AA and the PBGC

[FWAAA]

Delta froze and United terminated right?

As WT pointed out, DL terminated its pilot pension but froze all others; NW froze all pensions, leaving DL with a fairly large underfunded pension liability.

UA terminated all pensions, giving it an advantage over all other airlines except for US, which also terminated all pensions. UA then merged with CO, which froze all pensions, leaving UA with some underfunded liability (albeit a small one, since CO was a small airline and didn't have as large an underfunded pension problem).

The bottom line is that AA filed for Ch 11 but didn't get anywhere near the same cost benefits since it gave into Gotbaum's demands that it not terminate its pensions. The only workgroup that benefitted from a freeze compared to a termination is, of course, the pilots, as their pensions greatly exceed the PBGC maximum guarantee. FAs, mechanics, fleet service and agents don't have pensions that exceed the PBGC maximum so the freeze doesn't benefit them. AA ends up with higher costs than US, UA or DL, increasing the odds of another Ch 11 filing.

 

[usa1]

As WT pointed out, DL terminated its pilot pension but froze all others; NW froze all pensions, leaving DL with a fairly large underfunded pension liability.

UA terminated all pensions, giving it an advantage over all other airlines except for US, which also terminated all pensions. UA then merged with CO, which froze all pensions, leaving UA with some underfunded liability (albeit a small one, since CO was a small airline and didn't have as large an underfunded pension problem).

The bottom line is that AA filed for Ch 11 but didn't get anywhere near the same cost benefits since it gave into Gotbaum's demands that it not terminate its pensions. The only workgroup that benefitted from a freeze compared to a termination is, of course, the pilots, as their pensions greatly exceed the PBGC maximum guarantee. FAs, mechanics, fleet service and agents don't have pensions that exceed the PBGC maximum so the freeze doesn't benefit them. AA ends up with higher costs than US, UA or DL, increasing the odds of another Ch 11 filing.

Makes sense ...... I can see a second round in BK. If you get stock in the new company cash out ASAP!

 

[WorldTraveler]

yes, UA and US should have a cost advantage over AA and DL.... but theoretically, UA and US paid out more of their equity in their restructured companies to the PBGC than did DL and will AA.

$500M per year is not insurmountable for a $35B/yr company which is what AA/US will be or DL is... but you still have to account for the highest expenses somewhere, as well as the higher debt load which does affect the ability to borrow.

See here....
cheap manufacturer financing will likely get harder to obtain which will affect the ability of airlines to pay for new aircraft
http://finance.yahoo...-161226171.html


AA will not likely to end up w/ higher costs than DL but if they were counting on $500M in savings relative to DL, that isn't likely to happen.

AA and US could very well make it with their pension debt load... but they can't add tens of billions of dollars in new aircraft on top of the pension liabilities and remain solvent.

AA/US will face the same pressure from the PBGC if they file again.

Investors and employees who receive stock from the reorganized company will absolutely cash out quickly.

 

[Bob Owens]

yes, UA and US should have a cost advantage over AA and DL.... but theoretically, UA and US paid out more of their equity in their restructured companies to the PBGC than did DL and will AA.

$500M per year is not insurmountable for a $35B/yr company which is what AA/US will be or DL is... but you still have to account for the highest expenses somewhere, as well as the higher debt load which does affect the ability to borrow.

See here....
cheap manufacturer financing will likely get harder to obtain which will affect the ability of airlines to pay for new aircraft
http://finance.yahoo...-161226171.html


AA will not likely to end up w/ higher costs than DL but if they were counting on $500M in savings relative to DL, that isn't likely to happen.

They think they are going to get it from Maintenance. You're right, It aint gonna happen. Sure they will pay us a lot less, but they will get what they pay for. Maintenance is the cheapest thing to pay for, and the costliest thing when you dont.

 

[usa1]

Here is what it says word for word.

Note:

If you are currently employed by US Airways or its subsidiaries or currently receiving Long Term Disability benefits, you may not receive early pension benefits (age 55) from the plan. However, if you have reached the normal Retirement age (age 65) under your plan, you may receive your pension benefits from the PBGC and continue to work for US Airways or its subsidiaries. Please contact us at the telephone number below if you have questions regarding your eligibility.

I called them and they knew what I was talking about right away and said until the merger and terms are official and public they could not answer my question.

That is how former TWA employees tapped into their PBGC at age 55 ... TWA was no longer around. It had nothing to do with American Airlines.

This should probably be placed in the US Airways forum, but. ............

I just got an unsolicited call back from the PBGC / US Airways case worker today. They were checking to make sure they had answered my question satisfactorily. I was encouraged. They said that once the PBGC has been advised that there is no more "US Airways" they would receive a letter and things would move forward from there.

