AA at pension disadvantage!

[FWAAA]

from: http://online.wsj.com/article/SB1154736927...hs&ru=yahoo
"Continental Airlines and AMR Corp.'s American Airlines will get 10 years to fully fund their plans and may get further concessions in the fall."

Concessions? EEEK!

Anybody got any info on that?

Unfortunate use of the word "concessions."

What the reporter meant by that was that CO and AA are gonna seek additional relief (concessions) from Congress once Congress returns from its Summer Recess. Why? CO and AA want the same treatment as NW and DL got - 17 years - without having to hard freeze the plans.

Plenty of Reps and Senators agree with AA and CO's view on this one.

 

[AMFAMAN]

I was talking to a pilot one day and asked if he was ex-twa, he responded that he was ex-Ozark. He went on to say that he had to take a pay cut when twa bought Ozark and that the work rules at twa were worse than Ozark. I got the impression that this pilot was not happy at twa. On another board, there are some OZ pilots claiming they got screwed by the twa pilots.

From a mechanic/fsc wage stand-point, we weren't far off for some hired after 1982. TWAers sold out equally but maintained a 5 years to top pay. AAers sold out their young and agreed to much lower wages than TWA for the B-scale and upwards of 12 year payscales. If you did a side by side wage comparison from 1983 to 1993 for someone hired in 1983, the TWAer would come out on top. A person hired before 1983 would most likely do better at AA.

As for work rules, having a copy of both contracts in front of me, TWA had better work rules and benefits than AA pre-merger. The little things like working 3.5 hours of OT for 4 hours of OT pay, and a 8 hour break between shifts instead of less than 7.5 hours add up. 8 hour work days on mids and the medical appears to be paid for, but the retirement lags.

From reading both contracts, I not totally convinced that an AA had a better overall compensation and work rules package prior to the merger. Wages yes, but wages aren't everything.

As far as the OZ seniority, I know a few ex-OZ mechanics who stand by the fact that the only reason they got their seniority was their refusal to waive their integration contractual protection. They still say it was never given to them by the iam, they had to fight for it.

 

[nbmcg01]

1. The government would most likely not have given TWA any of the loan money because everyone knows it would have went straight to Ichans pocket because of Karabu. The government would have claimed twa was going to die even before 9/11.

2. No one was going to buy twa and infect themselves with karabu; which still had another 2 or 3 years left before it expired.

3. I am just sure the employees at Alaska and America West would have been more than willing to be stapled under you and they would have just stepped aside while you took the best routes, the best cities, and the best schedules.

4. If twa was so valuable, then why didn't anyone go to the bankruptcy auction and outbid AA (I wish someone would have).

5. The nAAtives and their unions were adamant in their opposition to the deal while the twa unions supported it and waived their scope. What could the nAAtives have done? A slow down or sick out? No, because the AA unions "learned their lesson" after the Reno debacle. The only thing we could do was defend ourselves against the twaers.

1. OZ received DOH in our acquisition. 2. BK was AA's condition. This acquisition had been planned for a long time. Why do you think TWA was paying off items that really didn't need to be paid in full. AA wanted us in a "cash poor" position so the bk could happen. 3. We (the former TWA employees) did not voluntarily give up SCOPE. It was done by our union, without a vote of the membership. I'm not certain the "boys" in satin jackets had a clue about the importance of out LPPs. The APFAs are crafted after our...go figure..lol 4. There would have not been a staple with any TWA f/a merger/acquisition. We have a proven track record in this area. ps Did you ever see our route structure. I think both America West and Alaska Airlines would have loved flying our intn' WITH us. While I don't think the former TWA f/as should have received DOH, I do think that the operation should have been kept totally separate or there should have been some credit for "time served". 5. We would have received the same proportionate share that every other airline received (after 9-11). 6. Folks, this deal was done long before any of us had a remote idea that it might take place. 7. AA (in the past) gave bidding seniority to Air Cal and Trans Carib and that was LONG before LPPs came into play. And finally, most of us were just as unhappy about the acquisition as you were. That's a fact. We knew that even though the pay was more, the work rules, loss of 401K contributions, and cost of AAs medical plan offset any/all of the increased $ per hour. There are always more than one side to every story. You not wanting us has been more than obvious. Sadly, the reverse is also true. TWA survived much worse conditions than we were in (financially) and I believe if we had been successful in removing Bill Compton and his cronies, the story would have had a different ending. Now it will be interesting to see what happens with your pensions in the future. With Courts abrogating mutually agreed upon CBAs without blinking an eye, nothing is safe. Good luck.

