United Airlines Defaults On Pensions...Biggest Default In U.S. History
 

Yo, sometimes you wonder why you're a pornmeister and the answer usually is because you can't trust the goody two shoes mainstream bullshit. You know as a pornmeister your future is in your hands. In a few short years if you listen to the pros and pick your friends right you can put away enough loot for a rainy day. Unlike the average mug who ends up with their pensions fucked and out in the street. This default is a sign of DOOM coming sooner than we expected. Just watch. I expect riots in the streets by Christmas...

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From the NY Times

United Air Wins Right to Default on Its Employee Pension Plans
By MICHELINE MAYNARD
United Airlines, which is operating in bankruptcy protection, received court permission yesterday to terminate its four employee pension plans, setting off the largest pension default in the three decades that the government has guaranteed pensions.

The ruling by Judge Eugene R. Wedoff of Federal Bankruptcy Court came after a lengthy hearing in a crowded Chicago courtroom, near where United is based.

Despite pleas by union lawyers, Judge Wedoff sided with United, which had insisted that it could not emerge from bankruptcy protection with its pension plans in place.

The ruling releases United, a unit of the UAL Corporation, from $3.2 billion in pension obligations over the next five years. The federal agency that guarantees pensions, the Pension Benefit Guaranty Corporation, will assume responsibility for the plans, which cover about 134,000 people.

Some retirees could see sharply lower pension payments as a result; others will see little change in benefits, depending on a variety of factors. Some retirees at US Airways, which has terminated its plans, have seen benefits drop by as much as 50 percent.

The airline, which has been in bankruptcy protection since December 2002, has been pushing to end its pensions since losing its bid for a federal loan package last year. But unions representing United's employees fought the action, threatening to strike if the pensions were set aside.

Along with raising that prospect, the action has significant implications for the airline industry, which has lost more than $30 billion since 2000, and perhaps for other industries like automobiles, with similarly heavy legacy costs.

Analysts have predicted that if United won its case, there could be a domino effect as other airlines are forced to seek bankruptcy protection to bring their pension costs down to United's levels.

That move would probably swamp the pension agency, which was created in 1974.

"It's a scale, and this is another weight on the side of the scale that puts pressure on the other airlines to follow in United's footsteps," said Gary M. Ford, a lawyer specializing in pension and bankruptcy issues at the Groom Law Group who is representing some of the other large airlines. "The question is, Do you want to just watch this movie again, or is Congress going to act in a way that would make these plans affordable for the remaining carriers?"

Legislation has been introduced in Congress that would allow major airlines to stretch out $20 billion in unpaid pension liabilities over 25 years, but the measure's future is uncertain.

US Airways, which is under court protection for the second time since 2002, terminated the last of its pension plans earlier this year. As a result, the federal government has taken over the responsibility to pay US Airways' current and future retirees $3 billion worth of benefits.

And Delta Air Lines disclosed yesterday that it might have to seek bankruptcy protection if it is not able to renegotiate terms of more than $600 million in loans, or if its cash reserves dwindle. It also said it expected a significant loss for 2005. The disclosure, made in a securities filing, caused a 10 percent decline in Delta stock.

Although the ruling freed United from $3.2 billion in pension contributions over five years, even that amount would not fully finance the plan. If United had been able to pay it, the amount would have simply brought it into compliance. The government measures United's pension shortfall at close to $9.8 billion.

United plans to switch its current employees from traditional retirement programs, which are called defined-benefit plans, to defined-contribution plans like 401(k) programs. The federal pension agency will assume responsibility for United's plans, which cover about 134,000 workers.

"It's a hammer blow to thousands of retirees who will have to somehow make do with lower pension checks," said Joseph Tiberi, a spokesman for the International Association of Machinists and Aerospace Workers. "The promises United made to them are worthless,"

Mr. Tiberi said his union would appeal the judge's decision.

But Judge Wedoff, speaking to a courtroom packed with United employees and retirees, said the move was unavoidable.

"The least bad of the available choices here," the judge said, "has got to be the one that keeps an airline functioning, that keeps employees being paid."

United, meanwhile, called the action an important step in its bid to restructure.

The termination at United is nearly three times the size of the 2002 default by Bethlehem Steel.

