Pension Freeze Proposal From AA

[ord78]

Bankruptcy Update
March 7, 2012


This morning the company notified the APFA of an update to their term sheet. The company changed their proposal from terminating the pensions to a ‘hard freeze’ of the pensions. A follow up Hotline will be sent shortly defining what this will mean for the Flight Attendants.

APFA did not respond to their proposal but is meeting internally to evaluate the proposal.

We will update you via this Hotline as additional information becomes available.

 

[ord78]

And this over at TWU

TWU Wins Freeze of Pension Plans at American Airlines
March 7, 2012AMR Drops Demand to Shift Pensions to U.S Gov’t Agency; Backs off Demand for Additional Concessions in Return
Dallas — In a major development in the ongoing AMR bankruptcy case, TWU members at American Airlines have won a freeze of current pension plans.
“The company initially wanted to terminate our pension plan, shift the cost to the government, and put our members at risk,” said TWU International President James C. Little. “Our negotiating team drew a line in the sand and said this was totally unacceptable – and today we are pleased to report that AMR has informed us they are willing to accept our proposal for a freeze of the current pension plan.”

AMR also agreed to drop its demand for an additional $600 to $800 million in concessions, which the company claimed was the cost of a pension plan freeze.

“We would have preferred to keep the existing defined benefit plan in place,” said Little, “but that simply was not possible.”

“We’re still discussing how to handle retirement savings going forward, as well as a very wide range of other issues,” said Little. “We are not out of the woods, and we can’t implement the pension plan freeze until we reach an overall agreement. But this is a very important step forward.”

AMR had proposed terminating its pension plans for all employees, and transferring liabilities to the U.S. Pension Benefit Guaranty Corporation (PBGC), resulting in a $10 billion deficit to the government agency that guarantees U.S. pension plans. Some 130,000 current employees and retirees are covered by AMR pension plans.

PGBC director Josh Gotbaum objected strongly to AMR’s plans, insisting that the company had not proven the need to terminate the plan, and pointing out that other airlines had emerged from bankruptcy without terminating their pension plans.

“The PBGC and Mr. Gotbaum acted very responsibly, by not letting this company shift its liabilities onto all the other workers whose pensions are backed by the agency,” said Little. “A pension freeze is a much better outcome.”

 

[eolesen]

Glad to see it (selfishly, since it will still allow me to draw on my pension 10 years earlier than I'd be forced to by the PBGC...). It might also soften the blow for some of those who are furloughed.

Have to wonder if this somewhat neuters Gotbaum's influence on the restructuring going forward and strengthens the case for an independent restructuring... Someone else taking over might still consider some or all of the pensions a toxic asset, and once frozen, it could still be terminated down the line if necessary.

 

[AA89]

And this over at TWU

TWU Wins Freeze of Pension Plans at American Airlines
March 7, 2012AMR Drops Demand to Shift Pensions to U.S Gov’t Agency; Backs off Demand for Additional Concessions in Return
Dallas — In a major development in the ongoing AMR bankruptcy case, TWU members at American Airlines have won a freeze of current pension plans.
“The company initially wanted to terminate our pension plan, shift the cost to the government, and put our members at risk,” said TWU International President James C. Little. “Our negotiating team drew a line in the sand and said this was totally unacceptable – and today we are pleased to report that AMR has informed us they are willing to accept our proposal for a freeze of the current pension plan.”

AMR also agreed to drop its demand for an additional $600 to $800 million in concessions, which the company claimed was the cost of a pension plan freeze.

“We would have preferred to keep the existing defined benefit plan in place,” said Little, “but that simply was not possible.”

“We’re still discussing how to handle retirement savings going forward, as well as a very wide range of other issues,” said Little. “We are not out of the woods, and we can’t implement the pension plan freeze until we reach an overall agreement. But this is a very important step forward.”

AMR had proposed terminating its pension plans for all employees, and transferring liabilities to the U.S. Pension Benefit Guaranty Corporation (PBGC), resulting in a $10 billion deficit to the government agency that guarantees U.S. pension plans. Some 130,000 current employees and retirees are covered by AMR pension plans.

PGBC director Josh Gotbaum objected strongly to AMR’s plans, insisting that the company had not proven the need to terminate the plan, and pointing out that other airlines had emerged from bankruptcy without terminating their pension plans.

“The PBGC and Mr. Gotbaum acted very responsibly, by not letting this company shift its liabilities onto all the other workers whose pensions are backed by the agency,” said Little. “A pension freeze is a much better outcome.”

The headline should read "Jim Little takes credit for work done by PBGC director Josh Gotbaum".
Does this even affect our pension if we are due to receive less than the max guaranteed by the PBGC?

 

[limit]

While this is a better outcome to termination,as far as I am concerned its a victory, and a setup,
by the company playing their cards right.
They are freezing the two plans that are capable of sustaining themselves,
and on the other hand they put added pressure, on the two unions and the judge,
for the importance of the rest of their plan to be put forward now.
The raping of the contract just became a tad bit easier to accomplish.

Appropriately the company states:

"However, taking on the pension freeze obligations would make it more critical than ever
that we achieve the changes to our cost structure that are essential to the company's ability to successfully restructure."


Welcome to playing with the big boys....... you smart people you.

Informer would you play that video for them again please?