 

[PRINCESS KIDAGAKASH]

BK was AA's condition. This acquisition had been planned for a long time. Why do you think TWA was paying off items that really didn't need to be paid in full. AA wanted us in a "cash poor" position so the bk could happen. We (the former TWA employees) did not voluntarily give up SCOPE. And finally, most of us were just as unhappy about the acquisition as you were. That's a fact.

I will agree that the TWA buyout was planed several more months ahead than has been admitted by AA-TWA management. I had a cousin who all of sudden quit AA eagle as a pilot and went to fly for TWA just a few months before the announcement. His dad knew several higher ups at TWA and the only reason he would have jumped to TWA was to cut in line to get hired at the AA mainline(He kept flunking the simulator at AA). TWA was hiring the bottom of the barrel for pilot's at that time because everyone in the industry knew TWA was dead.

As far as TWA people being unhappy about being bought by AA, that is the biggest bunch of B.S.! Here in Dallas-Ft.Worth the TV stations broad cast a speech in the MCI hanger by Don Carty. All those TWA people(looked like a couple thousand) looked like they were real happy to me.

 

[WorldTraveler]

I just heard on the TV that Delta is going to dump it's pensions on the PGBC anyway! So much for paying for it in 17 years. You know NWA can't be far behind.

To expand on FWAAA's comments,

DL told the pilots a year ago that their pension plan could not be saved because of the lump sum provision in their plan, which does not exist in the non-pilot plan. You'll recall that DL had nearly 1500 pilots retire in order to get their $1-2M lump sum distributions. In order to erase the deficit, DL would have to contribute over a billion dollars a year. But the irony is that as soon as they erased the deficit, the pilots would be free to start retiring en masse again.

DL told the pilots the plan could not be saved. They also told the PBGC and they testified to that fact to Congress as they were asking for pension relief for the larger non-pilot plan.

As part of the contract that was ratified in June, DL agreed to offer the pilots a $650 million note to make up for most of the benefits they would lose by turning the plan over to the PBGC. DL also agreed to give the pilots a bankruptcy claim which will probably be converted into equity in the reorganized company.

Bottom line is that the pilots, the PBGC, and Congress were all told months ago that DL intended to terminate the pilot pension plan regardless of whether pension relief was passed. Congress obviously considered that it was worth saving the non-pilot plan at DL as well as all plans at NW in addition to the relief the bill provides AA and CO.

Even with the pension termination, DL pilots are still the highest paid of any airline that has filed bankruptcy in this decade. Because CO has frozen its pilot pension plan and will take advantage of pension relief legislation, only AA's pilots remain with a defined benefit pension plan. AA's pilots should be grateful for what they have because it is clear that the rich pension benefits pilots once enjoyed can no longer be sustained.

 

[nbmcg01]

I will agree that the TWA buyout was planed several more months ahead than has been admitted by AA-TWA management. I had a cousin who all of sudden quit AA eagle as a pilot and went to fly for TWA just a few months before the announcement. His dad knew several higher ups at TWA and the only reason he would have jumped to TWA was to cut in line to get hired at the AA mainline(He kept flunking the simulator at AA). TWA was hiring the bottom of the barrel for pilot's at that time because everyone in the industry knew TWA was dead.

As far as TWA people being unhappy about being bought by AA, that is the biggest bunch of B.S.! Here in Dallas-Ft.Worth the TV stations broad cast a speech in the MCI hanger by Don Carty. All those TWA people(looked like a couple thousand) looked like they were real happy to me.

