Aa Pension

[aafsc]

🙂 Hey aafsc----- You want to tell us about that EAL DC-9 that lost it's tail on landing in MIA ????? 😛

[post="236756"][/post]​

I don't recall that happening in MIA, but it did happen in PNS (Pensacola, Florida).

 

[Bob Owens]

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.

[post="236777"][/post]​

According to TWU Rep Bobby Gless there are no more Robber Barons. Todays corporate leaders are all ethical businessmen.

 

[FWAAA]

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.

[post="236708"][/post]​

You claim that I am wrong that WN spends more on its employee retirement (on a proportionate basis) than does AA and you point to the pilots' retirement plans as proof that my claims are "false."

Yet the numbers prove otherwise.

From the Southwest 10-K:

The Company has defined contribution plans covering substantially all of Southwest’s Employees. The Southwest Airlines Co. Profitsharing Plan is a money purchase defined contribution plan and Employee stock purchase plan. The Company also sponsors Employee savings plans under section 401(k) of the Internal Revenue Code, which include Company matching contributions. The 401(k) plans cover substantially all Employees. Contributions under all defined contribution plans are based primarily on Employee compensation and performance of the Company.

Company contributions to all retirement plans expensed in 2003, 2002, and 2001 were $219 million, $156 million, and $215 million, respectively.

http://phx.corporate-ir.net/phoenix.zhtml?...CZhdHRhY2g9b24= (page 51)

Compare that to AMR's pension cash outlay (contibutions to plans) of $333 million in 2003. AMR's contribtutions in 2004 were $461 milion. WN spent much more on a proportionate basis than did AMR.

I don't know which WN participate in its Profit Sharing plan and which don't, but that plan is a company paid defined contribution to its employees' vested retirement accounts which do not require employee contributions. In addition, WN makes matching contributions to its employees' 401k accounts.

Considering that WN had only about one third the revenue of AMR in 2003, yet spent half as much (nominally) as AMR did for employee retirement, it is beyond argument that WN's cash outflow for retirement substantially exceeded that of AMR for 2003 on a relative basis.

WN pilots' pay rates now exceed AA's 738 pilots' pay rates. Same thing with WN mechanics - they top out more than $10k higher than mechanics at AA. As you know, focusing on components of employee pay in isolation isn't what matters: What matters is how much money the employees cost the company in total, not their pay rates or their pension expense.

My main point remains unrebutted: AMR's current plans require less current cash expenditures than the retirement plans cost WN. And since AMR's current focus is on not running out of cash, it is very unlikely that AMR would do anything to its retirement plans that would cost it more cash.

As I have said before, a new fuel efficient car might reduce operating costs for the owner over the long term. But if one's car payments (for the new car) cause one to run out of cash in a year or two, then it shouldn't be purchased. Same thing with AMR's retirement plans. DC plans are almost always cheaper for the company over the long term. But AMR wants desperately to avoid running out of cash, and canceling its pension plans and substituting plans like those at WN might very well cost more cash and hasten bankruptcy.

In future years, AMR will probably migrate toward DC plans, especially for new hires, regardless of their union. But cancelation of the DB plans (ala UA or US) ain't gonna happen.

 

[Bob Owens]

You claim that I am wrong that WN spends more on its employee retirement (on a proportionate basis) than does AA and you point to the pilots' retirement plans as proof that my claims are "false."

Yet the numbers prove otherwise.

From the Southwest 10-K:
http://phx.corporate-ir.net/phoenix.zhtml?...CZhdHRhY2g9b24= (page 51)

Compare that to AMR's pension cash outlay (contibutions to plans) of $333 million in 2003. AMR's contribtutions in 2004 were $461 milion. WN spent much more on a proportionate basis than did AMR.

I don't know which WN participate in its Profit Sharing plan and which don't, but that plan is a company paid defined contribution to its employees' vested retirement accounts which do not require employee contributions. In addition, WN makes matching contributions to its employees' 401k accounts.

Considering that WN had only about one third the revenue of AMR in 2003, yet spent half as much (nominally) as AMR did for employee retirement, it is beyond argument that WN's cash outflow for retirement substantially exceeded that of AMR for 2003 on a relative basis.

WN pilots' pay rates now exceed AA's 738 pilots' pay rates. Same thing with WN mechanics - they top out more than $10k higher than mechanics at AA. As you know, focusing on components of employee pay in isolation isn't what matters: What matters is how much money the employees cost the company in total, not their pay rates or their pension expense.

My main point remains unrebutted: AMR's current plans require less current cash expenditures than the retirement plans cost WN. And since AMR's current focus is on not running out of cash, it is very unlikely that AMR would do anything to its retirement plans that would cost it more cash.

