Pensions!

[Hopeful]

From what has been in the news, and from what I've read ont the UAL board here, it seems that the UAL people are going to lose their pensions in some way, shape, or form.

Now they are going to be the envy of the remaining large carriers, and corporations in general because they will have no pension liability. They not only stuck it to the employees, but the taxpayer ultimately will fot the bill.

Do you really believe AA will be the last one standing with traditional pension plans?

Two things are likely to transpire with AA.


First, AA will approach the unions and beg to change the pension plans for a cheaper cash balance, or 401k match plan...VOLUNTARILY!

OR


Second, if the unions balk, then AA will begin the gloom and doom scenario and threaten Bankruptcy again. (This tactic had the TWU on their knees begging for mercy with fear of losing union dues paying members!)



EITHER WAY, WE ARE GOING TO LOSE!


The big question is WHAT WILL WE GET IN RETURN?

 

[Checking it Out]

So Hopeful, what do you propose?

 

[Decision 2004]

So Hopeful, what do you propose?

[post="171153"][/post]​

How about a Nationwide Shutdown/Protest of the Transportation System for one, while we visit the all powerful AFL-CIO Headquarters in Washington D.C.?

Or why should we propose anything, Jim Little gave away the farm to protect all the jobs, maintenance bases, and pensions. There is really nothing to fear is there CIO?

 

[Hopeful]

CIO,
Just by your question to me, I can see that you are prepared for a similar attact on our pensions at AA.

But I will tell you I do expect AA's pensions to come under attack sooner rather than later.

What I am afraid is that we will get NOTHING in return for giving up our pension.

So what I propose is that when AA comes with its hand out asking for the pension, we make it clear that if they want the pension, they must restore EVERYTHING they took from us. But since all they have to do is threaten bankruptcy again, the TWU will give them what they want and tell us "AT LEAST WE STAYED OUT OF THE BANKRUPTCY COURT!"

Look at this way, CIO. They got 650 million dollars in concessions from just the TWU. And when you factor in layoffs, that number went much higher.

So if they would like to get the pension, the savings of all pension plans far exceed what was given back in concessions. And when you consider the future pension funding, the savings to AA increase over and over.


So, again, I propose that we get EVERYTHING back if they want the pension!

 

[FWAAA]

What I am afraid is that we will get NOTHING in return for giving up our pension.

So what I propose is that when AA comes with its hand out asking for the pension, we make it clear that if they want the pension, they must restore EVERYTHING they took from us.

Look at this way, CIO. They got 650 million dollars in concessions from just the TWU. And when you factor in layoffs, that number went much higher.

So if they would like to get the pension, the savings of all pension plans far exceed what was given back in concessions. And when you consider the future pension funding, the savings to AA increase over and over.
So, again, I propose that we get EVERYTHING back if they want the pension!

[post="171163"][/post]​

You may be right, but I doubt it.

I agree that AA might like to terminate its pensions (especially now that UAL will probably succeed at once again screwing its employees) but your math needs some work. AA's pensions are underfunded, but nowhere near as much as UAL's pensions. And there's no way AA would ever give back all the concession savings in exchange.

AA cut $1.6 billion of annual wages from its unionized workforce with last year's concessions. Before anyone screams "what about the $1.8 billion," remember that the other $200 million came from management and nonunion employees.

This year, AA contributed a total of $461 million to its pensions (and is completely paid up for 2004) and has publicly stated that next year's total contributions will be about $450 million. That's chump change for a company with revenues this year of maybe $18 billion.

AA saves a lot more each year from the concessions than its DB pension contributions cost it. Almost four times as much.

Besides, as interest rates finally rise from their ridiculous lows of the past several years (federal funds rate at 1% for 2 years now until recently), the amount AA needs to contribute to the plans will actually go down, making them even cheaper than they are now.

The difference at UAL compared to AA is that UAL's plans are grossly underfunded compared to AA's plans; UAL's minimum contributions are about $6 billion over the next 5 years. That's several times the amount that AA will have to contribute to its plans.

Why the difference? UAL mismanagement? AA finally did something right and correctly managed its pension plans' assets? Who knows.

So you're right that AA will not pay you all the concessions to terminate the plans - that would be severely overpaying (paying $1.6 billion to save $450 million). Not even AA management is THAT stupid.