I can only speak for the f/as. The minute we say the APFA contract, we cried. '70s work rules was a step wayyyyyy back. Also, you have to remember that when most of us were hired, TWA and PanAM were the only two "flag carriers". Those not hired by PanAm or TWA went to work for the other carriers. So much for being the "best of the best"...lol

It wasn't a few months, how about a year or two. This was carefully orchestrated deal that Compton and Carty put together. Like Flt 800, one day the truth will come out. (not that it will do anyone any good) ps I would be very careful about comments about our pilots and our training. TWA was known for their safe practices, excellent pilots and state of the art training. Our safety record was considered an industry leader.

I started with TWA in Jan of 1970. Everyone was always saying "TWA is dead". We managed to survive for many years until two less than ethical CEOs got together and "killed" us for good. I think Carty and Compton make Ichan look like a "prince".

For many there was a very brief moment of hope. We had been very creative in concessions by trading dollar per hour for quality of life work rules but the constant "ax" is always stressful. Can you imagine that some actually believed Carty's "Two Great Airlines" bs? "Fair and equitable" was another fine phrase. Don't give me the 9-11 song and dance. That is the ultimate excuse. How much more milage can AA get out of that tragedy? In the airline business if it isn't one crisis it is another. Creative negotiations with both sides actually looking to come to productive agreements (without the ultimate screw job) is the way to win the loyalty of both employees and customers. You have to take care of the "internal" customer if you want the "external" customer to be happy.

Want to take bets on your pension future?

 

[exnw]

I just heard on the TV that Delta is going to dump it's pensions on the PGBC anyway! So much for paying for it in 17 years. You know NWA can't be far behind.

It all started with US AIR and UNITED dumping their
pensions. That put ideas into other carriers minds.
My belief is a law should be in place if a company defaults on its pension plan then they would have to file
chapter 7, liquidate and all monies be put into the
pension plan. These companies are simply looking for a
way not to pay its obligations to the employees.

US AIR and UNITED both had unfair advantages not having
to pay into their pensions and NW and DELTA will be
next by having a longer number of years to pay than the
remaining carriers still somewhat solvent.

 

[Bob Owens]

Like Ozark did...

I've only spoken to Mechanics who were Ozark, and they do not feel that they were well treated.

First of all the Union recognizing the mechanics, AMFA, did not waive their contractual rights to help the deal through.

Secondly,when the Ozark guys went to TWA they took pay and benifit cuts, so they kept their seniority but lost money.

When TWA guys went to AA they got raises, but they did not get all their seniority outside of St Louis or MCI.

The IAM sold the TWA guys out because TWA owed them hundreds of millions towards the pension the IAM set up after TWA got out.

 

[Bob Owens]

Leasing v. Buying costs roughly the same - just two different ways of financing something you don't have enough cash to just buy. Southwest pays cash for most of its airplanes without leasing and without debt.

AA is going to pay down some of its debt now that it isn't facing the requirement to contribute $2.3 billion to its pension plans next year.

Didnt AA already pay down around $4 billion? If they still owe $20 billion, and they have over $5 billion in cash, up from $1 billion, and they havent been profitable, then obviosly somebody got paid, otherwise they would owe $24 billion.

 

[BoeingBoy]

...they havent been profitable, then obviosly somebody got paid,...

FWAAA can explain it better, but there's profits/loses and there's cash flow positive/negative and the two don't have to match.

A company can be unprofitable while taking in more cash than it's spending. Just means that there were non-cash expenses.

Jim

 

[Boomer]

Before anyone breaks out the bubbly over the new legislation:

Can anyone tell me where I can find an Oxley-Sorbanes certifide document to which Arpey has attached his name that details what the assumed rate of return has been over each of the last twenty years and the specific investments that were made during that period directly compared to the actual performance of those investments?

Additionally, can anyone provide me with the new legislations' legal requirement for any periods' assumed rate of return and a means of verifying that return as opposed to the one assumed?

Trust me, I want to believe that the BS is over; but before I pull the proverbial handle, I'd like to kknow what this bill means to me and I'd like the ability to sue someone if the numbers fail to jive.

