Concessions and What do We Get for Them?

kirkpatrick

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Aug 20, 2002
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Those of us at TWA haave been down this road before. Three bankruptcies and billions of dollars in concessions. My question is, if we agree to them, what besides a supposed increase in job security do we get for them?
In TWA''s first bankruptcy in ''92 each group was given a dollar amount. We could come up with these dollars in any way we decided; pay rates, bennies or work rules. Here are some of the creative things the FA union came up with to mitigate the pay hit:
1) No pay for first six days of sick leave.
2) No crew meal on most flights with a few exceptions.
3) Basic uniform articles (shirts, ties, belts, etc) to be paid by employee rather than the company.
4) Loss of vacation days.
5) Raise the trigger point for downtown layovers.
None of these is pleasant to think about, but I for one don''t want $14,000 per year cut from my paycheck.
One thing we got from our TWA concessions was that the company granted us some welcome changes in flexibility in exchange for the concessions we had made. What sort of no-cost/low-cost items could APFA and the other unions think of which would ease the pain a little? How about an extension of recall rights from five years to at least seven? This clause was negotiated way back when it was unheard of for a furlough to last so long. How about some added flexibility in OE and OT trading?
Any ideas?
MK
 

Bob Owens

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Sep 9, 2002
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All you got in return for your concessions was the opportunity do with less to make Ichann richer.
 

Boomer

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Would someone from TWA pleas explain what the "TAP" plan was and how it worked?

From what I've been told, it involved the TWA employees giving money back to TWA AFTER they had paid taxes on it. I found that a little hard to believe so I figured maybe someone here could give me the info.
 

WingNaPrayer

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What you get is the opportunity to pay for, and cover up, Carty's huge mistake in buying TWA.

I'm surprised no one has crunched the numbers yet, but in short...

Carty says the carrier has already found 2B in waste/cuts it has already implemented, but they need more, another 1.8B which they have no alternative but to turn to labor for. This would bring them to a grand total of 3.8 Billion in cuts, which would help them stay on their feet.

Now, when AA proposed taking on TWA with the bankruptcy court, the numbers were exact:

AA offered 500M for TWA's assets
AA paid 200M then 100M in DIP emergency cash
AA assumed 3B in debt, including aircraft leases.

The total? 3.8 Billion

Now, what is being said here is two things.

1: Labor is being asked to fund the TWA snafu by kicking in 1.8 Billion of the 3.8 Billion overall total, and/or;

2: AA is off-handedly admitting that if they had not wasted 3.8 Billion on TWA, they would be in great shape right now, and wouldn't be looking to chop huge chunks out of your paychecks to help finance, cover up, and pay for executive management mistakes.

Wake UP! NO cuts, NO givebacks. There will be a lot of disappointed laborers out there if AA labor breaks, and starts funding corporate politics and blunders with their paychecks.
 

410OhOne

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Dec 30, 2002
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[blockquote]
----------------
On 2/8/2003 12:54:46 PM WingNaPrayer wrote:
What you get is the opportunity to pay for, and cover up, Carty's huge mistake in buying TWA.
I'm surprised no one has crunched the numbers yet, but in short...
Carty says the carrier has already found 2B in waste/cuts it has already implemented, but they need more, another 1.8B which they have no alternative but to turn to labor for. This would bring them to a grand total of 3.8 Billion in cuts, which would help them stay on their feet.
Now, when AA proposed taking on TWA with the bankruptcy court, the numbers were exact:
AA offered 500M for TWA's assets
AA paid 200M then 100M in DIP emergency cash
AA assumed 3B in debt, including aircraft leases.
The total? 3.8 Billion
Now, what is being said here is two things.
1: Labor is being asked to fund the TWA snafu by kicking in 1.8 Billion of the 3.8 Billion overall total, and/or;
2: AA is off-handedly admitting that if they had not wasted 3.8 Billion on TWA, they would be in great shape right now, and wouldn't be looking to chop huge chunks out of your paychecks to help finance, cover up, and pay for executive management mistakes.
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[/blockquote]

Wing,

Excellent spin on the ball, in fact that was a great inside curve ball you just threw. Blame management, it is all their fault. Yes we should have not bought TWA, but like Carty said, "We won, yet we were the winner among losers." TWA a competitor is gone. Now think of the opportunities if UAL soon goes by the way side. The simple fact is the current business model does not and has not worked for 50 plus years. The cartel airlines must change, labor must change, and management must start managing. The winds of change are blowing.
 
