airbus320
Sep 15, 05, 12:03 pm
http://www.marketwatch.com/news/yhoo/story.asp?source=blq/yhoo&siteid=yhoo&dist=yhoo&guid=%7B9F825B7F%2D566B%2D4C78%2D80AA%2DBD92F312BE BB%7D
Newsstand - DL and NW pension funds underfunded by 16.3B
View Full Version : DL and NW pension funds underfunded by 16.3B
anonplz
Sep 15, 05, 12:59 pm
And they're trying to weasel out of their obligations, apparently, as Delta reportedly says they won't be making their next contributions, and the head of the PBGC said today that they are mandated by law to make those payments. :mad:
The head of the federal agency that protects private-sector pensions Thursday said Delta Air Lines Inc. and Northwest Airlines Corp. are required to keep making pension contributions in bankruptcy.
The two airlines filed for bankruptcy Wednesday. Both owe their pensions plans billions of dollars. Delta said Wednesday it does not plan to make the next scheduled contribution to its pension fund.
"Northwest and Delta continue to be responsible under the law for making their pension contributions," the executive director of the Pension Benefit Guaranty Corp., Bradley Belt, said in a statement.
"As long as companies remain in operation with ongoing pension plans, they have a legal obligation to meet their funding requirements," he said...
http://sfgate.com/cgi-bin/article.cgi?f=/news/archive/2005/09/15/financial/f101254D38.DTL&type=business
The head of the federal agency that protects private-sector pensions Thursday said Delta Air Lines Inc. and Northwest Airlines Corp. are required to keep making pension contributions in bankruptcy.
The two airlines filed for bankruptcy Wednesday. Both owe their pensions plans billions of dollars. Delta said Wednesday it does not plan to make the next scheduled contribution to its pension fund.
"Northwest and Delta continue to be responsible under the law for making their pension contributions," the executive director of the Pension Benefit Guaranty Corp., Bradley Belt, said in a statement.
"As long as companies remain in operation with ongoing pension plans, they have a legal obligation to meet their funding requirements," he said...
http://sfgate.com/cgi-bin/article.cgi?f=/news/archive/2005/09/15/financial/f101254D38.DTL&type=business
Rejuvenated
Sep 16, 05, 3:08 am
<Deleted>
Rejuvenated
Sep 16, 05, 3:09 am
Source: Airwise (http://news.airwise.com/story/view/1126817318.html)
September 15, 2005
Employees at newly bankrupt Delta Air Lines and Northwest Airlines have every reason to fear that any leverage they once had in contract negotiations has evaporated, analysts said on Thursday.
The two carriers filed for Chapter 11 protection from creditors on Wednesday, a move that may allow them to make deeper cuts than they might have achieved out of bankruptcy.
Delta and Northwest both blamed soaring fuel costs for troubles that led them to Chapter 11. With fuel prices largely out of their control, analysts say the carriers must wring the biggest savings from labor. More than 92,000 people work for the two carriers.
"Employees who make up a large -- if not the largest -- cost item in operations are clearly going to be the subject of intense scrutiny by management," said Thomas Salerno, chairman of the financial reorganization practice group at Squire, Sanders & Dempsey.
"(A financially distressed airline) is by necessity going to take as aggressive a position as they can, using all the legal tools available to them to cajole or force, if necessary, concessions that outside of bankruptcy they would be very unlikely to get," he said.
Most of the major airlines have called on their workers for savings as soaring fuel prices continue to erode profit. Fierce competition, meanwhile, has made it especially difficult for carriers to raise fares and pass that expense on.
Delta previously had said it needs USD$5 billion in average annual savings. The carrier has said it may need more. Northwest, which was asking its workers for USD$1.1 billion in annual savings, also has said its circumstances have worsened and that its savings target may rise.
Northwest currently is battling a mechanics' strike and has continued flying with the aid of replacement workers and outside vendors.
The bankrupt carriers could use court protection to extract the savings they claim they need to survive. Analysts say they will take their cues from United Airlines and US Airways to cut costs and dump their under-funded pensions on government insurers, a move that saves airlines money, but erodes workers' retirement benefits.
"There is no reason to think that the employees of Delta and Northwest will be confronting anything different than the employees of other airlines that have recently filed," said Willis Goldsmith, chairman of Jones Day's labor and employment law practice.
"These include significant pressure to make concessions in the areas of pensions and health care benefits for both active and retired employees and layoffs as well," Goldsmith said.
As some airline unions struggle to gain control over the volatile situation, others may view the turmoil as a chance to boost their own membership.
The Professional Flight Attendants Association, which represents Northwest's 8,500 flight attendants, is trying to shrug off an attempt by the Association of Flight Attendants to take its members.