 

[usa1]

Found this ........... December 27, 2011

CAN I STILL WORK AND COLLECT MY PENSION? WHEN CAN I DO THIS?

Q. I am a former Eastern Airlines employee and I have a [background=yellow]PBGC[/background] pension from those years. Can I collect from that pension and still work for US Airways?
A. Yes, you can collect your Eastern Airlines pension from the [background=yellow]PBGC[/background] and still fly for US Airways.

Q. When can I collect my [background=yellow]PBGC[/background] pension?
A. You can quit your job at US Airways and collect your [background=yellow]PBGC[/background] pension at age 52 for Shuttle FA's and at age 55 for US Airways, Piedmont, and PSA flight attendants. You may have another job at another company at this age and still collect your pension.

Q. When can I collect my [background=yellow]PBGC[/background] pension and still fly for US Airways?
A. You can collect your [background=yellow]PBGC[/background] pension and still fly for US Airways at age 65, if you are a US Airways, former Piedmont, or former PSA flight attendant. If you were a Shuttle flight attendant, you can begin to collect at age 62.

Q. Piedmont Airlines and PSA do not exist anymore, just like Eastern Airlines. Why can't I collect my Piedmont or PSA pension at age 62?
A. Eastern Airlines did not merge with another carrier and their pension was not integrated into another carrier's pension program. Both Piedmont and PSA pension programs were integrated into the US Airways Pension Program. Your time with Piedmont and PSA counted toward your US Airways Pension (Shuttle as well). The time a flight attendant spent with Eastern Airlines did not count toward any credit with a US Airways pension. Former Eastern Airlines flight attendants who were hired by US Airways started their seniority at zero years. Piedmont, PSA and Shuttle flight attendants kept their seniority and years of pension credits during the mergers.

http://afausairways....ne/dec27_11.htm

 

[WorldTraveler]

based on that logic, US employees should be able to collect a pension regardless of who they work for since US' former pensions will never become the responsibility of or joined with another airline (and yes I am very comfortable saying "never")

 

[usa1]

You know WT, former Piedmont, US Air, US Airways agents need a break. We have seen it all, we're the glue that held this mess together. Through past mismanagement, bankruptcies, mergers, pay cuts, weather, screwed up ATC systems, pension losses, you name it we still got flyers where they need to be, with nothing to work with sometimes. .... Lord would we love to get just one break in life ..... :blush:.

 

[1AA]

You know WT, former Piedmont, US Air, US Airways agents need a break. We have seen it all, we're the glue that held this mess together. Through past mismanagement, bankruptcies, mergers, pay cuts, weather, screwed up ATC systems, pension losses, you name it we still got flyers where they need to be, with nothing to work with sometimes. .... Lord would we love to get just one break in life ..... :blush:.

So why merge with AA? We have our internal issues as well. It will not get any better. It will be worse if you really want to know.

 

[usa1]

My job is much easier today ..... and I guess I have to credit Parker and Isom. They turned it around. Take away the pilot seniority mess and this place is a much better place to work today. You're right, I do not look forward to hooking up with a another airline on the mend, been there got the t-shirt. But hey, I'm just along for the ride.

 

[usa1]

Interesting .... if US Airways F/A's and agents could start receiving their PBGC payments @ 55 after the merger they could take advantage of the "catch-up" contribution that allows 401k participants over the age of 50 to save $5,500 extra.

AA Frozen benefits. Current American Airlines employees still a few years away from retirement are likely to suffer even without a PBGC takeover, because it's likely that American will freeze its pension plan through the bankruptcy process. Patrick Hancock, a 55-year-old flight attendant, for instance, would never have been affected by the PBGC limits because his pension benefit is not rich enough to trigger the caps. But he's facing a huge loss because he'll no longer accrue benefits, and the amount of money he and other workers can expect at retirement is likely to be drastically reduced.

Hancock was planning to retire in five years, at age 60. He was expecting a $2,500 monthly pension, but he'll get roughly $1,800 a month because he won't earn those pivotal final years of accrued benefits. Now he's trying to save like crazy in a 401(k) plan. Though he's already near the annual contribution limit of $17,000 in 2012, he's able to take advantage of "catch-up" contributions that allow participants over the age of 50 to save $5,500 extra.

But realistically, even if he saves every dime he can and gets an unusually high investment return, the result of five years of saving can't possibly be enough to make up a $700 monthly shortfall for the rest of his life. "I relied on the com­pany's promises and representations," he says. "I'm going to be hurt because they're not going to keep their promises."

If he were younger and further from retirement, he'd have a better chance of saving enough to fill the gap. Compound investment returns would have more time to work their magic.

http://www.kiplinger...en-pension.html