OP
K

kirkpatrick

Veteran
Aug 20, 2002
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Long Island, NY
[blockquote]
----------------
On 2/8/2003 12:54:46 PM WingNaPrayer wrote:

What you get is the opportunity to pay for, and cover up, Carty's huge mistake in buying TWA.

I'm surprised no one has crunched the numbers yet, but in short...
[/blockquote]

In short, nobody's crunched the numbers because the numbers don't really crunch that way.

We all realize AA wouldn't have bought TWA after 9/11, but that doesn't mean TWA is the huge drain you and others seem to think. You have a little less cash than you would have had, but not buying TWA would have left AA in roughly the same place it is now; high costs and lower yields.

Much of the "debt" you say AA took on was aircraft leases which were immediately negotiated down. What is AA's total payout per year in AC leases? And remember, those aircraft are just under 70% full bringing in revenue; not profit, maybe, but revenue.

The STL hub is already beneficial to AA. I've seen it myself when my commuter flight fills up as passengers are rerouted when ORD's weather goes down. And the gates and slots will be useful even if they aren't bringing in loads of cash right now.

In short, of course buying TWA used up a bit of excess cash on hand and increased costs some, but you haven't counted the benefits. If AA hadn't bought TWA AA would still have a big, big problem.

Five years from now the acquisition will be looked on in a different light.

MK
 
OP
K

kirkpatrick

Veteran
Aug 20, 2002
1,345
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Long Island, NY
[blockquote]
----------------
On 2/8/2003 12:16:02 PM Boomer wrote:

Would someone from TWA pleas explain what the "TAP" plan was and how it worked?

From what I've been told, it involved the TWA employees giving money back to TWA AFTER they had paid taxes on it. I found that a little hard to believe so I figured maybe someone here could give me the info.
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[/blockquote]
TAP stands for "Turn Around Plan," which was the company's plan to come out of bankruptcy and make money again. Part of the plan was employee concessions. Since there were no profits to share, we were given stock according to how much our individual concessions were.

For example, the flight attendants were told to take a 25% cut. By giving up a lot of other things we were able to get that down to only 11% in actual pay. For me, that meant a cut of approximately $128 in an average bi-weekly check. That amount showed on my pay stub as "TAP = -$128."

Several misunderstandings arose from this. Many thought TAP was a deduction from their paychecks. All they had to do was a little simple arithmetic to see this wasn't the case. Others thought that if they "gave," say, $4000 in paycuts for a year they would get $4000 in stock which might be worth something some day. That wasn't true either. We got stock based on the amount we gave, but it wasn't dollar for dollar.

Finally, around '98 or so when the "Turn Around Plan" ended, they stopped putting the "TAP" indication on our pay stubs since it no longer meant anything. Many couldn't understand why their paychecks didn't go up now that this "deduction" wasn't being made. There never had been any deduction made. The "deduction" was already reflected in the new, lower "before taxes" pay rate.

The stock we were given was controlled by the unions, with the exception of the pilots, I think. I got something like 389 shares, if I remember corrrectly, and never saw a dollar of it. I have no idea where it is today or if it just "went away" when TWA did.

MK
 

TWAnr

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Aug 19, 2002
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[blockquote]
----------------
On 2/8/2003 12:54:46 PM WingNaPrayer wrote:

Now, when AA proposed taking on TWA with the bankruptcy court, the numbers were exact:

AA offered 500M for TWA's assets
AA paid 200M then 100M in DIP emergency cash
AA assumed 3B in debt, including aircraft leases.

The total? 3.8 Billion
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[/blockquote]

At least have the decency and integrity to quote the final numbers regarding the cost of the acquisition.

It was $2.8 billion. $700 million cash (including the DIP financing) and $2.1 in renegotiated (i.e., $700 million cheaper) aircraft lease obligations.
 
Aug 20, 2002
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If it is true that our present problem is that "MANAGEMENT" bought TWA, THEN BLAME MANAGEMENT(damnit), NOT the people of TWA !!!!!!!!!!!!

Kirkpatrick is CORRECT, LLC HAS made contributions to AMR.

Without exception, any LLC/er that I've EVER come across, was a good person, AND A BETTER UNION PERSON THAN(most) "ANY" OF THE TWU "CLOWNS I'm forced to work with today.

NH/BB's
 
Aug 20, 2002
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[blockquote]
----------------
On 2/8/2003 6:46:52 PM Buck wrote:

[blockquote]
----------------
On 2/8/2003 5:12:46 PM NewHampshire Black Bears wrote:


Without exception, any LLC/er that I've EVER come across, was a good person, AND A BETTER UNION PERSON THAN(most) "ANY" OF THE TWU "CLOWNS I'm forced to work with today.