 

[damajagua]

While this is a better outcome to termination,as far as I am concerned its a victory, and a setup,
by the company playing their cards right.
They are freezing the two plans that are capable of sustaining themselves,
and on the other hand they put added pressure, on the two unions and the judge,
for the importance of the rest of their plan to be put forward now.
The raping of the contract just became a tad bit easier to accomplish.

Appropriately the company states:

"However, taking on the pension freeze obligations would make it more critical than ever
that we achieve the changes to our cost structure that are essential to the company's ability to successfully restructure."


Welcome to playing with the big boys....... you smart people you.

Informer would you play that video for them again please?

I agree. The company is already saying that by freezing the pensions it will need to go out and raise capital.
That they must get the 1.25 billion from employees. If you read between the lines this was a strategic
decision. Advantage AA. Unions get ready to get rape by the rest of the term sheet.
The company comes out like the good guy here. Saying we are willing to compromise.
But we now need the unions to give us the rest of what we need to be a successful
restructuring.

 

[enough already]

I agree. The company is already saying that freezing the pensions it will need to go raise capital.
That they must get the 1.25 billion from employees. If you read between the lines this was a strategic
decision. Advantage AA. Unions get ready to get rape by the rest of the term sheet.

But the twu said it was a victory for us/THEM!!!

 

[Ed Norton]

And this over at TWU

TWU Wins Freeze of Pension Plans at American Airlines
March 7, 2012AMR Drops Demand to Shift Pensions to U.S Gov’t Agency; Backs off Demand for Additional Concessions in Return
Dallas — In a major development in the ongoing AMR bankruptcy case, TWU members at American Airlines have won a freeze of current pension plans.
“The company initially wanted to terminate our pension plan, shift the cost to the government, and put our members at risk,” said TWU International President James C. Little. “Our negotiating team drew a line in the sand and said this was totally unacceptable – and today we are pleased to report that AMR has informed us they are willing to accept our proposal for a freeze of the current pension plan.”

AMR also agreed to drop its demand for an additional $600 to $800 million in concessions, which the company claimed was the cost of a pension plan freeze.

“We would have preferred to keep the existing defined benefit plan in place,” said Little, “but that simply was not possible.”

“We’re still discussing how to handle retirement savings going forward, as well as a very wide range of other issues,” said Little. “We are not out of the woods, and we can’t implement the pension plan freeze until we reach an overall agreement. But this is a very important step forward.”

AMR had proposed terminating its pension plans for all employees, and transferring liabilities to the U.S. Pension Benefit Guaranty Corporation (PBGC), resulting in a $10 billion deficit to the government agency that guarantees U.S. pension plans. Some 130,000 current employees and retirees are covered by AMR pension plans.

PGBC director Josh Gotbaum objected strongly to AMR’s plans, insisting that the company had not proven the need to terminate the plan, and pointing out that other airlines had emerged from bankruptcy without terminating their pension plans.

“The PBGC and Mr. Gotbaum acted very responsibly, by not letting this company shift its liabilities onto all the other workers whose pensions are backed by the agency,” said Little. “A pension freeze is a much better outcome.”

Wow, Jim Little drew a line in the sand....lines in the sand can easily blow away. He must have threatened to fire up the silk screen printing machines and unleash the mighty "TWU Strike Snake"......hssss,,....hssss.....

 

[TWU informer]

Now all they need to do is work out the details of the rest of "my plan" and we will be good to go.

 

[ord78]

They are freezing the two plans that are capable of sustaining themselves,
and on the other hand they put added pressure, on the two unions and the judge,
for the importance of the rest of their plan to be put forward now.
The raping of the contract just became a tad bit easier to accomplish.

Good point...and now they can turn around and say to Lane "see, we gave, we moved...now let us rip up the rest of the CBAs"

 

[AC AA LA FA]

I am NOT OK w taking in the shorts re the rest of the TS to save/freeze pension...Im not willing to work under conditions remotely set forth in the TS just to "save" pensions..I would rather see value built back into the agreement...If it comes to a vote and is set forth as such I will vote NO..and advocate others I know to do the same....

 

[Buck]

I am NOT OK w taking in the shorts re the rest of the TS to save/freeze pension...Im not willing to work under conditions remotely set forth in the TS just to "save" pensions..I would rather see value built back into the agreement...If it comes to a vote and is set forth as such I will vote NO..and advocate others I know to do the same....

"Hiss Hiss"

 

[ord78]

I am NOT OK w taking in the shorts re the rest of the TS to save/freeze pension...Im not willing to work under conditions remotely set forth in the TS just to "save" pensions..I would rather see value built back into the agreement...If it comes to a vote and is set forth as such I will vote NO..and advocate others I know to do the same....

Agreed and right there with you on that

 

[eolesen]

Well, for the sake of all the no voters, I suggest you verify with your union if the agreement to freeze the pension is tied to a consensual agreement.

My guess is that absent a consensual agreement, the pension could wind up distress terminated again.

 

[strikeforce]

I am NOT OK w taking in the shorts re the rest of the TS to save/freeze pension...Im not willing to work under conditions remotely set forth in the TS just to "save" pensions..I would rather see value built back into the agreement...If it comes to a vote and is set forth as such I will vote NO..and advocate others I know to do the same....

there's an obvious cost to freezing the pension, and I'm not sure what, if any, horse trading was involved in this. For the company to go out and seek more capital (debt) to fund these pensions immediately either illustrates managements fiscally reckless behavior or the unions are being set up for a shallacking. Either way, WE are going to pay!