Aa Pension
- Thread starter Hopeful
- Start date
The major LCC's don't have pensions. They are successful. AMR constantly mentions a need to compete with LCC's. They are gonna try to emulate them in every respect possible, therefore the axe goes to AA retirement.
Senior APA will do everything possible to prevent this, leading to concessions in other areas and sacrificing junior members. Another bonus for the company in their drive to cut costs. Once AMR has squeezed the last bit out of APA, they will then still go after pensions, much to everyones angst.
Senior APA will do everything possible to prevent this, leading to concessions in other areas and sacrificing junior members. Another bonus for the company in their drive to cut costs. Once AMR has squeezed the last bit out of APA, they will then still go after pensions, much to everyones angst.
LaBradford22
Advanced
- Joined
- May 15, 2003
- Messages
- 206
- Reaction score
- 0
AA will not terminate the pensions. I don't think a bankruptcy court (or the PBGC, for that matter) would let them. Their pension is not underfunded enough.
Put another way, AA has been reasonably responsible in funding its pensions, unlike UA and US. UA and US management realized that when there is insurance out there, it doesn't make any sense to be responsible. Is this a f**ked up industry or what?
What AA might do, however, is move to either change the terms of the pension (i.e. reduce the multiplier, implement credit caps, do away with the pilot lump sum, etc), or freeze the plans altogether. If the plan is frozen, employees who have earned benefits still have a right to those benefits, but no future benefits can be earned by current or future employees. My guess is that AA will move in this direction.
Put another way, AA has been reasonably responsible in funding its pensions, unlike UA and US. UA and US management realized that when there is insurance out there, it doesn't make any sense to be responsible. Is this a f**ked up industry or what?
What AA might do, however, is move to either change the terms of the pension (i.e. reduce the multiplier, implement credit caps, do away with the pilot lump sum, etc), or freeze the plans altogether. If the plan is frozen, employees who have earned benefits still have a right to those benefits, but no future benefits can be earned by current or future employees. My guess is that AA will move in this direction.
LD max said:
What the "AMR is gonna cancel our pensions" crowd doesn't address is that the most successful competitor (WN) spends more each year on its employee retirement programs than AA, when measured as a percentage of revenue and as a percentage of total employee compensation.
If AA cancels its DB plans and replaces them with the same retirement plans as WN has, AA would spend far more money this year, and it simply can't afford to do that.
Defined Contribution plans are probably always cheaper in the long term than Definded Benefit plans. But in the short term, AA's DB plan requires less cash outlay than WN's DC plans. That's why AA will not cancel its DB plans. They simply cost less than the alternatives.
The chicken littles want to spread fear without looking at the facts.
UA and US will end up canceling all their pensions because they lack the cash to make the huge legally required contributions.
AA, on the other hand, made its $461 million contribution for all of 2004 in the first half of 2004, and is expected to contribute its estimated $450 million 2005 contribution early this year as well.
AA's pension contributions cost less than AA's bill for ice, soda, beer, wine, alcohol and food. Much less.
As for the necessity of canceling the plans so that AA can "compete" with UA and US - those two airlines will not live to see June 30, 2005, at the rate they are falling, and there will be no need to cancel the AA plans to "keep up with the failures.
AA will not be approaching the employees to cancel the DB plans. Count on it.
PRINCESS KIDAGAKASH
Veteran
- Joined
- Oct 9, 2003
- Messages
- 1,401
- Reaction score
- 2
They will threaten the pension just to try and force another round of wage and benefit cuts. Anybody who doesn't think AMR won't ask for more concessions now is either DUMB or STUPID or BOTH. :wacko:
Our pensions as we know it are safe for now. I said for now. We are not in BK so things will not change as far as the pension goes. Maybe the details and payout formula might change but that is all I can see for now. If AA hits anybody with pension changes to save money they will take a shot at the pilots pension either plan A or plan B. No other airline has a pilot pension plan like the pilots at AA.
In my opinion I do not feel that AA wants to file for BK, the BK judge will look at AA's books and probably see that AA is fat on many spending issues. AA can cry poverty all it wants out of BK. It's a different story once your under the courts watch. We'll see what happens as things move along in this industry in 2005.
In my opinion I do not feel that AA wants to file for BK, the BK judge will look at AA's books and probably see that AA is fat on many spending issues. AA can cry poverty all it wants out of BK. It's a different story once your under the courts watch. We'll see what happens as things move along in this industry in 2005.
LGA Fleet Service
Veteran
I dont know if anyone else saw it,but the day after the judge in the US bankruptcy case imposed that 21% paycut on them, our boy Tom Delvalle,(US VP Customer Service) sent out an email to all US/Canadian CSM's detailing the cuts.
The header of the email? "Interesting Reading".
They posted it here at LGA on the bulletin boards like it was a proclamation from the gods,handed down from Olympus...
I'm sure someone ran the numbers and they were salivating at the prospect of the savings it would generate if they could get something like that here.
As far as the pensions, I think they might try and do something with the people that arent vested such as transtioning them to a matched contribution 401k plan.What they'll do with those that are fully vested is anyone's guess.
The header of the email? "Interesting Reading".
They posted it here at LGA on the bulletin boards like it was a proclamation from the gods,handed down from Olympus...
I'm sure someone ran the numbers and they were salivating at the prospect of the savings it would generate if they could get something like that here.