NH/BB's
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[/blockquote]
I expect that you will start a card drive to replace the TWU as your bargaining agent?
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[/blockquote]
Buck,
I've said here, and on PB/BB's, that I'd trade the IBT, for the "weak sister" TWU, tomorrow.

One problem for me with starting a card drive is that when our contract expires in 3/1/04(add 6 mo. for final ratification)(9/1/04), I'll have already called the retirement folks at HDQ, instructing them to get the papers ready.
BUT,
even so, Mabey I could make "that" my last "battle", even though I'd be "out the door, AND NEVER LOOKING BACK !!!!

"HMMMM"

NH/BB's
 

Buck

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Contributor
Aug 20, 2002
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[blockquote]
----------------
On 2/8/2003 5:12:46 PM NewHampshire Black Bears wrote:


Without exception, any LLC/er that I've EVER come across, was a good person, AND A BETTER UNION PERSON THAN(most) "ANY" OF THE TWU "CLOWNS I'm forced to work with today.

NH/BB's
----------------
[/blockquote]
I expect that you will start a card drive to replace the TWU as your bargaining agent?
 
B

bagsmasher

Guest
Buck,
I've been pissed at the TWU too, but who would we replace them with? AMFA doesn't want us unskilled FSC's. It's bad enough that the IAM is still in firm control at MCIE, I wouldn't want to guess what shape we'd be in if they took control systemwide. So tell me, just who should we replace the TWU with?
 

Buck

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NHBB:

I believe that you should go ahead and retire, don't worry about this stuff anymore. You did your time. Your last battle might be securing your pension?

Bagsmasher:

That is exactly the point. The mechanics have an alternative. The Fleet Service could start their own union also. The Pilots did it; the Flight Attendants have done so. The one thing they left behind seems to be the AFL-CIO. They have done nothing in recent times to show that they remember what unionism is all about. The worker, at least the airline worker has become a second thought. If the AFL-CIO would stand up for the airline workers, the industry would not be in this mess. The confrontation would have happened a long time ago. Things would be different, but unionism and its membership would have power. Today they are just whisper of what they were. This is why mechanics are seeking their own destiny. We tire of the association of politics that do nothing for our craft and class. In many cases the manifesto of the Democratic Party today is far from what registered Democrats truly believe. When the bargaining agent has failed it is time to hire a new one. Who would that be for the Fleet Service? Maybe you Bagsmasher could take the rest of your years and push for a little independence.
 

WingNaPrayer

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Along with a nice slash in wages, Dubya thinks you all should pay 1/3rd MORE in income taxes to boot!

***** ***** ***** ***** *****​
New Tax Plan May Bring Shift In Burden
Poor Could Pay A Bigger Share


By Jonathan Weisman
Washington Post Staff Writer

As the Bush administration draws up plans to simplify the tax system, it is also refining arguments for why it may be necessary to shift more of the tax load onto lower-income workers.

Economists at the Treasury Department are drafting new ways to calculate the distribution of tax burdens among different income classes, which are expected to highlight what administration officials see as a rising tax burden on the rich and a declining burden on the poor. The White House Council of Economic Advisers is also preparing a report detailing the concentration of the tax burden on the affluent and highlighting problems with the way tax burdens are calculated for the poor.

The efforts would thrust the administration into a debate that until now has lingered on the fringes of economic policy: Are too few wealthy Americans paying too much in taxes for too many, and should the working poor and middle class be shouldering more of the tax burden?

"The increasing reliance on taxing higher-income households and targeted social preferences at lower incomes stands in the way of moving to a simpler, flatter tax system," R. Glenn Hubbard, chairman of the Council of Economic Advisers, warned at a tax forum at the American Enterprise Institute on Tuesday.

The Council of Economic Advisers' "Economic Report to the President," scheduled for release late next month or in early February, is to include a section arguing for new methods to calculate the distribution of tax burdens on various income groups.

The Treasury Department is working up more sophisticated distribution tables that are expected to make the poor appear to be paying less in taxes and the rich to be paying more.

Answering critics who say the working poor do face high taxes because they pay high Social Security payroll taxes, outgoing White House economic adviser Lawrence B. Lindsey told the AEI tax forum that the 12.4 percent Social Security levy should not be considered when tax burdens are calculated. Lindsey said the Social Security tax is ultimately returned to the taxpayer as a benefit.

