American Responds

[Wretched Wrench]

SWA "workrules and benifits"

How much maintenance does SWA farm out?

 

[frontline]

The spike was supposedly triggered by a selloff on Wall Street today with the money going towards oil.

It was. Oil is often used by SPECULATORS as a hedge against a weak dollar and stockmarket. And we end up paying for it.

I'm still of the opinion that we should go for a short term contract that is not concessionary on wages. That way we can ride out the instability of the economy and be set for a renegotiation when the next boom starts. I can't say if this contract would have been the one to go for necessarily, but at least there was some forward movement on earnings with the payouts.

What I can't figure is where we go from here. Dragging this process out only benefits management since we are working under our old contract. So we are dragging out this process for what purpose... ? I don't see us winning a better contract under these conditions.

 

[eolesen]

Once again, what are these "workrules and benifits"?

I know facts don't mean much to you, but let's try lack of outsourcing caps, codesharing caps, pensions, and retiree medical.

The union doesn't get to control how much work gets sent to vendors; instead, they get to win work based on their productivity and quality compared to vendors. Codesharing? Not restricted in the contract, either. Just because they don't do it today doesn't mean much, especially when they've already signed a letter of intent with WestJet.

Then there's pension expenses.... Their 401K is a match up to 7%: if the employee doesn't bother to save for their retirement, neither will the company. That 7% of salary will be less than what AMR is going to wind up paying into its pension plans as the underlying securities in their plans get eroded.

And unlike AMR´s liability, WN's ends when the employee quits or retires. AMR continues to be liable until the employee (or their spouse, if they select a survivor benefit for their pension) dies....

Those are all differences attributable to the TWU contract, Bob, including the M&R book.

 

[Boomer]

I know facts don't mean much to you, but let's try lack of outsourcing caps, codesharing caps, pensions, and retiree medical.

The union doesn't get to control how much work gets sent to vendors; instead, they get to win work based on their productivity and quality compared to vendors. Codesharing? Not restricted in the contract, either. Just because they don't do it today doesn't mean much, especially when they've already signed a letter of intent with WestJet.

Then there's pension expenses.... Their 401K is a match up to 7%: if the employee doesn't bother to save for their retirement, neither will the company. That 7% of salary will be less than what AMR is going to wind up paying into its pension plans as the underlying securities in their plans get eroded.

And unlike AMR´s liability, WN's ends when the employee quits or retires. AMR continues to be liable until the employee (or their spouse, if they select a survivor benefit for their pension) dies....

Those are all differences attributable to the TWU contract, Bob, including the M&R book.

Not so fast...

1) You state that there are contractual caps on the amount of work outsourced within the text of the current M&R CBA: I say point out the article and paragraph which requires anything more than the "preponderance" of the work to remain in house, absent anything contractual please tell us of a specific Arbitration Award limiting outsourcing.

2) You state that there are contractual caps on the amount of codesharing within the text of the current M&R CBA: I say point out the article and paragraph which limits any type of flying other than AE ASM's within the contract.

3) You state that the liability from the DBP is greater than the liability from a DCP despite having earlier argued that, for AA, the DBP was actually cheaper- which is it?

4) You state that the underlying securities funding the pension plan are being eroded despite a Clinton era law which prevents plan participants from forcing disclosure of the actual investments and their actual performance as opposed from the assumed rate of return booked as actual performance: pray tell, please list the dates and specific investments made by AMR for the various DBP PlAAns so we can all know where we stand.

5) You state that AA has obligations to ex-employees until they die, unlike LUV: I say that LUV committs themselves to their employees before their customers and shareholders making it less likely that the separation occurs and unlike AA, they actually know what they have. Of course, if AA just funded their pension plans fully and transparently, it wouldn't be a problem.

6) You state that the Medical Retiree PlAAns limit AA more so than LUV: we pre-fund our retiree benefits during our working career despite making less than LUV AMTs and AA is self insured for medical. If AA achieved the same rate of return on the prefunding funds and the self insured Medical Insurance Funds as they claim for the DBP plans, there shouldn't be a problem. Of course we could force them to fully source those claims.

There are more holes in the TWU Negotiated M&R CBA than most working under it even begin to realize: the simple fact that current M&R management is too dim witted to understand them goes a long way towards justifying the degree of contempt often posted on this board.

 

[FWAAA]

Not so fast...

3) You state that the liability from the DBP is greater than the liability from a DCP despite having earlier argued that, for AA, the DBP was actually cheaper- which is it?

4) You state that the underlying securities funding the pension plan are being eroded despite a Clinton era law which prevents plan participants from forcing disclosure of the actual investments and their actual performance as opposed from the assumed rate of return booked as actual performance: pray tell, please list the dates and specific investments made by AMR for the various DBP PlAAns so we can all know where we stand.