Last month, United reached agreement with the agency on a $1.5 billion plan that would give the agency a stake in United, along with other debt, when the airline emerges from bankruptcy protection.

In return, the agency would assume the pension plans. The agency had already moved to take control of two of the four pension plans after United stopped making its legally required contributions last summer. United said that it needed to terminate the plans to attract the financing it needs to leave bankruptcy protection, but it had been trying to time the terminations to get the maximum possible insurance coverage from the agency. That prompted the agency to intervene.

But sending the plans to the federal government could be difficult if labor strife erupts. Flight attendants have threatened to start unannounced strikes against United, while the Aircraft Mechanics Fraternal Association also warned it might stage walkouts. Members of the machinists union are completing a vote on whether to support a strike, with results expected today.

The company contends any strikes would be illegal because the rest of the workers' labor agreements remain in effect. Airline workers are covered by the federal Railway Labor Act, which forbids them to strike as long as labor agreements are in place. Wages and benefits for workers at United have been cut twice while United has been in reorganization.

"Today's decision is an enormous disappointment and it very well may have triggered the collapse of the defined benefit pension system nationwide," said Greg Davidowitch, president of the Association of Flight Attendants at United.

United had pinned its restructuring plans on its application for $1.6 billion in federally backed loans under a program intended to help airlines after the September 2001 attacks. But the Air Transportation Stabilization Board turned down its application last June, saying it believed that United could find financing elsewhere.

The pension terminations now will put pressure on United's chief executive, Glenn F. Tilton, to find the $2 billion in financing the airline needs to emerge from bankruptcy, said Robert W. Mann Jr., an industry analyst based in Port Washington, N.Y. United has said several of its lenders had expressed interest in providing loans, if it could put together a workable business plan.

Delta's shares dropped 10 percent, to $2.97, on its latest bankruptcy warning. Delta barely avoided filing for Chapter 11 last October by persuading its pilots to grant nearly $1.1 billion in wage and benefit cuts.

Delta, the nation's third-largest airline behind American and United, lost $5.2 billion last year, including one-time charges, its worst performance in its 70-year history. Delta lost another $1.1 billion in the first quarter of 2005.

In all, Delta has lost nearly $10 billion this decade and it has been on an aggressive push to cut $5 billion in costs through the end of next year.

But in the securities filing, Delta warned of further losses in 2005. It said it was meeting with lenders to renegotiate the terms of $630 million in financing that it arranged last year with General Electric and American Express in its effort to avoid a Chapter 11 filing.

The terms set cash and earnings requirements before expenses like interest, rent, aircraft payments and depreciation.

But since reaching the loan agreements, the airline industry has been hit hard by high prices for jet fuel. In addition, Delta cut fares as much as 50 percent in January, and set limits on what it can charge for coach and first-class tickets.

Delta said that if it could not renegotiate the terms, the loans could become due immediately. It also said it feared that its cash, which stood at $1.8 billion at the end of the first quarter, could dwindle to as little as $1.4 billion, where it stood last fall before it reached the deal with the pilots' union. Delta's assets are pledged to secure the financing from G.E. and American Express, as well as other loans. Delta has over $20 billion in outstanding debt.

All that could lead to a bankruptcy filing, the airline said. But Delta has raised that prospect a number of times in the past, particularly when talks with the pilots were under way.

Yesterday, a Delta spokesman, John Kennedy, said he was surprised at the market's reaction to the latest disclosure, given Delta's candor about its challenges. But, he said Delta was not playing down its problems. "There's still the elephant in the room" - meaning bankruptcy, Mr. Kennedy said.

Mary Williams Walsh contributed reporting forthis article.

GM and Ford are next................ :2 cents: :helpme

If you're right, that would be all she wrote.

The unions and the mobsters that run the unions would go postal no end.

The ramifications and the direction is easy. The U.S. is being undermined for a massive wave of bankruptcies. It's a fucking scam that will be ended when the main population gets guns out again.

See the U.S. is simple: Rip off the blacks and poor whites first, then bullshit the middle class into complacency and tax em' up the whazoo, then break the middle class and the upper 2% rich can then buy up all the goodies the hard workin' middle class created. Then mark up the price while the poor and former middle class have to resort to prostitution to stay alive.