Maybe you didn't notice last year, but AA really didn't want to file for Ch 11. With USAir and UAL already filing by last spring, it would have been easy for AA to join them. But it didn't. So why would AA rush to the courthouse to save a measly $450 million annually? With over $3 billion of cash in the bank? AA's pensions are underfunded by less (only $2.7 billion) than its current cash balance. How much are UAL's pensions underfunded? The PBGC says $8 billion. That's a big difference. The 2004 contributions that UAL has said it would skip are over half of the new DIP loan. So no wonder it isn't going to pay them. If it did, it would run out of money by the end of the year.

Another factor is that USAir is likely going to cease operations, and the prognosis for UAL is not good. If one (or both) of them go out of business, AA's chances of success go up. Way up. Right now there are too many airlines chasing the remaining high fare business travelers. But if one of them disappears . . .

That happens, and the future at AA looks even brighter.

Of course, fuel stays at $1.20+ per gallon and all the airlines may soon run out of money and the whole discussion is moot.

Gotta ask while I'm here: Hey, Mr Owens, how's Ch 11 treating all the good people at UAL now? IND completely closed down (thousands of mechanics furloughed for good) and now UAL is going to cancel the pensions for all who remain. Still wish AA had filed for bankruptcy? You can be sure that AA would have killed its pensions if it had filed last year.

 

[Ken MacTiernan]

fwaa,

"Gotta ask while I'm here: Hey, Mr Owens, how's Ch 11 treating all the good people at UAL now? IND completely closed down (thousands of mechanics furloughed for good) and now UAL is going to cancel the pensions for all who remain. Still wish AA had filed for bankruptcy? You can be sure that AA would have killed its pensions if it had filed last year."

What on Earth are you saying? UAL closed IND completely with "thousands of mechanics furloughed for good" because the iam allowed it. Chapter 11 at UAL? Are their AMTs making more than we are with better benefits?
UAL is going to cancel the pensions? More than likely. But why? Because UAL management can not run an airline. Why didn't the iam make noise and use their political afl-cio power to demand that UAL fullfill their obligations to the pension funds the FIRST time they cried that they could not make the payments.

Do not fear. As long as the twu remains at AA more concessions will be given to AA.

 

[Bob Owens]

FWAAA,Aug 21 2004, 03:46 PM
You may be right, but I doubt it.

I agree that AA might like to terminate its pensions (especially now that UAL will probably succeed at once again screwing its employees) but your math needs some work. AA's pensions are underfunded, but nowhere near as much as UAL's pensions. And there's no way AA would ever give back all the concession savings in exchange.

The fact is that AA screwed their employees worse. The loss of Holiday pay and vacation is nearly $7000 for each mechanic.

AA cut $1.6 billion of annual wages from its unionized workforce with last year's concessions. Before anyone screams "what about the $1.8 billion," remember that the other $200 million came from management and nonunion employees.

Its probably closer to $2 billion because retirements and layoffs were not added in and more than likely the companys numbers were on the low side. I'm sure when we ask for the same things we gave up back the numbers will be much higher than they were when we gave them up. You cant say that uits because of raises because at the end of this contract we will still be making less than we were before.


This year, AA contributed a total of $461 million to its pensions (and is completely paid up for 2004) and has publicly stated that next year's total contributions will be about $450 million. That's chump change for a company with revenues this year of maybe $18 billion.

But it is still underfunded isnt it?

AA saves a lot more each year from the concessions than its DB pension contributions cost it. Almost four times as much.

Besides, as interest rates finally rise from their ridiculous lows of the past several years (federal funds rate at 1% for 2 years now until recently), the amount AA needs to contribute to the plans will actually go down, making them even cheaper than they are now.

The difference at UAL compared to AA is that UAL's plans are grossly underfunded compared to AA's plans; UAL's minimum contributions are about $6 billion over the next 5 years. That's several times the amount that AA will have to contribute to its plans.

Well since pensions are based upon wages its understandable that UAL has to contribute more. Should we be happy that since we make much less than UAL and other airlines that we might have a pension? If we work for a wage that is unacceptable what makes you think that we should be so happy about a pension thats only a fraction of an unacceptable wage?

Why the difference? UAL mismanagement? AA finally did something right and correctly managed its pension plans' assets? Who knows.

So you're right that AA will not pay you all the concessions to terminate the plans - that would be severely overpaying (paying $1.6 billion to save $450 million). Not even AA management is THAT stupid.

