"The Wondering Jew"
Apr. 22, 2005 - 17:04 MDT
HORSE AND BUGGY
Trying to figure out what the next month is going to be like. Hard enough, won't even try to calculate the possiblities that can occur next year. An article in the Rocky Mountain News on April 21 by John Hughes of Bloomberg News accentuates what possibly is in the mill for us down the road. In Full:
Plan would allow airline pension deferrals
New legislation is designed to aid struggling carriers
"Delta Air Lines Inc., Northwest Airlines Corp. and other U.S. carriers could defer pension payments to resolve short falls and avoid bankruptcy under a bill introduced in the U.S. Senate on Wednesday."
" The proposal allows airlines to spread across 25 years payments that are due within four years, Sen. Johnny Isakson, a Republican, who represents Delta's home state of Georgia, said in a statement."
"Several large airlines "are considering eliminating their pension plans altogether or filing for bankruptcy," the statement said."
"Airlines including Delta and Northwest, which back the legislation, are trying to lower pension costs as they struggle with higher fuel prices and excess capacity that limit fare increases."
"Also Chicago-based United Airlines, which is the largest carrier in Denver and employs 6,000 workers here, is trying to scrap its four employee pension plans to trim more than $600 million in annual costs and emerge from Chapter 11 bankruptcy protection this year."
"Stock price declines and low interest rates have eroded the value of U.S. corporate pension plans, which the government in January said are underfunded by $450 billion."
"Airline pensions had a negative balance of $21.1 billion last year, down from a positive balance of $3 billion in 2000 according to a study by Charles River Associates Inc. of Boston, which will be released at a conference in Washington today. FedEx Corp., the second-biggest U.S. package carrier, financed the study."
"The legislation "is a far superior alternative to the job losses, substantial reductions in pension benefits and increase in airline bankruptcies that will inevitably occur if action is not taken soon," Andrea Fischer Newman, Northwest's senior vice president of government affairs, said in a statement."
"Under U.S. law, airlines are required to make, "catch up" contributions if their plans become underfunded by a certain amount."
"It certainly will be difficult for us in our current financial condition to manage those payments," Scott Yohe, Delta's senior vice president of government affairs, said in an interview Tuesday."
"U.S. carriers have posted combined losses of $33 billion in the past four years. NOrthwest said last month that its pension plan is underfunded by $3.8 billion. Delta had $4.8 billion in pension liabilities as of Sept. 30, 2004. the carrier said in a Securities and Exchange commission filing last year."
"AMR Corp.'s American Airlines "will be supportive" of the bill, said Mary Francis Fagan, a company spokeswoman. A spokeswoman for Continental Airlines Inc., did not immediately return a telephoone call for comment, Airlines such as Southwest Airlines Co. and JetBlue Airways Corp. wouldn't be eligible for the exemptions because they don't have fixed-benefit pension plans."
"Cash-strapped airlines may be forced to terminate plans and possibly increase taxpayer liability by shifting the plans to the Pension Benefit Guaranty Corp., according to Isakson's statement."
Even if we could figure out why our airlines are in such trouble it would be impossible to back up and make another stab at it. And from all the haranguing going on, doesn't seem as if any of the smart types have come up with anything but "bail out the company" ideas.
In the article, "The proposal allows airlines to spread across 25 years the payments that are due within four years," it is hard for me to contemplate how that could possibly work. Some ones (bottom of the totem pole types) are going to come up way short on survival funds it looks like to me.
Have the airlines been out of their heads for all these years that they could be caught so short ? Wasn't it in the 70's when we were in OPEC of trouble ? What were the airlines thinking, that it couldn't happen again ?
Looks from here that drastic moves will have to be made to keep 'em flying. And not like they flew before. Baggage weight limits, no food or drink served aboard (Passengers wanting stuff like that would have to carry it on -- within limits). Restrictions like that could potentially be just a drop in the bucket.
Aside from air travel, it seems as if AMTRAK is being shoved down the tube, even ACELA on the eastern seaboard is having problems. AMTRAK being shorted year after year by our government is in danger I think and with that gone there will be no more passenger service on the rails.
Federal highways are in disrepair, and those in charge don't seem to care about that either. Auto industry might move mountains and persuade the feds to do something about that, just so their cars keep running on the road and the oil industry keeps selling gas.
Facts (so-called) and figures (inflated or deflated to fit the argument) are bandied about, we are on the way up, things are hunky dory, unemployment is less, yadda, yadda. Haven't seen much that looks like an intelligent effort is being put forth by our administration to ward off the erosion of transportation as a whole here.
Perhaps soon we will be back to the days of the HORSE AND BUGGY. . . . . . . .0 comments so far