 

[aafsc]

1. OZ received DOH in our acquisition. 2. BK was AA's condition. This acquisition had been planned for a long time. Why do you think TWA was paying off items that really didn't need to be paid in full. AA wanted us in a "cash poor" position so the bk could happen. 3. We (the former TWA employees) did not voluntarily give up SCOPE. It was done by our union, without a vote of the membership. I'm not certain the "boys" in satin jackets had a clue about the importance of out LPPs. The APFAs are crafted after our...go figure..lol 4. There would have not been a staple with any TWA f/a merger/acquisition. We have a proven track record in this area. ps Did you ever see our route structure. I think both America West and Alaska Airlines would have loved flying our intn' WITH us. While I don't think the former TWA f/as should have received DOH, I do think that the operation should have been kept totally separate or there should have been some credit for "time served". 5. We would have received the same proportionate share that every other airline received (after 9-11). 6. Folks, this deal was done long before any of us had a remote idea that it might take place. 7. AA (in the past) gave bidding seniority to Air Cal and Trans Carib and that was LONG before LPPs came into play. And finally, most of us were just as unhappy about the acquisition as you were. That's a fact. We knew that even though the pay was more, the work rules, loss of 401K contributions, and cost of AAs medical plan offset any/all of the increased $ per hour. There are always more than one side to every story. You not wanting us has been more than obvious. Sadly, the reverse is also true. TWA survived much worse conditions than we were in (financially) and I believe if we had been successful in removing Bill Compton and his cronies, the story would have had a different ending. Now it will be interesting to see what happens with your pensions in the future. With Courts abrogating mutually agreed upon CBAs without blinking an eye, nothing is safe. Good luck.

1.OZ may have received DOH but the twaers did not want to give it to them. This was stated in the MCIexpress newsletter that is read at the former twa now AA MCI base.

2. What items did twa pay off that didn't need to be paid?

3. Your right, your unions gave up scope. Don't blame us, blame them for the position you now find yourself.

4. Your international routes? At the time of the asset purchase, twa flew about 4 planes transatlantic, JFK-CDG (which AA flew 2 flights of it's own), JFK-CAI-RUH (which certainly would have been dropped post 9-11) JFK-TLV (probably would have been dropped post 9-11 also) and STL-LGW. I would hardly call that an impressive "international route map". With the high seniority that the twaers had, I seriously doubt any America West or Alaska Air flight attendant could have been able to come anywhere near holding one of those lines.

5. If the ATSB rejected UAL's request for a loan with their "flawed business plan", there was no way the ATSB was going to give twa a loan with that blood sucking karabu agreement in place for another 2 years.

6. For AA to terminate our pensions and contracts in bankrutcy court, it would first have to file for Ch-11 bankruptcy.

7. Most of the twaers in DFW were happy about the AA buyout of twa. One said "I'm sure glad you guys bought us" and another told me directly that he is happy to still be working. And yes, he is still working.

 

[Hopeful]

Before anyone breaks out the bubbly over the new legislation:

Can anyone tell me where I can find an Oxley-Sorbanes certifide document to which Arpey has attached his name that details what the assumed rate of return has been over each of the last twenty years and the specific investments that were made during that period directly compared to the actual performance of those investments?

Additionally, can anyone provide me with the new legislations' legal requirement for any periods' assumed rate of return and a means of verifying that return as opposed to the one assumed?

Trust me, I want to believe that the BS is over; but before I pull the proverbial handle, I'd like to kknow what this bill means to me and I'd like the ability to sue someone if the numbers fail to jive.

I don't know of this document. But I do know when they had hearings on Capital Hill about a year, year and half ago, Bob Crandall said the assumed rate was about 10% and should have been a more realistic 4-5%.

 

[nbmcg01]

1.OZ may have received DOH but the twaers did not want to give it to them. This was stated in the MCIexpress newsletter that is read at the former twa now AA MCI base.

1. I can only speak for the f/as..I was there. Our Union Pres. said, "We will give them DOH, it is the right thing to do" Yes, there was posturing, we had 5000 people out on strike and the Co proposed "merging" the 2 seniority lists with only the OZ and the crossovers. That wasn't going to happen. I don't know how any other group worked their agreements.