Maybe you didn't notice last year, but AA really didn't want to file for Ch 11.

No kidding!

With USAir and UAL already filing by last spring, it would have been easy for AA to join them. But it didn't. So why would AA rush to the courthouse to save a measly $450 million annually? With over $3 billion of cash in the bank? AA's pensions are underfunded by less (only $2.7 billion) than its current cash balance. How much are UAL's pensions underfunded? The PBGC says $8 billion. That's a big difference. The 2004 contributions that UAL has said it would skip are over half of the new DIP loan. So no wonder it isn't going to pay them. If it did, it would run out of money by the end of the year.

Who knows what new numbers will pop up. It seemed that AA was doing fine until January of 2003 then they claimed they lost $3.5 billion by March. So what if $988 million was Goodwill and $1.5 billion was for Eagle?

Another factor is that USAir is likely going to cease operations, and the prognosis for UAL is not good. If one (or both) of them go out of business, AA's chances of success go up. Way up. Right now there are too many airlines chasing the remaining high fare business travelers. But if one of them disappears . . .

I agree that USAIR may go, but if UAL goes then, from the custmers point of view, their will be too few carriers. Remember that Bush would not let UAL strike because of the broader economic impact, well the economy isnt much better today. It would takes weeks if not months for the remaining carriers to restore service to many of the communities wher UAL is dominant.

That happens, and the future at AA looks even brighter.

Of course, fuel stays at $1.20+ per gallon and all the airlines may soon run out of money and the whole discussion is moot.

Yea right, all the airlines are going to dissapear because they have to pay the same price that European Airlines have been paying for years.

Gotta ask while I'm here: Hey, Mr Owens, how's Ch 11 treating all the good people at UAL now? IND completely closed down (thousands of mechanics furloughed for good) and now UAL is going to cancel the pensions for all who remain.

I would say that those who were laid off are doing about the same as the thousands that AA laid off, however those that are working are doing a lot better than us, at least $10,000 a year better than us. That $10,000 put into a 401K is a safer investment than our possible pension.

Still wish AA had filed for bankruptcy?

Did I ever say I wish that AA filed? NO! My position was not to give those absurd concessions no matter what management, the same management that has decieved the union before, claimed they were going to do. Understand the difference smart guy?

You can be sure that AA would have killed its pensions if it had filed last year.

Oh really? Why? Didnt you just get done explaining that AA pension liability was not that big of a deal?

 

[FWAAA]

I would say that those who were laid off are doing about the same as the thousands that AA laid off, however those that are working are doing a lot better than us, at least $10,000 a year better than us. That $10,000 put into a 401K is a safer investment than our possible pension.

. . . and $1.5 billion was for Eagle?


Still wish AA had filed for bankruptcy?

Did I ever say I wish that AA filed? NO! My position was not to give those absurd concessions no matter what management, the same management that has decieved the union before, claimed they were going to do. Understand the difference smart guy?

You can be sure that AA would have killed its pensions if it had filed last year.

Oh really? Why? Didnt you just get done explaining that AA pension liability was not that big of a deal?

[post="171201"][/post]​

About that $1.5 billion at Eagle that you mentioned: I'm not familiar with this line item; does it appear in the 10-K and if so, which year? Thanks. I assume that it is another component in the "inflated" or "aritificial" losses (in your opinion) shown by AMR from 2001-2003, but I don't remember the details of this specific allegation.

The guys at UAL (those who are still working) are making $10k more than the mechanics at AA? I thought the guys at WN made $10k more than you, but I didn't realize that UAL paid as much (even after their concessions) as WN pays. I learn something new everyday.

Since AA would have filed had the concessions been rejected, and since you have posted numerous times that you would rather take your chances in front of a bankruptcy judge, the logical conclusion is that you wish that AA had filed Ch 11 instead of accomplishing its savings outside bankruptcy. Understand logic, smart guy?

Sure, the AA pensions are not that big a deal, but had you and the others rejected the concessions, you can be certain that AA would have canceled them while in bankruptcy. AA can afford to fund them now, but when in bankruptcy you tend to fix all your problems while there. I'm certain that AA would have done the same thing as UAL is doing right now.

My point is that you're dreaming if you think that AA's management (stupid they may be) is going to file Ch 11 now just to hose the poor TWU members and everyone else. Especially since, according to you and the other vocal complainers, AA has been very adept at hosing the poor TWU members for many years (40? 50? How many years have the poor souls who fix AA's planes been screwed by their own union?) without ever having filed Ch 11.

