Morbid curiosity. Upgrade times?

SlumTodd_Millionaire said:
That’s not how an A-Fund pension is supposed to work. The problem is that you’re only familiar with the post-Reagan pensions that he gutted and allowed companies to chronically underfund. Pensions were originally fully funded so that the money grew and was there for you when you retired.
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I'm sure you know this, and CC is FOS, but what you said wasn't >precisely< correct either.

In a way, what happened to the DB plans was like having a ass ton of money in the bank and losing your job. Your bank calls in your mortgage because "you lost your job, we're calling the loan", but you say "Uh, but I have money in the bank for 20 years of payments, and I'll get another job" and they say "doesn't matter, pay up!".

What actually happened was more complicated, caused by long term factors that were already extant in the financial markets, but didn't really manifest themselves >publicly< until 2008.

It's really, really important for kiddos (folks who started paying attention to financial matters since 2005 or so) to understand that near zero interest rates are an extreme historical anomaly. We can argue to as to why it is what it is and how it got there and who to blame, but that's an argument for another time.

Point is, DB plans are designed to do well at MODEST interest rates. We're talking essentially secure bonds yielding 4-7% returns, or what us old timers used to pay for mortgages. ERISA regulations are designed to be even more conservative and provide for funding and simple long-term interest rates.

Note that how much money the plan has, and what returns it gets are wholly disconnected from what ERISA says they have to have. Good DB plans these days with reasonably competent fund managers are pulling around 10%, which for an OK funded plan is well more than they need. But what ERISA requires is an assumption is that returns will be WHOLLY based on long term interest rates (which are near zero, and have been for a long time). Even a plan that is 100% funded right now can't survive long term earning a quarter point and, in fact, ERISA would consider that plan underfunded.

During the pension crisis of the mid-2000s, yes, the funds were greatly impacted by the decline of the value of the funds. But the value of the funds recovered. What never recovered were the interest rates that provided very comfortable rates of return as far as ERISA was concerned.

The surviving funds have had massive amounts of funding poured into them, and those plans have actually done very well over the past years, but the forward looking analysis using zero interest compounded over the life of the average employee is crippling. There's no way you can recover cheaply from that. When interest rates go up, and they will, the ERISA calculations will look much, much better and those plans will go from "underfunded" to "massively overfunded" literally overnight. What happens at that point will be interesting, but also a discussion for another time.

Of course, the irony is that some pilot groups approached their managements in the late 90's to mitigate their "all in on the DB" risk because of what was seen as a >small< but real risk. But with well funded plans operating in a "rational" financial environment, the DB plans were self-funding, and companies were paying nothing but administration fees (which come out of the returns). When pilot groups approached their managements to de-risk, most companies said "No way! We pay nothing for DB plans now, and DC contributions cost real money every 2 weeks".

ERISA also handcuffs plan sponsors from overfunding DB plans because the IRS doesn't want them using DB plans as a tax dodge. That said, it would not surprise me ONE IOTA if we get back to rational interest rates if managements didn't come back at that point and offer up DB plans because they're cheaper in that environment than paying money every two weeks.
 
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Cherokee_Cruiser said:
Seriously. Pilots…. “I want to be paid to sit home and do nothing.”

Also pilots…. “Socialists are gonna destroy this country!” And “tell that homeless guy to get a job,”
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Am pretty sure making the most money for the absolute least amount of effort is a hallmark of capitalism, but most are under the American spell where only The Company can do that (if labor does it, he's lazy and inefficient!!!111)

This is a quality of life family
 
Richman said:
ERISA also handcuffs plan sponsors from overfunding DB plans because the IRS doesn't want them using DB plans as a tax dodge. That said, it would not surprise me ONE IOTA if we get back to rational interest rates if managements didn't come back at that point and offer up DB plans because they're cheaper in that environment than paying money every two weeks.
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I think we all start to see unions (especially ones with high earners) asking for them as well, in the form of MBCB plans.
 