The U.S. is becoming a pimp's paradise.

S&P cuts GM, Ford to junk status, jolts markets

NEW YORK (Reuters) - In a one-two punch for financial markets, Standard & Poor's cut General Motors Corp.'s and Ford Motor Co.'s debt ratings to junk status on Thursday, citing brutal global competition and flagging sales of the automakers' most profitable vehicles.

The downgrades, which total about $290 billion and are the largest cuts to junk in a single day, jolted financial markets. Stocks and the dollar weakened. Safe-haven Treasury debt prices rose. The broad junk bond market, which by some measures will expand about 15 percent in short order, dropped.

Burdened by junk ratings, the automakers have fewer avenues for raising funds. Their shares extended their losses and their bonds fell by about 5 cents on the dollar as investors braced for investment grade portfolio managers to sell auto debt.

The companies are facing difficult times and cuts to junk were expected later this year, but investors were surprised that S&P took action so soon.

GM and Ford are struggling with high health-care, pension and materials costs, which, combined with brutal competition from overseas companies have winnowed their market share.

The companies have ample cash for at least the next several years. The two other major ratings agencies still rate Ford and GM at investment-grade status, but further cuts for the companies are possible, analysts said.

``Potentially we've seen one or two shoes drop now, but it might be a four- or five-legged thing with more shoes to drop,'' said Jon Brorson, managing director of growth equities at Neuberger Berman in Chicago.

Investors had become more hopeful for dramatic changes at GM on Wednesday after billionaire Kirk Kerkorian, known for being an activist investor, said he was more than doubling his stake in the company to about 9 percent.

GM and Ford reported lower April U.S. vehicle sales on Tuesday, even as Toyota Motor Corp.'s U.S. sales rose 21 percent from last year for its best month ever.

Crucially, GM and Ford's sports utility vehicle and truck sales fell. These vehicles have provided most of their auto-related profits since the late 1990s, but are less attractive as gas prices rise.

Standard & Poor's cut GM and General Motors Acceptance Corp.'s long-term credit ratings by two notches to ``BB,'' the second-highest junk rating. The outlook on the new rating is negative, signaling that another downgrade in the next 24 months is possible.

The agency also cut Ford and Ford Motor Credit Co.'s long-term credit ratings by one notch to ``BB-plus,'' the highest junk rating, from ``BBB-minus.'' The outlook on the new rating is also negative.

A GM spokesman said in a statement that the company was disappointed with the downgrades, but that it has ample cash and liquidity to fund its business for the foreseeable future.

Ford Chief Financial Officer Don Leclair said in a statement the company disagreed with S&P's action. ``We're disappointed that it discounts our considerable liquidity and our access to diverse funding sources, as well as the recent successes of our new products.''

GM BONDS SPEED LOWER

S&P's downgrades of GM and Ford may force many investment-grade investors to sell holdings to the much smaller group of portfolio managers eligible to hold junk debt.

Junk, or speculative grade status, signals that a company is more likely to default on its debt.

Between them, the two auto giants have some $453 billion of debt outstanding, including some $290 billion of unsecured corporate bonds that will become junk after the cuts.

General Motors Corp.'s bonds due 2033 with an 8.75 percent coupon fell to about 74 cents on the dollar from about 79 cents before the news, traders said. Yields on other GM debt relative to Treasuries rose by about 50 to 60 basis points.

A basis point is 0.01 percentage point.

The rising gap between GM and Treasury yields is a sign investors see more risk in holding the automaker's debt.

Yield spreads on Ford Motor Credit's 7 percent notes due 2013 widened by about 60 basis points to 460 basis more than Treasuries, a trader said. Ford Credit is Ford's finance arm. (Additional reporting by Dean Aubin in New York and Mike Ellis in Detroit)

http://news.moneycentral.msn.com/bre...5&ID= 4426949

Why do I have this feeling that some European company will be building our cars and with a quick look behind the scenes the true owners of those companies will be Americans?

Better to have the cars built in China. Daimler Benz is planning on doing it..... And in 2007 Chinese made cars will start to enter US market :helpme

Daimler May Export Chrysler Cars to U.S. From China (Update4)

April 21 (Bloomberg) -- DaimlerChrysler AG, the first overseas company to make vehicles in China, plans to build Chrysler compact cars in the country to export to the U.S., taking advantage of wages one-18th those of U.S. workers.