2. What items did twa pay off that didn't need to be paid?

Anything that could have been paid off to lower cash reserves. This had to happen for us to be in a position to file BK. It was more of a pre-pack than true bk. Many long term vendors for example.

3. Your right, your unions gave up scope. Don't blame us, blame them for the position you now find yourself. .

Not to worry, I put full blame on those idiots. But, that being said, to refuse to even talk with another union is unconscionable. Since when do unions discuss seniority issues with the Co? Oh, I forgot, this is AA.

4. Your international routes? At the time of the asset purchase, twa flew about 4 planes transatlantic, JFK-CDG (which AA flew 2 flights of it's own), JFK-CAI-RUH (which certainly would have been dropped post 9-11) JFK-TLV (probably would have been dropped post 9-11 also) and STL-LGW. I would hardly call that an impressive "international route map". With the high seniority that the twaers had, I seriously doubt any America West or Alaska Air flight attendant could have been able to come anywhere near holding one of those lines.

CDG, LIS, MUC, Barcelona, LGW, Athens, with route authority to fly just about anywhere in Europe we wanted. OGG, HNL, Kona, and we were seeking routes from STL to Japan. We also had route authority to India. As for holding intn., we had cross utilization so you would be surprised at the seniority flying intn. And then there were those like myself that chose to fly domestic. STL-ANC was my flight of choice. Followed by STL-SEA turn-arounds (all nighters) many of our very junior flew the Mexico, SJU, Jamaica etc


5. If the ATSB rejected UAL's request for a loan with their "flawed business plan", there was no way the ATSB was going to give twa a loan with that blood sucking karabu agreement in place for another 2 years.

We were in the same "boat" as America West. We'll just have to agree to disagree on this one.

6. For AA to terminate our pensions and contracts in bankrutcy court, it would first have to file for Ch-11 bankruptcy.

Bets? Actually, you may be partially right. I think AA would do just about anything to keep from having to show a Court "the books".

7. Most of the twaers in DFW were happy about the AA buyout of twa. One said "I'm sure glad you guys bought us" and another told me directly that he is happy to still be working. And yes, he is still working.

Not a f/a. There are no former TWA f/as still working. (unless they gave up all of their TWA seniority and stayed in mangt.) Happy, I guess that is relative. It COULD have been great. And no, for the umteenth time, I don't think the former TWA f/as should have received DOH. But I do think the both RENO and TWA should have received some sort of ration slotting as there had been past precedent with AirCal and Trans Carib.

My friend, once again, we will have to agree to disagree. There are always at least 2 sides to the story. This is a thread about pensions and I hope you all will be wise and negotiate an age weighted 401K as a backup. Just a thought.

 

[FWAAA]

Didnt AA already pay down around $4 billion? If they still owe $20 billion, and they have over $5 billion in cash, up from $1 billion, and they havent been profitable, then obviosly somebody got paid, otherwise they would owe $24 billion.

AA has paid minimal amounts of principal since 2003 and has borrowed more money since the concessions were signed. The additional borrowings sort of matched the amount of principal due. Additionally, AA has sold new stock a few times and has sold some convertible debt, too.

I've looked thru the 10-Ks since 2002 and find only small amounts of debt retirement since then. Certainly no $4 billion of debt repayment.

As BoeingBoy pointed out, cash grows because AA is taking more in than it spends. Or borrowing to make up the difference. Or selling new stock. And, as we've discussed before, GAAP profits take into account some non-cash expenses even when total cash on hand is growing.

But now that AA doesn't have the $2.3 billion of pension contributions hanging over its head for next year, it's obvious that it can now begin to pay off some of the massive debt run up in the wake of September 11, 2001.

Or, as I mentioned before, perhaps kick some tires of fuel efficient airplanes at the Boeing showroom. Maybe some of both. Cash is rolling in like gangbusters this year and at the current rate, unrestricted cash should equal $6 billion or so by the end of the year.

First thing that should be paid off? That revolving credit line that carries those minimum liquidity requirements that have you pissed off. B)