As I have said before, a new fuel efficient car might reduce operating costs for the owner over the long term. But if one's car payments (for the new car) cause one to run out of cash in a year or two, then it shouldn't be purchased. Same thing with AMR's retirement plans. DC plans are almost always cheaper for the company over the long term. But AMR wants desperately to avoid running out of cash, and canceling its pension plans and substituting plans like those at WN might very well cost more cash and hasten bankruptcy.

In future years, AMR will probably migrate toward DC plans, especially for new hires, regardless of their union. But cancelation of the DB plans (ala UA or US) ain't gonna happen.

[post="237654"][/post]​

To say that SWAs DC is more expensive than AAs DB plan is one thing, to say that if AA went to a DC plan it would cost more is another.

Sure maybe if we got the same plan as SWA has then maybe it would cost the company more than they are laying out now but who says we would get that?

 

[FWAAA]

To say that SWAs DC is more expensive than AAs DB plan is one thing, to say that if AA went to a DC plan it would cost more is another.

Sure maybe if we got the same plan as SWA has then maybe it would cost the company more than they are laying out now but who says we would get that?

[post="237656"][/post]​

I agree with you completely. Earlier in this thread I clarified that my comparison assumes that if canceled, AMR's DC replacement for the DB plans would be the same as WN.

But if AMR could convince its employees to accept an inferior DC plan replacement (when compared to WN), then maybe AMR could save cash.

We'll know the answer if AMR reports early funding of its 2005 minimum contributions, like it did in 2004.

As usual, I continue to hope that industry-wide overcapacity of fancy-pants airline seats is rectified soon to give some chance to AA that it will survive.

Time for US and UA to give up the ghost. Allow others to eat.

You should be in favor of this - after all, you appear to favor layoffs over pay concessions, so the layoff (albeit permanent) of all UA and US employees should be preferable to continued pay concessions in the vain hope that UA and US can survive.

 

[LaBradford22]

You claim that I am wrong that WN spends more on its employee retirement (on a proportionate basis) than does AA and you point to the pilots' retirement plans as proof that my claims are "false."

Yet the numbers prove otherwise.

From the Southwest 10-K:
http://phx.corporate-ir.net/phoenix.zhtml?...CZhdHRhY2g9b24= (page 51)

Compare that to AMR's pension cash outlay (contibutions to plans) of $333 million in 2003. AMR's contribtutions in 2004 were $461 milion. WN spent much more on a proportionate basis than did AMR.

I don't know which WN participate in its Profit Sharing plan and which don't, but that plan is a company paid defined contribution to its employees' vested retirement accounts which do not require employee contributions. In addition, WN makes matching contributions to its employees' 401k accounts.

Considering that WN had only about one third the revenue of AMR in 2003, yet spent half as much (nominally) as AMR did for employee retirement, it is beyond argument that WN's cash outflow for retirement substantially exceeded that of AMR for 2003 on a relative basis.

WN pilots' pay rates now exceed AA's 738 pilots' pay rates. Same thing with WN mechanics - they top out more than $10k higher than mechanics at AA. As you know, focusing on components of employee pay in isolation isn't what matters: What matters is how much money the employees cost the company in total, not their pay rates or their pension expense.

My main point remains unrebutted: AMR's current plans require less current cash expenditures than the retirement plans cost WN. And since AMR's current focus is on not running out of cash, it is very unlikely that AMR would do anything to its retirement plans that would cost it more cash.

As I have said before, a new fuel efficient car might reduce operating costs for the owner over the long term. But if one's car payments (for the new car) cause one to run out of cash in a year or two, then it shouldn't be purchased. Same thing with AMR's retirement plans. DC plans are almost always cheaper for the company over the long term. But AMR wants desperately to avoid running out of cash, and canceling its pension plans and substituting plans like those at WN might very well cost more cash and hasten bankruptcy.

In future years, AMR will probably migrate toward DC plans, especially for new hires, regardless of their union. But cancelation of the DB plans (ala UA or US) ain't gonna happen.

[post="237654"][/post]​

I agree, but with one caveat. WN's retirement plans are richer than AA's when WN is profitable (and paying profit sharing at a rate of ~10% or more per year). Given that WN's 401k match is 7.3%, and that the effective cost of that is probably around 5% to 6% since many employees don't contribute the full 7.3%, then it stands to reason that roughly 2/3 of the WN retirement cost is their profit sharing plan.

Of course, this makes a lot of sense from a company's perspective - give the employees a rich retirement as long as the company is also doing well. If the company stops being profitable, then there is a built-in cost reduction in the form of profit sharing going away.

Then again, I don't expect AA to ever do anything that makes much sense.

 

[Mach85ER]

Then again, I don't expect AA to ever do anything that makes much sense.