Richman said:
I'm sure you know this, and CC is FOS, but what you said wasn't >precisely< correct either.

In a way, what happened to the DB plans was like having a ass ton of money in the bank and losing your job. Your bank calls in your mortgage because "you lost your job, we're calling the loan", but you say "Uh, but I have money in the bank for 20 years of payments, and I'll get another job" and they say "doesn't matter, pay up!".

What actually happened was more complicated, caused by long term factors that were already extant in the financial markets, but didn't really manifest themselves >publicly< until 2008.

It's really, really important for kiddos (folks who started paying attention to financial matters since 2005 or so) to understand that near zero interest rates are an extreme historical anomaly. We can argue to as to why it is what it is and how it got there and who to blame, but that's an argument for another time.

Point is, DB plans are designed to do well at MODEST interest rates. We're talking essentially secure bonds yielding 4-7% returns, or what us old timers used to pay for mortgages. ERISA regulations are designed to be even more conservative and provide for funding and simple long-term interest rates.

Note that how much money the plan has, and what returns it gets are wholly disconnected from what ERISA says they have to have. Good DB plans these days with reasonably competent fund managers are pulling around 10%, which for an OK funded plan is well more than they need. But what ERISA requires is an assumption is that returns will be WHOLLY based on long term interest rates (which are near zero, and have been for a long time). Even a plan that is 100% funded right now can't survive long term earning a quarter point and, in fact, ERISA would consider that plan underfunded.

During the pension crisis of the mid-2000s, yes, the funds were greatly impacted by the decline of the value of the funds. But the value of the funds recovered. What never recovered were the interest rates that provided very comfortable rates of return as far as ERISA was concerned.

The surviving funds have had massive amounts of funding poured into them, and those plans have actually done very well over the past years, but the forward looking analysis using zero interest compounded over the life of the average employee is crippling. There's no way you can recover cheaply from that. When interest rates go up, and they will, the ERISA calculations will look much, much better and those plans will go from "underfunded" to "massively overfunded" literally overnight. What happens at that point will be interesting, but also a discussion for another time.

Of course, the irony is that some pilot groups approached their managements in the late 90's to mitigate their "all in on the DB" risk because of what was seen as a >small< but real risk. But with well funded plans operating in a "rational" financial environment, the DB plans were self-funding, and companies were paying nothing but administration fees (which come out of the returns). When pilot groups approached their managements to de-risk, most companies said "No way! We pay nothing for DB plans now, and DC contributions cost real money every 2 weeks".

ERISA also handcuffs plan sponsors from overfunding DB plans because the IRS doesn't want them using DB plans as a tax dodge. That said, it would not surprise me ONE IOTA if we get back to rational interest rates if managements didn't come back at that point and offer up DB plans because they're cheaper in that environment than paying money every two weeks.
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I knew what I wrote would be personal and taken hard by anyone who lost a pension plan post 9/11. In that sense, I had FOS coming.


That said, as a guy who has been interested in financials since 2005: I do not want my future tied into a DB for PRECISELY the reasons you just wrote out! I'm a fat dumb happy camper with the 15.5% DC into a 401K, where ***I*** get to choose and manage my funds, investment percentages, allocations, and can change them at any time. If my company goes poof, I go to the next company (whatever it may be) rollver over the 401K into the new one, and keep going.

What you said about interest rates is spot on. It is one of the reasons the funds never went back to a ~7-10% return. Although not tied to interest rates, I feel the same way for SS for that matter. The model just isn't sustainable long term. The assumptions and facts it came out with when it started, no longer hold true today. The pandemic made the math even worse.