Best of luck with the union replacement - I don't have a horse in that race, but it sounds like it would make you happy, so I hope it works out.

 

[Hopeful]

FWAAA:

Where I disagree most with you is that you say AA can afford to fund the pensions and for the past 40-50 years they have paid all retirees!

AA can afford to pay the pensions, you are correct, but when UAL gets out of the liability of 8 billion dollars, AA will be at a cost disadvantage with them as well as the low cost carriers.

Would you agree to no more raises until your retirement with AA if they promise not to eliminate the traditional pension plan?

If you think for one minute that AA will be the last and only airline left with a traditional pension plan while all the other airlines will have none, you are sadly mistaken.

As for AA paying its retirees for the past 40-50 years, so did UAL and USAIR and soon Delta.


But don't worry, all the executives are protected.

 

[FWAAA]

FWAAA:

Where I disagree most with you is that you say AA can afford to fund the pensions and for the past 40-50 years they have paid all retirees!

Would you agree to no more raises until your retirement with AA if they promise not to eliminate the traditional pension plan?

As for AA paying its retirees for the past 40-50 years, so did UAL and USAIR and soon Delta.

[post="171348"][/post]​

You may have misunderstood my comment about 40-50 years. I didn't say anything about AA paying its retirees for the last 40-50 years, I asked Mr Owens how long AA has been HOSING (slang for SCREWING) its hapless unionized employees. In the past he has posted numerous times about the long history of poor representation by the TWU. Given that, I asked him why AA would go to the bother and expense of bankruptcy when it can get all it wants without the trouble and expense of a Ch 11 filing.

About that competitive disadvantage . . . AA already has a huge disadvantage compared to many of the LCCs because of the age of its workforce (ignoring pensions for the moment). The most senior person at B6 has only worked there for 5 years, while anyone at AA with only 5 years seniority is probably furloughed right now. At B6, they all make less (some a lot less) than their counterpart at AA or any other legacy carrier. There is some good news.

That good news is that if AA can hang on for a few more years, the LCCs will be facing higher pay (maybe even unionization at the nonunion shops) and it is perhaps possible that AA's disadvantage will shrink as those years tick by.

And Mr Owens said that UAL mechanics make $10k more than AA's mechanics. If true, the savings from that alone will pay much of AA's DB minimum contributions.

Often forgotten is that although WN doesn't have a traditional DB pension plan, it does incur large expenses in matching 401k contributions, paying profit sharing and in buying its own stock on the open market to satisfy the employees' stock options. Granted, the total expenditures may not equal AA's costs, but it's not like their employees' retirement planning costs them zero. It has a substantial cost.

Oh, and would I forgo raises to guarantee my DB pension? Of course not. But then again, I'm not employed by AMR, nor any of its subsidiaries. Right now is a lousy time to rely on an airline for a paycheck, and I'm hoping that the story at AA turns out better for AA's employees than for the poor people at USAir or UAL, because it looks like they are in for the same thing suffered at Eastern, PanAm, Braniff and all the other failed airlines. Some of us are still optimistic that AA will be one of the survivors.

 

[High Speed Steel]

Hopeful, I really don't see why you would have a problem with your suggestion that AA may come after our pensions. Don't you support amfa..? Don't you support Delle Femine..? Isn't he the one who suggest's we would have been better off in Bankruptcy...? Do you own one of those amfa slogan shirt's that says "Follow the Leader"...? You may need to reconsider your position on the support of the amfa, because their reckless actions are decimating this industry....!!!!

-----------------------------------------------
amfa: The YUGO of the labor movement
Where bargaining means YOU GO....!

 

[Hopeful]

HSS:

AMFA is not here at AA, are they?

 

[enough already]

HSS:

AMFA is not here at AA, are they?

[post="171402"][/post]​

...and according to the Iraqi PR guy "the Americans are not in Bagdad"!!!

 

[Rusty]

You may have misunderstood my comment about 40-50 years. I didn't say anything about AA paying its retirees for the last 40-50 years, I asked Mr Owens how long AA has been HOSING (slang for SCREWING) its hapless unionized employees. In the past he has posted numerous times about the long history of poor representation by the TWU. Given that, I asked him why AA would go to the bother and expense of bankruptcy when it can get all it wants without the trouble and expense of a Ch 11 filing.

