AMR Announces Additional $100 Million Pension Contribution

[Bob Owens]

You're only talking tenths of a cent.

Exactly, like the difference in labor unit costs, in tenths of a cent.

Plus, you can't eliminate ALL pension payments, Bob. If the plans were terminated and shifted over to a 401K match, there'd still be an associated expense.

I consider 401K match payments pension plan payments. So if everyone had subtracted these figures what would the result be?

 

[FWAAA]

Scroll down to page 25 and you will see why AA put as much as they have into the pension.
So they could claim that their labor costs are the highest.

Yes, Mr Owens, that's why AA contributed more to the plans than legally required.

By the way - those figures in your link are for the second quarter of 2006. What are the numbers for the whole year?

AA was point one seven cents higher than Delta and a whopping point nine nine cents higher than Jet Blue.
AA claims that their costs were a little more than half a penny more than SWA, but if we exclude all pension payments what would they be? By manipulating the payments they can make any claim they want to. So they fall behind at one point,(in fact they get the unions to lobby to allow them to fall behind even more) then add a little extra and claim that they saw an increase in labor costs. Factual-yes, Honest -NO.

If you exclude all pension contributions and payments by both WN and AA, you'd find that AA's costs get worse when compared to WN. Why? Because WN contributes more to its employee retirement (defined contribution) than AA contributed to its defined benefit plans. The relatively cheaper plans at AA (at least for now) actually closes the gap somewhat.

 

[eolesen]

Exactly, like the difference in labor unit costs, in tenths of a cent.

At most, it looks like would have reduced the 2.96c to 2.84c by 12/100ths of a cent, which still isn't enough to make a difference in the peer group.

I consider 401K match payments pension plan payments. So if everyone had subtracted these figures what would the result be?

Well, gee, Bob, gather up all the pension/401K expenses, wage/benefit expenses and net expenses for those carriers, and I'll have my fourteen year old do the math for you....

As I've mentioned before, when the markets are performing well like they are now, 401K's turn out to be a bigger expense than DBP's, so the offset for the other carriers on the slide probably winds up making making your case even worse than it is right now.

 

[Bob Owens]

Yes, Mr Owens, that's why AA contributed more to the plans than legally required.

By the way - those figures in your link are for the second quarter of 2006. What are the numbers for the whole year?

Dont have em.

If you exclude all pension contributions and payments by both WN and AA, you'd find that AA's costs get worse when compared to WN. Why? Because WN contributes more to its employee retirement (defined contribution) than AA contributed to its defined benefit plans. The relatively cheaper plans at AA (at least for now) actually closes the gap somewhat.

Well I would agree that over all the costs are lower but by paying in lump sums it distorts figures for that reporting period, thus making AAs costs appear higher than they are.For instance the $100 million breaks down to around $1400 extra per employee which is only $600 less than the entire contribution for the whole year of 2005 which was only around $2000.

 

[FWAAA]

Well I would agree that over all the costs are lower but by paying in lump sums it distorts figures for that reporting period, thus making AAs costs appear higher than they are.For instance the $100 million breaks down to around $1400 extra per employee which is only $600 less than the entire contribution for the whole year of 2005 which was only around $2000.

If you say so. If AA's total pension funding deficit is $2 billion (ballpark - I haven't looked lately), then by your per-employee numbers the pension deficit comes to about $28,000 per employee.

Why is distortion a problem here? Isn't it more important to get the plans fully funded?

Weren't you complaining about the underfunded plans the other day? Didn't you say you wanted them fully funded?

 

[eolesen]

If you say so. If AA's total pension funding deficit is $2 billion (ballpark - I haven't looked lately), then by your per-employee numbers the pension deficit comes to about $28,000 per employee.

The plans are 85% funded at $8.5B, so simple math says they're about $1.2B short.

Given almost $500M in interest income growth for 2006, if the markets continue to perform as well as they did in 2006, theoretically, AMR could be fully funded by YE2008 based off interest income alone.

Why is distortion a problem here? Isn't it more important to get the plans fully funded?

Weren't you complaining about the underfunded plans the other day? Didn't you say you wanted them fully funded?

Damned if you do, damned if you don't.

 

[Bob Owens]

Why is distortion a problem here? Isn't it more important to get the plans fully funded?

Weren't you complaining about the underfunded plans the other day? Didn't you say you wanted them fully funded?

Who is complaining? I want the plans fully funded but that doesnt mean I'm going to let them use that as a ploy to claim that their costs are higher.

 

[eolesen]

Yeah, well my nine year old wants a pony but doesn't want to have to clean up after it... You don't get one without the other.

Who is complaining? That's a laugh! Bob, I can't remember a single post from you ever that hasn't been a complaint of some form or fashion.

 

[Bob Owens]

Yeah, well my nine year old wants a pony but doesn't want to have to clean up after it... You don't get one without the other.

Do you mean you dont just have "the help" do it?

 

[flyastrojets]

The ability of several of my former fellow employees to dream up conspiracies always AAmazed me. Only at American Airlines, could a $100 million dollar contribution to the pension plans over and above what was required be construed as a plot by "the man" to screw the employees.

 

[Hopeful]

The ability of several of my former fellow employees to dream up conspiracies always AAmazed me. Only at American Airlines, could a $100 million dollar contribution to the pension plans over and above what was required be construed as a plot by "the man" to screw the employees.

Nahh,,,,$100 million pension contibution and $191 million PUP payout for management....sounds good.

 

[eolesen]

Do you mean you dont just have "the help" do it?

I could ask the landscapers to do it, but that wouldn't really her anything about responsibility and commitment, now would it?

 

[Bob Owens]

I could ask the landscapers to do it, but that wouldn't really her anything about responsibility and commitment, now would it?

Ah yes, responsibility and commitment, the things we learn in childhood. But I'm sure that you will finish your conditioning of a future executive by making sure that she stows those things along with other childhood things like Santa Claus and the Easter bunnny.

 

[eolesen]

Ah yes, responsibility and commitment, the things we learn in childhood. But I'm sure that you will finish your conditioning of a future executive by making sure that she stows those things along with other childhood things like Santa Claus and the Easter bunnny.

She's mentally disabled, so I'm pretty certain she'll always have Santa and the Easter Bunny to believe in.

But, thanks for your concern for her future. Really.