5) You state that AA has obligations to ex-employees until they die, unlike LUV: I say that LUV committs themselves to their employees before their customers and shareholders making it less likely that the separation occurs and unlike AA, they actually know what they have. Of course, if AA just funded their pension plans fully and transparently, it wouldn't be a problem.

Not so fast.

As to paragraph #3, eolesen has never claimed that the DB plan was cheaper for AA; I posted that.

About paragraph #4, nobody here has a specific list of securities and dates, but unless someone's been under a rock for the past year, it's obvious that the value of the assets is down. Within the past year, the Dow was over 14,000 and it was over 13,000 as recently as mid-May. Today it closed at 10,854. You can deduce that the value of the assets has declined by observing the market averages. I expect AA to have to contribute a lot to the plans next year to make up for the decline in market value.

As to paragraph #5, the plans were funded to 96% at 12/31/07. Safe to assume that the funding will have fallen to 90% or less by 12/31/08 unless the markets make a dramatic recovery in the fourth quarter. The value of the plan assets doesn't hit 100% and stay there every day the way an autopilot keeps an aircraft at a pre-determined altitude. Asset values fluctuate and in the past two weeks we've seen tremendous volatility. Over the long-term, they tend to increase.

 

[MCI transplant]

I know facts don't mean much to you, but let's try lack of outsourcing caps, codesharing caps, pensions, and retiree medical.

The union doesn't get to control how much work gets sent to vendors; instead, they get to win work based on their productivity and quality compared to vendors. Codesharing? Not restricted in the contract, either. Just because they don't do it today doesn't mean much, especially when they've already signed a letter of intent with WestJet.

Then there's pension expenses.... Their 401K is a match up to 7%: if the employee doesn't bother to save for their retirement, neither will the company. That 7% of salary will be less than what AMR is going to wind up paying into its pension plans as the underlying securities in their plans get eroded.

And unlike AMR´s liability, WN's ends when the employee quits or retires. AMR continues to be liable until the employee (or their spouse, if they select a survivor benefit for their pension) dies....

Those are all differences attributable to the TWU contract, Bob, including the M&R book.

<_< ------- Eolesen, AA doesn't give a damn about "Productivity", or "Quility", if they did MCI would be the last place they'd close!!!!And yes! My record is stuck in this grove, because I'm pissed! Damn good mechanics are being displaced at ages 56, 57, etc., that can work circles around younger bucks at ether AFW, or TUL, and have! But that don't seem to cut it these days with AA, or the TWU!!!

 

[Hopeful]

<_< ------- Damn good mechanics are being displaced at ages 56, 57, etc., that can work circles around younger bucks at ether AFW, or TUL, and have!

Now you know how the the older bucks felt at Eastern Airlines and PanAm...Do you really think you are more special and valuable and a better worker than they were simply because you worked for TWA. I understand your TWA pride and your anger, but there are damn good native AA mechanics as well.

 

[Bob Owens]

Not so fast.

As to paragraph #3, eolesen has never claimed that the DB plan was cheaper for AA; I posted that.

Eoleson wrote:
Then there's pension expenses.... Their 401K is a match up to 7%: if the employee doesn't bother to save for their retirement, neither will the company. That 7% of salary will be less than what AMR is going to wind up paying into its pension plans as the underlying securities in their plans get eroded.

And unlike AMR´s liability, WN's ends when the employee quits or retires. AMR continues to be liable until the employee (or their spouse, if they select a survivor benefit for their pension) dies....
Which was in response to "Once again, what are these "workrules and benifits"?,, (that put AA at a competeive cost disadvantage). Clearly Eoleson is saying that our DP plan is more expensive than SWA DC plan. If I had the SWA Pension they would have had to put in nearly $5000 last year because OT is included, AA only put in slightly over $1000.

If I had a 401K match I would borrow the money to meet the companies match if I had to.

About paragraph #4, nobody here has a specific list of securities and dates, but unless someone's been under a rock for the past year, it's obvious that the value of the assets is down. Within the past year, the Dow was over 14,000 and it was over 13,000 as recently as mid-May. Today it closed at 10,854. You can deduce that the value of the assets has declined by observing the market averages. I expect AA to have to contribute a lot to the plans next year to make up for the decline in market value.

If I recall correctly there were years when AA didnt have to contribute to the plan, they actually took money out. Under those conditions AAs plan was not only cheaper, it made money for the company. While it was legal to take money out it was foolish and it should not be allowed but they write the rules.

As to paragraph #5, the plans were funded to 96% at 12/31/07. Safe to assume that the funding will have fallen to 90% or less by 12/31/08 unless the markets make a dramatic recovery in the fourth quarter. The value of the plan assets doesn't hit 100% and stay there every day the way an autopilot keeps an aircraft at a pre-determined altitude. Asset values fluctuate and in the past two weeks we've seen tremendous volatility. Over the long-term, they tend to increase.