I know this isn't really relevant, over the summer Spirit delivered someone else's bag to my parents home in PA when I was visiting. So I made the the right calls and got a baggage delivery person to come and pick it up to take back to PIT airport. Once he was there, we made some small talk. Turns out, he was an ex-US Airways mechanic. He said at one point his retirement plan had something like 55% be invested in the US Airways stock. It was decimated after BK. Now he's been retired coming up on 20 yrs soon and he's STILL working, old guy, because he lost pretty much everything. I definitely felt bad for him, but he took it all in stride.
 
roundout said:
I remember when something along those lines happened at Delta, in 2018 or 2019. LGA MD88 CA went to a new hire. People were in disbelief. Meanwhile, at Southwest....
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What's happening at Southwest? They have weird rules like Lance CAs who are like FOs but actually fly some trips as CAs? I don't even know, what is the most junior CA systemwide DOH at Southwest on whatever most recent bid they had?
 
Cherokee_Cruiser said:
What's happening at Southwest? They have weird rules like Lance CAs who are like FOs but actually fly some trips as CAs? I don't even know, what is the most junior CA systemwide DOH at Southwest on whatever most recent bid they had?
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It's going to be tough to determine what the upgrade time is until the hiring/upgrades are really spooled up again sometime late spring. We know the plan is to upgrade about 675 pilots this year - which is only about 70% of what we were originally told they were targeting.

Hiring about 450 by May, with TBA shown for the rest of the year, so who knows.

The general consensus is that upgrade is around 10 years, but there is some optimism that might come down to 7-8 years if the rumored hiring comes to fruition. Color me skeptical.

Lance Captains are FOs who can fly as Captains if they can make room in their schedule for Captain trips. They're in the top 3% of FOs in each base. They'll bid turn lines or two days with the hopes of giving them away. Then, once they've cleared their schedule (or "board" in WN parlance) they either pick up captain trips that other pilots are giving away, or they take their chances on open time.

Typically Lance goes way senior to the most junior captains because it's a heck of a good deal. They keep their FO seniority for bidding, vacations, etc. but can fly as a Captain. They're allowed to do that for a year and then they must poo or get off the pot. (Upgrade or remain an FO)

I can tell you that the last hiring boom started in January 2014, so those pilots are approaching 8 years on property and are still at least 650 numbers away from the most junior Captain positions in the company.

That's in a pilot group of about 9000.

There are a lot of good things about the company, but for a 50 year old airline the CBA lacks maturity and therefore is missing many of the ancillary items and work rules found at their peer airlines. It's absolutely possible to make as much as a Delta pilot, and you only have to work twice as hard. ;-)

(That's gentle ribbing, but you get the gist)
 
ZapBrannigan said:
It's going to be tough to determine what the upgrade time is until the hiring/upgrades are really spooled up again sometime late spring. We know the plan is to upgrade about 675 pilots this year - which is only about 70% of what we were originally told they were targeting.

Hiring about 450 by May, with TBA shown for the rest of the year, so who knows.

The general consensus is that upgrade is around 10 years, but there is some optimism that might come down to 7-8 years if the rumored hiring comes to fruition. Color me skeptical.

Lance Captains are FOs who can fly as Captains if they can make room in their schedule for Captain trips. They're in the top 3% of FOs in each base. They'll bid turn lines or two days with the hopes of giving them away. Then, once they've cleared their schedule (or "board" in WN parlance) they either pick up captain trips that other pilots are giving away, or they take their chances on open time.

Typically Lance goes way senior to the most junior captains because it's a heck of a good deal. They keep their FO seniority for bidding, vacations, etc. but can fly as a Captain. They're allowed to do that for a year and then they must poo or get off the pot. (Upgrade or remain an FO)

I can tell you that the last hiring boom started in January 2014, so those pilots are approaching 8 years on property and are still at least 650 numbers away from the most junior Captain positions in the company.

That's in a pilot group of about 9000.

There are a lot of good things about the company, but for a 50 year old airline the CBA lacks maturity and therefore is missing many of the ancillary items and work rules found at their peer airlines. It's absolutely possible to make as much as a Delta pilot, and you only have to work twice as hard. ;-)

(That's gentle ribbing, but you get the gist)
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Wait, so there isn't any CA currently hired since Jan 2014?
 
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