[post="237668"][/post]​

LaBradford22,

The "data" cannot quanitfy "sense" therefore it does not exist. Every so often, expensive consultants are brought in by AMR in an effort to locate it. Their recommendations go unread and unfollowed, futher guaranteeing that at AMR, "sense" will never be discovered.

I hope this clears things up 😉

At AMR, all of our employees are "gruntled".

 

[LaBradford22]

You claim that I am wrong that WN spends more on its employee retirement (on a proportionate basis) than does AA and you point to the pilots' retirement plans as proof that my claims are "false."

Yet the numbers prove otherwise.

From the Southwest 10-K:
http://phx.corporate-ir.net/phoenix.zhtml?...CZhdHRhY2g9b24= (page 51)

Compare that to AMR's pension cash outlay (contibutions to plans) of $333 million in 2003. AMR's contribtutions in 2004 were $461 milion. WN spent much more on a proportionate basis than did AMR.

I don't know which WN participate in its Profit Sharing plan and which don't, but that plan is a company paid defined contribution to its employees' vested retirement accounts which do not require employee contributions. In addition, WN makes matching contributions to its employees' 401k accounts.

Considering that WN had only about one third the revenue of AMR in 2003, yet spent half as much (nominally) as AMR did for employee retirement, it is beyond argument that WN's cash outflow for retirement substantially exceeded that of AMR for 2003 on a relative basis.

WN pilots' pay rates now exceed AA's 738 pilots' pay rates. Same thing with WN mechanics - they top out more than $10k higher than mechanics at AA. As you know, focusing on components of employee pay in isolation isn't what matters: What matters is how much money the employees cost the company in total, not their pay rates or their pension expense.

My main point remains unrebutted: AMR's current plans require less current cash expenditures than the retirement plans cost WN. And since AMR's current focus is on not running out of cash, it is very unlikely that AMR would do anything to its retirement plans that would cost it more cash.

As I have said before, a new fuel efficient car might reduce operating costs for the owner over the long term. But if one's car payments (for the new car) cause one to run out of cash in a year or two, then it shouldn't be purchased. Same thing with AMR's retirement plans. DC plans are almost always cheaper for the company over the long term. But AMR wants desperately to avoid running out of cash, and canceling its pension plans and substituting plans like those at WN might very well cost more cash and hasten bankruptcy.

In future years, AMR will probably migrate toward DC plans, especially for new hires, regardless of their union. But cancelation of the DB plans (ala UA or US) ain't gonna happen.

[post="237654"][/post]​

Two more points here ...

1. The figures quoted for AMR represent only contributions to defined benefit plans. The pilots have a defined contribution plan of 11%. Taking an average pilot salary of about $130k times roughly 9000 pilots yields a pilot payroll of $1.17 billion. 11% of that is another $129 million. Also, management has a 401k match up to 5.5% of salary. I don't know the exact numbers, but assuming AA has management headcount of about 8000, with an average salary of about $50k, that works out to a $400 million management payroll. Multiply that by about 4% (the effective cost of a 5.5% match) and you get another $16 million. Both of these numbers should be added into the AMR figure to make it apples-to-apples with the WN figures quoted in the 10k.

2. Cash contributions to a defined benefit plan represent a point in time. Market conditions and interest rates can move the cash cost of these plans around significantly. For example, in 1999, with a strong bull market, AMR's plans were overfunded, and as such, AMR paid nothing into its defined benefit plans. Does that mean the defined benefit plans didn't cost anything that year? Of course not. Barring a strong bull market or a meaningful reduction in interest rates, AMR's cash contributions to its pensions are going to escalate very rapidly in the next four or five years as more and more employees near retirement. So, even after the adjustments in #1 above, this is still not really an apples-to-apples comparison.

 

[Boomer]

FWAA,

Another exercise by the "hospice house" in obtaining acceptance by the masses.

AA has funded their 20004 and 2005 pension requirements due to a Senate Bill formula that allowed them to SHORTFUND the pension plans. The Senate bill was S.2282, Sponsor Sen. Kennedy, D-MA

According to the bill, the airlines were able to continue shortfunding the pensions until 2006. While FWAA and AA crow about "fully funding" their pension requirement, they do not tell you that the 2004, 2005 requirements were not the amounts required had the bill not been passed. Nor will they discuss what is going to happen when AA is required to actually full fund their pensions within seven years of 2006, when S.2282 expires.

The bottom line is that the totall SHORTFUNDING of all DBPs' in the US is estimated to be almost $400 Billion. To put it in better terms, that is more than twice the size of the Savings and Loan debacle.

The problem is that only 17% of Americans are covered by Defined Benefit Plans. The S&L bailout was an easier sell to all Americans because the vast majority have some type of connection to a financial institution.