Eoleson left out that many workers die without ever collecting a penny from the pension. Some die shortly after retiring. So the liabilities vary as well.

Your response to #5 contradicts Eoleson #3.Assetts vary-"Over the long term,they tend to increase."

I'd say that Boomer pretty much handled Eolesons other claims. Still havent seen where our workrules or benifits put AA at a disadvantage. Even if he could put a number figure on any of the things he claims are disadvantageous I doubt that number when broken down to individuals would add up even close to the difference in pay.

 

[TIME FOR CHANGE]

How much maintenance does SWA farm out?

Money to be made pay up AA

http://www.bloomberg.com/apps/news?pid=con...id=a7RJ5TSgpv7E

 

[FWAAA]

Eoleson wrote:
Then there's pension expenses.... Their 401K is a match up to 7%: if the employee doesn't bother to save for their retirement, neither will the company. That 7% of salary will be less than what AMR is going to wind up paying into its pension plans as the underlying securities in their plans get eroded.

And unlike AMR´s liability, WN's ends when the employee quits or retires. AMR continues to be liable until the employee (or their spouse, if they select a survivor benefit for their pension) dies....
Which was in response to "Once again, what are these "workrules and benifits"?,, (that put AA at a competeive cost disadvantage). Clearly Eoleson is saying that our DP plan is more expensive than SWA DC plan. If I had the SWA Pension they would have had to put in nearly $5000 last year because OT is included, AA only put in slightly over $1000.

Boomer accused eolesen of earlier claiming that the DB plan is cheaper for AA than WN's DC plan and then arguing that the DB plan is more costly. Nothing you quoted above refutes that. eolesen (right or wrong) claimed that the DB plan is more costly for AA. All I did was correct Boomer's incorrect assertion that eolesen was doing a John Kerry. The quote you posted above confirms that. Boomer was attributing an argument to eolesen that I don't think eolesen has ever made in print.

If I recall correctly there were years when AA didnt have to contribute to the plan, they actually took money out. Under those conditions AAs plan was not only cheaper, it made money for the company. While it was legal to take money out it was foolish and it should not be allowed but they write the rules.

I have no idea whether AA ever raided its DB plans. In any event, the rules permitting such raids were changed something like 20 years ago. Assuming, for purposes of argument, that AA did raid its plans and skimmed off some excess money many years ago, how is that result any different than not contributing for the period of overfunding? Money is fungible. "They" write the rules? Nope. Congress writes the rules.

Eoleson left out that many workers die without ever collecting a penny from the pension. Some die shortly after retiring. So the liabilities vary as well.

Sure the liabilities vary. But "many" die without collecting anything? Many? If you die shortly after retiring, wouldn't your spouse continue to collect (assuming you chose the joint/survivor option)? If you die before retiring, doesn't your spouse eventually collect at your retirement age (again, assuming a joint/survivor option)?

Your response to #5 contradicts Eoleson #3.Assetts vary-"Over the long term,they tend to increase."

I don't follow what you're trying to say with the above. Maybe I did contradict eolesen. If I did, who cares?

 

[Wretched Wrench]

Then there's pension expenses.... Their 401K is a match up to 7%: if the employee doesn't bother to save for their retirement, neither will the company. That 7% of salary will be less than what AMR is going to wind up paying into its pension plans as the underlying securities in their plans get eroded.

So, how does an AA DB pension compare to a SWA DC pension?

Has anyone run a comparison between an AA DB pension and a 7% matching 401k? Of course, the investment return of the 401k would have to be something fairly standard, as it is a significant variable. MY TI BA has a glitch in its Time Value of Money function. Are there online sites for doing that?

 

[Bob Owens]

I have no idea whether AA ever raided its DB plans. In any event, the rules permitting such raids were changed something like 20 years ago. Assuming, for purposes of argument, that AA did raid its plans and skimmed off some excess money many years ago, how is that result any different than not contributing for the period of overfunding? Money is fungible. "

Well they did both, not put anything in, because the fund was outperforming what they projected they needed and they took out the excess. I dont think they should ever be able to withdraw the excess because the "excess" may not be real because their assumptions are off. They use unrealistic assumptions and underfund the plan, the 90s was an anomaly and we wont likely see such exapnsion again in the near future. There is no way the $1000 a year they put away in the plan is going to cover what they are promising, even if most of my coworkers die before retiring. They are deliberately underfunding the plan so they can either create a crisis when they are profitable, in order to get out of giving us pay increases or they simply want to terminate the plan after they feel they have gotten all the concessions they are going to get out of it.

"They" write the rules? Nope. Congress writes the rules.