The AFA on Wednesday said it is organizing a campaign to represent Northwest's flight attendants. The PFAA has been in mediated contract talks with the airline and is asking its members to rebuff any overtures from the AFA, which it says has lost clout in the airline industry.
"AFA's track record among major carriers has been reversed in recent years, producing some of the worst contracts ever seen in the airline industry," PFAA President Guy Meek said in a statement.
Salerno said such maneuvering by unions is common in times of trouble.
"The various unions are also in a competitive industry, and they need to get membership in order to keep themselves alive," Salerno said. "In adversity, there's opportunity."
(Reuters)
September 15, 2005
Employees at newly bankrupt Delta Air Lines and Northwest Airlines have every reason to fear that any leverage they once had in contract negotiations has evaporated, analysts said on Thursday.
The two carriers filed for Chapter 11 protection from creditors on Wednesday, a move that may allow them to make deeper cuts than they might have achieved out of bankruptcy.
Delta and Northwest both blamed soaring fuel costs for troubles that led them to Chapter 11. With fuel prices largely out of their control, analysts say the carriers must wring the biggest savings from labor. More than 92,000 people work for the two carriers.
"Employees who make up a large -- if not the largest -- cost item in operations are clearly going to be the subject of intense scrutiny by management," said Thomas Salerno, chairman of the financial reorganization practice group at Squire, Sanders & Dempsey.
"(A financially distressed airline) is by necessity going to take as aggressive a position as they can, using all the legal tools available to them to cajole or force, if necessary, concessions that outside of bankruptcy they would be very unlikely to get," he said.
Most of the major airlines have called on their workers for savings as soaring fuel prices continue to erode profit. Fierce competition, meanwhile, has made it especially difficult for carriers to raise fares and pass that expense on.
Delta previously had said it needs USD$5 billion in average annual savings. The carrier has said it may need more. Northwest, which was asking its workers for USD$1.1 billion in annual savings, also has said its circumstances have worsened and that its savings target may rise.
Northwest currently is battling a mechanics' strike and has continued flying with the aid of replacement workers and outside vendors.
The bankrupt carriers could use court protection to extract the savings they claim they need to survive. Analysts say they will take their cues from United Airlines and US Airways to cut costs and dump their under-funded pensions on government insurers, a move that saves airlines money, but erodes workers' retirement benefits.
"There is no reason to think that the employees of Delta and Northwest will be confronting anything different than the employees of other airlines that have recently filed," said Willis Goldsmith, chairman of Jones Day's labor and employment law practice.
"These include significant pressure to make concessions in the areas of pensions and health care benefits for both active and retired employees and layoffs as well," Goldsmith said.
As some airline unions struggle to gain control over the volatile situation, others may view the turmoil as a chance to boost their own membership.
The Professional Flight Attendants Association, which represents Northwest's 8,500 flight attendants, is trying to shrug off an attempt by the Association of Flight Attendants to take its members.
The AFA on Wednesday said it is organizing a campaign to represent Northwest's flight attendants. The PFAA has been in mediated contract talks with the airline and is asking its members to rebuff any overtures from the AFA, which it says has lost clout in the airline industry.
"AFA's track record among major carriers has been reversed in recent years, producing some of the worst contracts ever seen in the airline industry," PFAA President Guy Meek said in a statement.
Salerno said such maneuvering by unions is common in times of trouble.
"The various unions are also in a competitive industry, and they need to get membership in order to keep themselves alive," Salerno said. "In adversity, there's opportunity."
(Reuters)
Rejuvenated
Sep 16, 05, 3:16 am
Source: Airwise (http://news.airwise.com/story/view/1126766470.html)
September 15, 2005
The last solvent traditional large US airlines could be among the biggest beneficiaries from bankruptcy filings by Northwest Airlines and Delta Air Lines, analysts said on Wednesday.
Expected steps by both bankrupt carriers to slash domestic flights and put smaller planes on some routes could help American Airlines and Continental Airlines by getting rid of excess seats.
"The reduction in capacity that would follow the... bankruptcies would be an across-the-board positive for the industry's solvent carriers," Merrill Lynch analyst Michael Linenberg said in a research note.
A Northwest bankruptcy "would support our thesis that calls for the removal of 100-200 aircraft from the domestic market due to record high fuel prices," Linenberg said.
Northwest and Delta both made clear in comments following their bankruptcies that trimming flights on unprofitable US routes were among their priorities.
Northwest Chief Executive Doug Steenland said the carrier would return some planes to lessors, while Delta will cut flights out of some hubs, fly smaller aircraft on some routes and remove four plane types from its fleet.