Given the looming problems with the Social Security funding and the measures that may be required to salvage that ponzi scheme: how many Americans are going to be willing to salvage a pension fund that 80% do not have access to?

 

[Boomer]

Bush Antidote for Kennedy Sickness

FWAA,

How do ya like them apples?

Seems the Republicans are all for more transparency with respect to deals sold to the Union Membership from the collusion between Corporate Unions and Corporations.

 

[Bob Owens]

FWAAA,Jan 10 2005, 08:26 PM]
I agree with you completely. Earlier in this thread I clarified that my comparison assumes that if canceled, AMR's DC replacement for the DB plans would be the same as WN.


Why would you make such an assumption?

But if AMR could convince its employees to accept an inferior DC plan replacement (when compared to WN), then maybe AMR could save cash.

You forget that AA has company unions on the property that take care of things like that.

We'll know the answer if AMR reports early funding of its 2005 minimum contributions, like it did in 2004.

You mean if they pay up to the amount of underfunding that they are allowed?

As usual, I continue to hope that industry-wide overcapacity of fancy-pants airline seats is rectified soon to give some chance to AA that it will survive.

Time for US and UA to give up the ghost. Allow others to eat.

You should be in favor of this - after all, you appear to favor layoffs over pay concessions, so the layoff (albeit permanent) of all UA and US employees should be preferable to continued pay concessions in the vain hope that UA and US can survive.

Thats a rediculous statement, I dont favor either. I do favor not giving away pay and bnifits for an unenforcable promise that by giving concessions the company will choose to keep workers on payroll. The fact is that my position has proven to be correct because we gave the concessions and the company continues to eliminate jobs anyway.


[/quote]

 

[FWAAA]

FWAA,

Another exercise by the "hospice house" in obtaining acceptance by the masses.

AA has funded their 20004 and 2005 pension requirements due to a Senate Bill formula that allowed them to SHORTFUND the pension plans. The Senate bill was S.2282, Sponsor Sen. Kennedy, D-MA

According to the bill, the airlines were able to continue shortfunding the pensions until 2006. While FWAA and AA crow about "fully funding" their pension requirement, they do not tell you that the 2004, 2005 requirements were not the amounts required had the bill not been passed. Nor will they discuss what is going to happen when AA is required to actually full fund their pensions within seven years of 2006, when S.2282 expires.

[post="237869"][/post]​

Bomer:

Of course AA is availing itself of Congressionally-passed funding relief. As much as the typical employee paints management as stupid, when they are "screwing the employees," they are brilliant, right?

Too bad the sh!theads running UAL and USAir couldn't be bothered to do the same and fund their employees' pensions. They chose to walk away from their obligations instead of paying hundreds of millions in required contributions to their DB plans.

Would you be happier as a mechanic at those airlines? Both of which will soon be completely out of the overhaul business. I guess if you're on the line (like Mr Owens) it wouldn't matter to you if AMR closed down all three overhaul bases.

In 2003 and 2004, combined, AMR conrtributed over $800 million to its DB plans. If AMR was gonna shaft its employees (like at UAL and USAir) by abandoning its pension obligations, wouldn't they have done that in 2003 before wasting that $800 million?

 

[Wretched Wrench]

Bomer:



If AMR was gonna shaft its employees (like at UAL and USAir) by abandoning its pension obligations, wouldn't they have done that in 2003 before wasting that $800 million?

Well, there seems to be no question that AA is shafting its employees, as with the concessions.

Retirement is next. The only question is how, and how bad. Lots of old folks are hanging around, afraid to retire until the next shoe drops. There will be a wave of retirements if they can be convinced their pensions are safe.

And, conversely, there will be a whole bunch of slow-moving, slow-thinking, arthritic, "senior moment" employees taking up space forever if not.

 

[Oneflyer]

Well, there seems to be no question that AA is shafting its employees, as with the concessions.

When you say things like this, is it your belief that someone at AA knows how to make AA profitable, but they just don't want to because they'd rather screw the employees?

Is Arpey and crew giving up who knows how much in salary increases and stock option value just to stick it to you?

Who are you kidding? Are you dilusional or just that self-absorbed?

Do you have any idea how much Jeff Campbell's salary increased when he left? It quadrupled!!!!!!!!!!! Why because he left for a company that wasn't losing billions of dollars.

My point is this, if the sole purpose of the concessions was to screw the employees and they really weren't necessary, then isn't Arpey & Crew screwing themselves as well? I mean if they know the answer to all the company's problems and they're just not saying because they want to keep beating down the unions aren't they really beating themselves down even more?

Could it be that the answer to AA's financial problems had to include a salary cut? That maybe it was part of the only possible solution? Or is reducing someone's paycheck never justified unless it is those rich management people?

 

[1AA]

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