As far as the pensions, I think they might try and do something with the people that arent vested such as transtioning them to a matched contribution 401k plan.What they'll do with those that are fully vested is anyone's guess.
LaBradford22
Advanced
- Joined
- May 15, 2003
- Messages
- 206
- Reaction score
- 0
FWAAA said:
For some work groups that may be true, but for pilots, this is completely untrue. WN has a 7.3% 401(k) match across the board. Notice that it is a company match, and given that many employees will not contribute up to the maximum company match, WN's effective cost is less than this (probably in the 5% to 6% range).
AA's pilots have both an "A" plan and a "B" plan (defined contribution) of 11%. That is a flat 11% - the employee doesn't have to put up anything. You are right that the cost of the "A" plan can fluctuate based on a variety of factors (market returns, interest rates, employee demographics, etc). In some years, the cost of that plan is 0%, in some years, the cost of that plan is upwards of 20%. On average, it is around 10%. So, AA pilots have about three times as much company-funded retirement than WN pilots do. Not to mention the fact that WN pilots do not receive any company-funded retiree medical - AA pilots do. I can't speak for mechanics, flight attendants, or fleet service. I know each has an "A" plan, but I'm not familiar with the details of each.
You are right to say that, depending on market conditions, defined benefit plans may be advantageous over defined contribution plans, but to say that AA would not want WN's retirement plans because WN's plans are more expensive is (at least for the pilot group - by far and away the most expensive group) simply false.
Another problem missed by many in the whole defined benefit mess is that the government via ERISA has some wonky funding rules for defined benefit pensions. For example, it is illegal to overfund your pension, even though it would be wise at times for companies to do so. The government views that as a tax shelter. So, in the heydays of the late 1990's, when airlines were raking in profits and the stock market was going wild, everyone's plan was overfunded and no one could make a "rainy day" contribution to their plans. Now, when airlines are struggling and strapped for cash, the market has been bumpy (though better lately) and everyone is underfunded, we have the worst possible scenario for everyone involved.
Another issue is variability, and this is a huge one in a cyclical industry like the airlines. With a defined contribution plan, I have a great deal of clarity on what my retirement costs are as a % of salary every year. The market can go up, it could go down, the value of my employee's retirement could go up, or it could go down, but that's the employee's problem, not mine. With a defined benefit plan, the cost moves all over the place. The company is bearing the employee's investment risk. If the market goes down, you better believe it is the company's problem because the retirement liability didn't go down, and the company has to bridge the difference. And, as alluded to above, the market going down tends to coincide with airlines struggling. Creating the perfect pension storm that you see today.
MCI transplant
Veteran
- Joined
- Jun 4, 2003
- Messages
- 5,311
- Reaction score
- 584
<_< Hopeful--------TWA's pensions were "Frozen for at least six years! That's why the Seniority was so high! People just couldn't afford to retire! What do they say? "What go'es arround, comes arround!" 😛Hopeful said:
MCI transplant
Veteran
- Joined
- Jun 4, 2003
- Messages
- 5,311
- Reaction score
- 584
🙂 Hey aafsc----- You want to tell us about that EAL DC-9 that lost it's tail on landing in MIA ????? 😛aafsc said:
Wretched Wrench
Veteran
- Joined
- Apr 21, 2003
- Messages
- 1,626
- Reaction score
- 12
Our top 47 or so company officers have a very well-funded, bankruptcy-proof pension plan.
Does that tell you anything?
Carty took a lump sum when he "retired". It was pre-arranged that every year of his service would count as three.
Does that tell you anything?
Little, Gless, and the others have a much more generous pension than we do.
Does that tell you anything?
Retirees cannot vote in the next union representation election, so will probably be thrown to the wolves..
etc
What amazes me is that we have not seen a massive reitrement of pilots, as they have a lump sum, and it cannot be stolen once they have taken it.
We used to have a lump sum retirement plan, but the TWU gave it away.
While some LCCs airlines, and SW, do not have a defined benefit plan, most have a defined contribution plan. Once the matching money is in your fund, it can't be stolen by the company, like our retirement has been and will continue to be.
As far as future changes go, we might consider that the company already converted a lot of employees to a DC plan, Super Saver Plus. The company matches 5.5% (or more for selected groups). It is not unlikely that that could happen again, or some variant of it.
The original question should not only be WILL there be a change, but when and of what nature. It is a certainty that there will be a change, and it will benefit the robber barons, not the serfs.
Does that tell you anything?
Carty took a lump sum when he "retired". It was pre-arranged that every year of his service would count as three.
Does that tell you anything?
Little, Gless, and the others have a much more generous pension than we do.
Does that tell you anything?
Retirees cannot vote in the next union representation election, so will probably be thrown to the wolves..
etc
What amazes me is that we have not seen a massive reitrement of pilots, as they have a lump sum, and it cannot be stolen once they have taken it.
We used to have a lump sum retirement plan, but the TWU gave it away.
While some LCCs airlines, and SW, do not have a defined benefit plan, most have a defined contribution plan. Once the matching money is in your fund, it can't be stolen by the company, like our retirement has been and will continue to be.
As far as future changes go, we might consider that the company already converted a lot of employees to a DC plan, Super Saver Plus. The company matches 5.5% (or more for selected groups). It is not unlikely that that could happen again, or some variant of it.
The original question should not only be WILL there be a change, but when and of what nature. It is a certainty that there will be a change, and it will benefit the robber barons, not the serfs.