Cutthroat competition among traditional airlines as well as from discounters like Southwest Airlines, along with soaring oil prices, are the main reasons for the industry's current crisis, analysts say.
But the proliferation in bankruptcies is not without its risks for the still-solvent carriers.
If the No. 3 and No. 5 airlines manage to use bankruptcy to lower their wages and benefits and pension costs, they could emerge as potentially stronger competitors, or even to win business by lowering prices.
"It will put more pressure on other legacy carriers to cut costs more aggressively," said Ray Neidl, an analyst at Calyon Securities.
Still, both American and Continental have been moving aggressively to ensure their survival and have generally gotten high marks from investors.
Both airlines eked out profitable second quarters, though they are still likely to lose money for the full year.
Both could also be helped by proposed legislation to ease pension burdens for the industry as a whole.
"If the pension legislation goes through, some of those legacy costs will have abated greatly," said Susan Donofrio, an analyst at Fulcrum Global Partners, adding that both airlines' costs are relatively close to those of the low cost carriers.
In addition Continental, which has already been through bankruptcy twice, has shed many of the pension and other costs that Delta and Northwest will be targeting, she said.
(Reuters)
September 15, 2005
The last solvent traditional large US airlines could be among the biggest beneficiaries from bankruptcy filings by Northwest Airlines and Delta Air Lines, analysts said on Wednesday.
Expected steps by both bankrupt carriers to slash domestic flights and put smaller planes on some routes could help American Airlines and Continental Airlines by getting rid of excess seats.
"The reduction in capacity that would follow the... bankruptcies would be an across-the-board positive for the industry's solvent carriers," Merrill Lynch analyst Michael Linenberg said in a research note.
A Northwest bankruptcy "would support our thesis that calls for the removal of 100-200 aircraft from the domestic market due to record high fuel prices," Linenberg said.
Northwest and Delta both made clear in comments following their bankruptcies that trimming flights on unprofitable US routes were among their priorities.
Northwest Chief Executive Doug Steenland said the carrier would return some planes to lessors, while Delta will cut flights out of some hubs, fly smaller aircraft on some routes and remove four plane types from its fleet.
Cutthroat competition among traditional airlines as well as from discounters like Southwest Airlines, along with soaring oil prices, are the main reasons for the industry's current crisis, analysts say.
But the proliferation in bankruptcies is not without its risks for the still-solvent carriers.
If the No. 3 and No. 5 airlines manage to use bankruptcy to lower their wages and benefits and pension costs, they could emerge as potentially stronger competitors, or even to win business by lowering prices.
"It will put more pressure on other legacy carriers to cut costs more aggressively," said Ray Neidl, an analyst at Calyon Securities.
Still, both American and Continental have been moving aggressively to ensure their survival and have generally gotten high marks from investors.
Both airlines eked out profitable second quarters, though they are still likely to lose money for the full year.
Both could also be helped by proposed legislation to ease pension burdens for the industry as a whole.
"If the pension legislation goes through, some of those legacy costs will have abated greatly," said Susan Donofrio, an analyst at Fulcrum Global Partners, adding that both airlines' costs are relatively close to those of the low cost carriers.
In addition Continental, which has already been through bankruptcy twice, has shed many of the pension and other costs that Delta and Northwest will be targeting, she said.
(Reuters)
Rejuvenated
Sep 16, 05, 3:19 am
Source: Airwise (http://news.airwise.com/story/view/1126766104.html)
September 15, 2005
US airlines have a long tradition of visiting bankruptcy court, but few emerge as long-term successful players.
As Delta Air Lines and Northwest Airlines become the latest to take Chapter 11 protection, some industry experts cast doubt on a happy outcome.
"I don't think it (bankruptcy) is going to solve anything," said James Harris, president of Seneca Financial Group, which specializes in financial restructuring.
"The business model for all these airlines is broken," he said. "You can either fix them one by one, or you can adopt a policy that limits capacity."
More than 100 US airlines have entered bankruptcy over the past 25 years.
The runway is littered with once proud names such as Pan Am and TWA, which could not survive repeated bankruptcies as the industry struggled to cope with deregulation.
United Airlines and US Airways are still in prolonged bankruptcy. High fuel and pension costs are driving the next wave of carriers to bankruptcy court.
"The legacy carriers are dinosaurs," said Jim Bromley, a bankruptcy and restructuring partner at law firm Cleary Gottlieb. "The investment that has to be made in people and equipment and the requirement that you keep these things full and moving all the time -- it's a daunting task."
There have been only two fully successful airline bankruptcies, Continental Airlines and America West, experts say.