DaimlerChrysler, the world's fifth-largest vehicle maker, is in talks with Fujian Motor Industry Group to form the venture in southeastern China, said officials from the two companies. The entry-level Chrysler model has not yet been developed, said DaimlerChrysler's China chief Ruediger Grube.

``China has a big advantage where labor costs are concerned,'' Grube said today at the Auto Shanghai 2005 vehicle exhibition. ``We expect to make a decision in the second half of the year.''

DaimlerChrysler is following Honda Motor Co. and General Motors Corp. in producing cars in China for export, as sales growth in the world's third-largest vehicle market slowed. Honda, Japan's third-largest carmaker, exports Fit compact cars from southern China while GM said it would make Chevrolet Aveo compact cars in Shanghai for overseas markets.

``Reality''

``It's not so much a trend as the reality,'' said GM's Vice Chairman Bob Lutz, at a ceremony on Tuesday to unveil its Aveo. ``Anybody who wants entry into this low end of the market finds it can no longer be done in the U.S., it has to be done in a low- cost country.''

China had a record $162 billion trade surplus with the U.S. last year. China's average labor cost is 1.5 euro per hour, Grube said. That compares with the hourly average of 38 euros in Germany, 31 euros in Japan and 28 euros in the U.S., he said.

DaimlerChrysler shares rose 0.3 percent to 32.25 euros in Frankfurt.

DaimlerChrysler has invested 1.2 billion euros ($923 million) in China. The company, based in Stuttgart, Germany, makes Jeep sport-utility vehicles with Beijing Automobile Holding Co. in the Chinese capital and builds Mercedes-Benz vans with Fujian Motor.

Mercedes in China

DaimlerChrysler also plans to start building Mercedes-Benz C-Class and E-Class cars in China this year, two years behind Bayerische Motoren Werke AG and 20 years after Volkswagen AG began production in the country. Production should begin in either October or November, DaimlerChrysler said. DaimlerChrysler is not planning to export Mercedes from China, Grube said.

Sales of Mercedes-Benz luxury cars grew 3 percent in the first quarter in China, Grube said, declining to say how many units were sold. The company has also set up a purchasing unit in China to cut the cost of parts. It will establish a design center in China in the second half of the year.

The company expects the total market for luxury segment in China to be about 260,000 units annually.

China's car sales rose 15 percent last year, slowing from the 76 percent surge in 2003 and a 50 percent growth in 2002. Overseas carmakers including DaimlerChrysler, GM, Toyota Motor Corp. and Volkswagen have invested an estimated $19 billion in the country's car industry in the past three years.

http://www.bloomberg.com/apps/news?p...BlU&refer=asia

Toyota is worth more than the American Big Three put together


http://www.economist.com/displaystor...ory_id=3599000

Nice find........ :thumbsup

Riots? I think not....after september 11th the entire male population of the united states have lost their testicals

In fact, people are even scared to use the word riot, on fear of being investigated for being a terrorist

And what kind of car did you say you drove???

can i get the cliff notes?

So glad I work for me... I will not default on my own pension... I hope...

yeah, that is kind of scarey.

While United is the biggest so far, they certainly aren't the first nor will they be the last.

This is no trend, as all of you are agreeing. This is reality.

Which just goes to show us. Safety and security are an illusion and there are no guarantees.

wow that's huge:(

That's why I'm speeding up my plans to get out of Detroit. Things are going into the shitter in a hurry here. Everyone talks doom and gloom, so many people out of work, such long faces everywhere, the real estate market is heading downhill.

Cali, here I come!

marc

Polaroid recently settled all the lawsuits over the termination of their retirement program. For decades of service, each pensioner received the whopping sum of $47.00. The lawyers made off like bandits.

To rub this in the face of the Polaroid retirees more, Polaroid also petitioned the bankruptcy court to give short time CEO J. Nasser (formerly of Ford before he got the axe for shitty performance) $20 something million in bonuses. Unreal.

Yeah I heard allot of people in Michigan are out of work.......... :(