16 am ET
- Third-Quarter Operating Earnings of $165 Million, a $245 Million Improvement Year-Over-Year Despite Higher Fuel Prices Negatively Impacting Fuel Expenses By $405 Million
- $68 Million Net Income, Excluding Restructuring Charges
- Predominantly Non-Cash Bankruptcy Related Charges of $1.8 Billion Result in Net Quarterly Loss of $1.8 Billion
- Mainline Passenger Unit Revenue up 11 percent
- Mainline Unit Costs Up 5 percent on 5 percent Lower Capacity Excluding Fuel, Mainline Unit Costs Down 5 percent
CHICAGO, Oct. 31 /PRNewswire-FirstCall/ -- UAL Corporation (OTC Bulletin Board: UALAQ - News), the holding company whose primary subsidiary is United Airlines, today reported its third-quarter 2005 financial results.
UAL reported third-quarter operating earnings of $165 million, $245 million better than the same quarter last year, despite higher fuel prices for the mainline and regional affiliates negatively impacting fuel expense by $405 million year-over-year. UAL reported a net loss of $1.8 billion, or a loss per basic share of $15.26, which includes $1.8 billion in reorganization items. The company believes the best indicator of United's post-reorganization financial performance is provided by reviewing operating and net earnings excluding restructuring charges. Excluding the reorganization items, UAL earned a net profit for the third quarter totaling $68 million.
Reorganization items were primarily driven by $1.7 billion in non-cash aircraft rejection charges. It is common for the results of operations of companies progressing through Chapter 11 to be impacted by non-cash charges related to their reorganization, especially as restructuring work nears completion. Charges based on the claims of our creditors are recorded at the amount expected to be allowed by the court. However, as shown in our Plan of Reorganization, these claims are expected to be settled at exit for a minor fraction of the amount of the charges recorded. Looking forward, the company is expected to record a large gain at exit in 2006 when these claims are settled for less than the amounts originally recorded. It is important to note that this is a matter of accurate accounting, and that neither the aircraft rejection charges recorded at this time nor the gain expected to be recorded at exit in 2006 have any significant impact on the company's cash position.