Lindsey compared the Social Security tax to a deposit in a neighborhood bank's Christmas Club. In such clubs, periodic deposits are returned in a lump sum during the holiday season, and Lindsey said no one would consider such deposits a tax.

Early this month, J.T. Young, the deputy assistant treasury secretary for legislative affairs, lamented in a Washington Times opinion article: "[Higher] earners cannot produce the level of revenues needed to sustain the liberals' increasingly costly spending programs over the long-term. . . . If federal government spending is not controlled, then the tax burden will have to begin extending backward down the income ladder."

The tenor of the administration's policy discussions marks a dramatic shift from early in 2001, when Bush sold his 10-year, $1.35 trillion tax cut as a tool to "take down the tollgate on the road to the middle class," emphasizing its beneficial impact on workers "on the outskirts of poverty." At that time, the administration fretted over the tax burden on the working poor, which the White House calculated to include federal income taxes, state taxes and the Social Security tax.

When administration officials pushed the need to create private investment accounts to supplement Social Security, they specifically warned that taxes paid into Social Security would not necessarily be returned unless the system was reformed.

William W. Beach, an economist at the Heritage Foundation think tank, said he was sympathetic to Lindsey's argument that the Social Security tax is not really a tax. But, he said, it was a dangerous argument for a Republican to make.

"Do I allow defense spending to offset my income taxes since I like to be defended? Do I allow road taxes to offset my profits taxes because I use the roads?" he asked. "If you do start down that road, it's hard to see anything as taxes."

But for the purposes of a tax reform debate, removing Social Security taxes from consideration could have a sizable impact. The top 5 percent of the nation's taxpayers paid 41 percent of all federal taxes, a hefty share, according to the Joint Committee on Taxation. But that same group paid from 56 to 59 percent of all income taxes, an even more impressive burden.

"If we take out Social Security, the poor will look very lightly taxed," said Robert S. McIntyre, of Citizens for Tax Justice, a tax research group backed by organized labor.

Democrats say the shift could prove ominous for lower-income Americans. And they appear eager for the fight.

"These people are setting the tone in saying the poor really are not being taxed enough and that the burden is too high on the rich," said New York Rep. Charles B. Rangel, the ranking Democrat on the House Ways and Means Committee. "We're going back some 70 years."

Rep. Robert T. Matsui (D-Calif.), a member of the committee, said: "I don't think there's any question you have a number of extremists in the Republican ranks that would like to see the wealthy do very well. They're going to try to make the case that the average American is overtaxed and subsidizing the poor."

But to some conservatives, the shift is long overdue. Rep. Jim DeMint (R-S.C.) has argued for two years that the nation is entering a dangerous period in which the burden of financing government is falling on too few people. In such an environment, the masses will always vote for politicians promising ever-more-generous social programs, knowing they will not have to pay for such programs, DeMint warned.

"This issue is coming to a head," DeMint said earlier this month, just minutes after making his pitch to outgoing Treasury Secretary Paul H. O'Neill. "You can't maintain a democracy if the people who are voting don't care what their government costs."

DeMint and his allies have called for a national sales tax to replace the income tax. For those below the federal poverty line, sales taxes paid would be refunded, but under the system, at least they will have seen the cost of government, he said. The working poor would accept a higher tax burden because they would be relieved of the need to file a tax return.

DeMint called his ideas "the duck's feet under the water," propelling his proposals forward invisibly. Conservative thinkers at the Heritage Foundation and other think tanks have begun expressing similar opinions. Last month, the Wall Street Journal editorial page made waves with an article titled, "The Non-Taxpaying Class."

"Workers who pay little or no taxes can hardly be expected to care about tax relief for everybody else," the editorial stated. "They are also that much more detached from recognizing the costs of government."

But advocates of this new line can expect a furious backlash. Liberal commentators have already reduced the argument to an appeal to tax the poor, and even conservatives worry that the label will stick.

"It's hard to conclude it's anything else," said the Heritage Foundation's Beach.

Michael J. Graetz, a Yale University law professor and tax reform expert, said he could not figure out where the administration's arguments are supposed to lead.

"I would be very surprised if the agenda is to put more people on the tax rolls," he said. "That doesn't seem like a good political agenda."

But Democrats say that is exactly where the administration is heading. Matsui said he sees the seeds of a disastrous Republican overreach.

"The president is making the case that people who earn between $50 [thousand] and $75,000 a year should be paying a third more taxes," Matsui said. "I'd love to debate him on that."

But McIntyre worried that in the marketplace of ideas, the new argument could carry the day.

"I would hope the public would find it repugnant," he said, "but I suppose you never know."

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