Please, do you really believe that? Politicians dont write most laws, lobbiest do, and then the politicians push it. Look at S-1327. Do you honestly believe that Sen McCain, Lott or Burns actually sat down and wrote that? That bill was clearly written by lawyers working for the airline industry.

Sure the liabilities vary. But "many" die without collecting anything? Many? If you die shortly after retiring, wouldn't your spouse continue to collect (assuming you chose the joint/survivor option)?

She would get half. Less than $600 a month. Less than what I gave up in concessions for the last five years. She would have to collect for 17 years before it would cover the concessions of 2003, not counting Interest. Counting interest she could collect forever without the fund touching the principle.

 

[FWAAA]

Well they did both, not put anything in, because the fund was outperforming what they projected they needed and they took out the excess. I dont think they should ever be able to withdraw the excess because the "excess" may not be real because their assumptions are off.

If AA "over-withdrew" that excess, that just means that the actuarial computations (performed each year) will reveal that AA is bound by law to contribute more. Kinda like the catch-up contributions it's been making.

They use unrealistic assumptions and underfund the plan, the 90s was an anomaly and we wont likely see such exapnsion again in the near future.

You may be right. If the equities markets never produce another run like 1982-2000 and 2002-2008 (ignoring the short dips in 1987 and 1990 and the recession of 2001-02), then the money managers will have an uphill battle.

There is no way the $1000 a year they put away in the plan is going to cover what they are promising, even if most of my coworkers die before retiring.

You're positive of that? On 12/31/07, AA's plans contained $9.1 billion of assets. You don't think AA can generate enough return on those investments to pay everyone their pension (when combined with future contributions)?!? You might be right, but the acturaries disagree with you. In 1982, the Dow was at about 750. Earlier this year, it was at 14,000. A 19-fold increase in a quarter century. You don't think another 10-fold or 15-fold increase is possible over the next 25 years? AA only had to contribute that $1,000 some odd figure on your behalf because there's already $9.1 billion in the pot. Testament to their long-term investment success. I'm certain you'll disagree.

They are deliberately underfunding the plan so they can either create a crisis when they are profitable, in order to get out of giving us pay increases or they simply want to terminate the plan after they feel they have gotten all the concessions they are going to get out of it.

Seriously? If proven, that could put Arpey in prison. I encourage you to pursue that. More accurately, AA funds the pensions with the amount the actuaries (applying the federal regulations) tell AA is legally required.

Please, do you really believe that? Politicians dont write most laws, lobbiest do, and then the politicians push it. Look at S-1327. Do you honestly believe that Sen McCain, Lott or Burns actually sat down and wrote that? That bill was clearly written by lawyers working for the airline industry.

Sure, lobbyists play an important part. Still, Congress writes the rules. Witness how difficult it was for AA and CO to win the same pension funding break that Congress gave NW and DL. Oberstar and others objected to AA and CO getting the additional time to make up their shortfalls because AA refused to freeze their pensions.

She would get half. Less than $600 a month. Less than what I gave up in concessions for the last five years. She would have to collect for 17 years before it would cover the concessions of 2003, not counting Interest. Counting interest she could collect forever without the fund touching the principle.

That's a terribly small pension. Statistically, though, surviving widows tend to live a very long time. That accounts for the discount applied to the joint/survivor benefit options.

 

[Bob Owens]

You're positive of that? On 12/31/07, AA's plans contained $9.1 billion of assets. You don't think AA can generate enough return on those investments to pay everyone their pension (when combined with future contributions)?!? You might be right, but the acturaries disagree with you. In 1982, the Dow was at about 750. Earlier this year, it was at 14,000. A 19-fold increase in a quarter century. You don't think another 10-fold or 15-fold increase is possible over the next 25 years?

I'd bet that in Sept of 1929 people believed that the economy would expand forever as well. Looking back 20 or 25 years is not looking back far enough. We have always known inflation but historically, looking back to the beginning of the industrial era, inflation is not the norm. So the answer is no, I do not expect to see another 10 or 15 fold increase over the next 25 years.

Seriously? If proven, that could put Arpey in prison. I encourage you to pursue that. More accurately, AA funds the pensions with the amount the actuaries (applying the federal regulations) tell AA is legally required.

Yes. Put in Prison for what? Its unethical and immoral but its perfectly legal, like I said they write the rules.

Sure, lobbyists play an important part. Still, Congress writes the rules. Witness how difficult it was for AA and CO to win the same pension funding break that Congress gave NW and DL. Oberstar and others objected to AA and CO getting the additional time to make up their shortfalls because AA refused to freeze their pensions.

Well you didnt answer the question. Do you believe that McCain actually sat down and wrote SR1327? Like I said Congressional members sponsor bills but they rarely actually write them.

 

[lpbrian]

give all the recent market turmoil, aren't pension funds allowed more leeway in how they invest funds than "modern" pension plans, which are very limited?