Caught in the cookie jar - AGAIN?

Frank Szabo

Aug 21, 2010
Broken Arrow, Okiehoma

This is a rather interesting article re: more of AMR's financial shenanigans (at the expense of their "most valuable asset") over the years that, for some odd reason, never was looked at seriously. Perhaps they really meant what they said re: that "valuable asset" stuff but not as implied.

Now, there seems to be some interest, as evidenced by a letter from Booby Gless to the twu's "Brothers and Sisters",
as though this was just now noticed and brought to light - more like, "Oh crap - an article in Forbes Magazine - how do we protect our phoney-baloney jobs?" (h/t to Mel Brooks as Governor LePetomaine in "Blazing Saddles") - can I get a rousing round of "HARUMPHS?"

This was evident when I hired in (1990) and should have been obvious to anyone performing their own due diligence on any investment vehicle for their retirement.
As my late aunt in Alabama would have said, "Well, consider my pearls clutched." :lol:

I'm shocked. Shocked, I tell you. Round up the usual suspects. It's exactly why I never bothered to put money into their 401-K plan that was offered while we still had the DB plan. I saw who was managing it, and thought, "No, I don't think so."

I'm in it now, but I really just think of it as a temporary, forced savings account that I can roll over to one of my IRAs when I retire within the next year or so. I would never leave money in AMR's care for a day longer than necessary.
plus 1 Jim....
and now we find out that A Beacon was sold to TPG and that TPG was potentially interested in using AA employee funds for an acquisition of AA - perhaps they still might provide exit financing. I can assure you that AA employees would get no special interests in a deal like that.

I can smell the stinch 5000 miles away from Texas.

sorry but you gotta call a spade what it is.
I read this blog piece a couple weeks ago and wondered when the "fight like hell" TWU leadership would try to incite more "it's management's fault, not the worthless union's fault."

The only AA non-management workgroup affected by underfunded pensions is, of course, the pilots. Nearly every other AA employee or retiree gets a pension that would be covered by the PBGC insurance. Only the pilots are exposed, as their pensions generally exceed the maximum PBGC amounts.

So I have to wonder, given that the pilots tend to be good watchdogs of their own situation, and also tend to have a lot more leverage in negotiations with AA, why the pilots would permit the American Beacon situation to occur and then continue for 25 years i(f this author is correct and the obvious conflicts negatively affected the pensions).

Congress didn't have a problem with it (and they write the ERISA laws). The pilots (the only AA employees with any real skin in this game) didn't have a problem with it. AA filed for Ch 11 (like every other legacy network airline before it) with underfunded pensions and suddenly a guy with a blog (and a law degree) writes:

In conclusion, no one can deny that conflicts of interest abound in retirement plans. The unanswered question is whether these conflicts are harmful to plans and their participants. In my opinion, they generally are. If not beforehand, certainly by the time a pension is on the verge of failing, someone should take a close look.

He may be right - I don't know. What I do know is that thousands of AA's highest paid employees (the pilots) didn't object for a quarter century despite knowing about the situation. Congress didn't object for 25 years. Perhaps this was a benign conflict (one that didn't really matter).
I would hardly call the US Congress' lack of objection to the situation as the Good Housekeeping seal of approval.
You are aware we are staring at a Fiscal cliff that should have been dealt with years ago and that Congress' approval rating is barely above single digits?

And let's remember that the only reason there isn't more harm is because PBGC insurance protects most employee pensions, not because the funds - any of them were well-managed.

Whether anyone has actually been harmed is not the point.