Continental filed for bankruptcy in 1983 and 1990, but managed to reshape itself, making inroads into the transatlantic market, and is one of the strongest US carriers today.
America West went into bankruptcy in the early 1990s, but fought back to a strong position and is now helping US Airways out of bankruptcy with a merger deal.
"It's recognizing where you make money, and being willing to shrink and move the business very quickly," said Bromley, identifying the key points of a successful reorganization.
Bankruptcy failures outnumber survivors.
Pan American World Airways, known as Pan Am, failed shortly after bankruptcy in 1991. Trans World Airlines, or TWA, went into bankruptcy three times from 1992 to 2001 until it was finally liquidated.
Eastern Airlines and Braniff went out of business in the early 1990s after bouts of Chapter 11 protection in the troubled 1980s. Smaller carriers such as Air Florida, Western Pacific and Grand Airways never recovered from bankruptcy.
The only consistent winners are the army of lawyers, accountants and advisers in the bankruptcy process, said Harris.
However, at least in the short term, industry watchers are expecting Delta and Northwest to come out of bankruptcy in one piece.
"Their chances of emerging would be pretty good based on the open pocketbooks of the creditors and lessors and manufacturers," said Susan Donofrio of research firm Fulcrum Global Partners. "Everyone wants them to stay propped up."
The companies have learned from the extended bankruptcy of United, and should have a smoother path back, said John Weiss, a bankruptcy specialist at law firm Katten Muchin Rosenman.
"The other carriers have seen United go through all the processes and the fights in court," he said. "The decisions made by those judges will reverberate throughout the other airline bankruptcies now."
(Reuters)
September 15, 2005
US airlines have a long tradition of visiting bankruptcy court, but few emerge as long-term successful players.
As Delta Air Lines and Northwest Airlines become the latest to take Chapter 11 protection, some industry experts cast doubt on a happy outcome.
"I don't think it (bankruptcy) is going to solve anything," said James Harris, president of Seneca Financial Group, which specializes in financial restructuring.
"The business model for all these airlines is broken," he said. "You can either fix them one by one, or you can adopt a policy that limits capacity."
More than 100 US airlines have entered bankruptcy over the past 25 years.
The runway is littered with once proud names such as Pan Am and TWA, which could not survive repeated bankruptcies as the industry struggled to cope with deregulation.
United Airlines and US Airways are still in prolonged bankruptcy. High fuel and pension costs are driving the next wave of carriers to bankruptcy court.
"The legacy carriers are dinosaurs," said Jim Bromley, a bankruptcy and restructuring partner at law firm Cleary Gottlieb. "The investment that has to be made in people and equipment and the requirement that you keep these things full and moving all the time -- it's a daunting task."
There have been only two fully successful airline bankruptcies, Continental Airlines and America West, experts say.
Continental filed for bankruptcy in 1983 and 1990, but managed to reshape itself, making inroads into the transatlantic market, and is one of the strongest US carriers today.
America West went into bankruptcy in the early 1990s, but fought back to a strong position and is now helping US Airways out of bankruptcy with a merger deal.
"It's recognizing where you make money, and being willing to shrink and move the business very quickly," said Bromley, identifying the key points of a successful reorganization.
Bankruptcy failures outnumber survivors.
Pan American World Airways, known as Pan Am, failed shortly after bankruptcy in 1991. Trans World Airlines, or TWA, went into bankruptcy three times from 1992 to 2001 until it was finally liquidated.
Eastern Airlines and Braniff went out of business in the early 1990s after bouts of Chapter 11 protection in the troubled 1980s. Smaller carriers such as Air Florida, Western Pacific and Grand Airways never recovered from bankruptcy.
The only consistent winners are the army of lawyers, accountants and advisers in the bankruptcy process, said Harris.
However, at least in the short term, industry watchers are expecting Delta and Northwest to come out of bankruptcy in one piece.
"Their chances of emerging would be pretty good based on the open pocketbooks of the creditors and lessors and manufacturers," said Susan Donofrio of research firm Fulcrum Global Partners. "Everyone wants them to stay propped up."
The companies have learned from the extended bankruptcy of United, and should have a smoother path back, said John Weiss, a bankruptcy specialist at law firm Katten Muchin Rosenman.
"The other carriers have seen United go through all the processes and the fights in court," he said. "The decisions made by those judges will reverberate throughout the other airline bankruptcies now."
(Reuters)
SirFlysALot
Sep 16, 05, 9:25 am
Never in the history of mankind has any form of mass transportation survived without some sort of subsidy. This goes all the way back to the Roman roads which were built by families hoping to get their name immortalized. In the cities the property adjoining the road was required to pay to build and maintain them.
