He pointed out that all of Lockheed's business is with the U.S. government: "When Lockheed charges the government, its pension costs are included in the charges, so the government pays them."
Lockheed's stock price rose to $54.50 a share as of Sept. 8, from $46.27 a share as of March 31, 2003.
The automotive industry also seems to have unfunded liabilities factored into rising stock prices.
"I think to a large extent they (the unfunded pension liabilities) have been factored into the prices of their stocks," said Efraim Levy, an auto analyst with Standard & Poor's, New York. He said the pension underfunding was more of an issue affecting the auto companies' stock price in 2002 and 2003.
Three automotive companies are among the top 10 companies with the largest unfunded pension liabilities: Delphi Corp., Troy, Mich., in fourth place with an unfunded pension liability of $3.97 billion; Ford Motor Co., Dearborn, Mich., in ninth place with a $3.44 billion unfunded pension liability; and DaimlerChrysler Corp., Auburn Hills, Mich., which was in 10th place with a $3.38 billion unfunded pension liability.
"Last year's stock market returns and the rise in interest rates has helped these companies a lot," Mr. Levy said.
He has a sell rating on Delphi's stock, which was at $9.56 a share on Sept. 8, rising from $6.52 a share on March 31, 2003. But that is not so much because of its pension underfunding as its dependence on the fortunes of General Motors Corp. Mr. Levy said.
Mr. Levy has hold ratings on Ford and DaimlerChrysler, whose stocks he thinks are at fair value now, with the unfunded pension liabilities already factored into the price.
Ford stock rose to $14.25 a share on Sept. 8 from $7.18 a share on March 31, 2003. Daimler Chrysler's stock climbed to $42.60 a share on Sept. 8, from $27.62 a share on March 31, 2003. The same seems to be true with Boeing, which had the largest unfunded liability as of Dec. 31
But the airline industry doesn't seem to be immune from the effects of pension underfunding.
Two of the airline companies in the top 10 companies with the largest unfunded pension liabilities are in grave trouble. The stock of UAL Corp., Chicago, which was second on the underfunded liability list with $6.15 billion, was de-listed from the New York Stock Exchange on March 28, 2003, after the carrier filed for Chapter 11 bankruptcy protection in late 2002. The stock of Delta Air Lines Inc., Atlanta, in third place with a $5.69 billion underfunding, has fallen to $4.04 a share on Sept. 8 from $8.88 a share on March 31, 2003.
However, Mr. Engle said "the airline business would still be a miserable business even without the pension problems."