American water travel was subsidized by the government building canals. The wooden plank toll roads all went belly up. Railroads were given land grants to sell to build large routes. Those railroads privately funded were funded by theft, fraud and bankruptcy. Other massive projects such as the Suez Canal and the Panama Canal were built by governments. The US Army Corp of Engineers spends a fortune keeping our waterways open.
Our roads are not even close to being paid for out of gasoline taxes. Our public buses and rail systems are not paid for out of fares.
Our airlines spend a lot of time in bankruptcy. This is in addition to the subsidies they get by not fully funding the FAA or paying to build the airports.
If the airlines are to truly survive they will abandon all of the smaller airports and concentrate on the routes that seem to be profitable.
It is time to take a step back and develop a transportation system that makes sense.
American water travel was subsidized by the government building canals. The wooden plank toll roads all went belly up. Railroads were given land grants to sell to build large routes. Those railroads privately funded were funded by theft, fraud and bankruptcy. Other massive projects such as the Suez Canal and the Panama Canal were built by governments. The US Army Corp of Engineers spends a fortune keeping our waterways open.
Our roads are not even close to being paid for out of gasoline taxes. Our public buses and rail systems are not paid for out of fares.
Our airlines spend a lot of time in bankruptcy. This is in addition to the subsidies they get by not fully funding the FAA or paying to build the airports.
If the airlines are to truly survive they will abandon all of the smaller airports and concentrate on the routes that seem to be profitable.
It is time to take a step back and develop a transportation system that makes sense.
SirFlysALot
Sep 16, 05, 4:41 pm
And they're trying to weasel out of their obligations, apparently, as Delta reportedly says they won't be making their next contributions, and the head of the PBGC said today that they are mandated by law to make those payments. :mad:
http://sfgate.com/cgi-bin/article.cgi?f=/news/archive/2005/09/15/financial/f101254D38.DTL&type=business
Well a company cannot skimp on employment taxes. It is not a good loan source. Did you know if you do not pay the taxes for employees for a company for which you have responsibility you are PERSONALLY responsible? If the company did not pay for the medical insurance the employees coverage would be invalid by the 5th day of the following month. All claim payments would stop.
Those folks do not play games. But the companies stiffed the pension funds for billions? And the tax payers have to pick this up? I know, no tax money will be used because the rates will be raised for companies that played straight and kicked in for the pension as they should have. Is this fair? The good guys will be penalized? And then they will be priced out of providing pensions for employees because they are responsible?
The airlines (and other companies too, they are not alone) skipped their obligations and dumped it on others? The pension funds should have first claim on the assets of BK companies just like employee wages.
http://sfgate.com/cgi-bin/article.cgi?f=/news/archive/2005/09/15/financial/f101254D38.DTL&type=business
Well a company cannot skimp on employment taxes. It is not a good loan source. Did you know if you do not pay the taxes for employees for a company for which you have responsibility you are PERSONALLY responsible? If the company did not pay for the medical insurance the employees coverage would be invalid by the 5th day of the following month. All claim payments would stop.
Those folks do not play games. But the companies stiffed the pension funds for billions? And the tax payers have to pick this up? I know, no tax money will be used because the rates will be raised for companies that played straight and kicked in for the pension as they should have. Is this fair? The good guys will be penalized? And then they will be priced out of providing pensions for employees because they are responsible?
The airlines (and other companies too, they are not alone) skipped their obligations and dumped it on others? The pension funds should have first claim on the assets of BK companies just like employee wages.
rkt10
Sep 16, 05, 6:08 pm
Well, it's always stunning to me that the government doesn't demand full pension funding by businesses.
Years ago I worked at the Manchester Union Leader in New Hampshire. The pension was a benefit given to employees with no contribution by the employee. Rather it was paid by the company (a privately owned company)
The publisher needed a loan to update equipment and decided to borrow from "his" own pension fund, paying it back, with interest, at prevailing rates.
A violation of the law.
The government sued and made Loeb sell 25% of the company.
The story continued, but the bottom line is that the government was extremely harsh with this company for futzing around with the pension of his employees.
Why, oh why doesn't that still happen.
Rita
Years ago I worked at the Manchester Union Leader in New Hampshire. The pension was a benefit given to employees with no contribution by the employee. Rather it was paid by the company (a privately owned company)
The publisher needed a loan to update equipment and decided to borrow from "his" own pension fund, paying it back, with interest, at prevailing rates.
A violation of the law.
The government sued and made Loeb sell 25% of the company.
The story continued, but the bottom line is that the government was extremely harsh with this company for futzing around with the pension of his employees.
Why, oh why doesn't that still happen.
Rita