[post="171369"][/post]​

How do you know they were going to file chapter 11 in the first place??? Because the company told you so? The twu hired the same people that AA did to check the books. Actually that in it self would lead me to believe the money paid was never actually paid but, went under the table somewhere. There is no doubt the company wanted to accelerate or leapfrog labor to the downside for competitive reasons. They did exactly that and may have caught a competitive edge over the industry yet, how does leapfrogging to the downside help our craft and class or labor in general??? The rest of the industry now must match or better AA to stay competitive even thought they lost some market share in cutbacks and this may be where the twu may have saved a few jobs but, again this is a business proposition not a labor cutting our brothers at other airlines proposition.. As we sit here and watch airline labor beat the hell out of each other by accepting concession after concessions when do we say enough is enough? If all the airlines had gone into bankruptcy would there be less flying public to fill seats? I think not, and would there be less planes flying, again I think not. Why should labor brunt the forces of bad management and why should we give AA the competitive advantage of off labors back just to sell ourselves out at another airline.

I can tell you why, the twu has the same goal as the company and that is to grow the twu. Grow the airline of off labors back (as always) and you grow the twu at the same time cutting that darn iam. Take a look at the twu constitution and you will see that the international is not paid a percentage of membership wages, they are paid to grow the twu. They get raises for the amount of members they can put under the twu logo and wages and benefits are put on the back burner. Then take a look at the usual package offered to twu members. They always say in the reasoning is to allow the company to grow but again it is off of twu members backs.

What if we said it will cost any airline $40 for a skilled worker to work on an aircraft and set national officers wages at a percentage of the workers wages. Then if management screws up and does not have the market foresight to see what is coming then another airline will eat your lunch thus putting you out of business and the worker will fill the vacancy where the alert management team is now hiring and you kept your skilled wages at the same level. Your AMFA priority number is set by your senority date and off to the healthy airline you go.

About that competitive disadvantage . . . AA already has a huge disadvantage compared to many of the LCCs because of the age of its workforce (ignoring pensions for the moment). The most senior person at B6 has only worked there for 5 years, while anyone at AA with only 5 years seniority is probably furloughed right now. At B6, they all make less (some a lot less) than their counterpart at AA or any other legacy carrier. There is some good news.

SWA offered their mechanics a $42hr.

That good news is that if AA can hang on for a few more years, the LCCs will be facing higher pay (maybe even unionization at the nonunion shops) and it is perhaps possible that AA's disadvantage will shrink as those years tick by.

That good news comes from AA airline labors backs while destroying the structure at other airlines, good news for AA bad news for labor as a whole. I would agree that we need to unionize the non-union shop including 3rd party maintenance across the nation. If there is to be tiered wages, it would need to be to stop the movement of work from airlines to 3rd party and vice versa in order to make this more stable work.

And Mr Owens said that UAL mechanics make $10k more than AA's mechanics. If true, the savings from that alone will pay much of AA's DB minimum contributions.

UAL is still at a cost disadvantage in their benefit package. They did not lose holiday, vacation, sick time, and work rules that the twu advocated giving away. UAL has said they did not save money by outsourcing maintenance work, therefore the cost disadvantage of benefits is still being realized.

Often forgotten is that although WN doesn't have a traditional DB pension plan, it does incur large expenses in matching 401k contributions, paying profit sharing and in buying its own stock on the open market to satisfy the employees' stock options. Granted, the total expenditures may not equal AA's costs, but it's not like their employees' retirement planning costs them zero. It has a substantial cost.

I agree with your analysis here. The biggest difference is that the company cannot lead them around by the retirement nose ring because the stock is guaranteed at the preferred rate and is not in arrears. If we learn anything here watching the pilots with large retirement packages and practically begging for pay cuts to save those packages a matching 401K is in my opinion the only way to go granted, cash would be best but, the nose ring would be gone.

Oh, and would I forgo raises to guarantee my DB pension? Of course not. But then again, I'm not employed by AMR, nor any of its subsidiaries. Right now is a lousy time to rely on an airline for a paycheck, and I'm hoping that the story at AA turns out better for AA's employees than for the poor people at USAir or UAL, because it looks like they are in for the same thing suffered at Eastern, PanAm, Braniff and all the other failed airlines. Some of us are still optimistic that AA will be one of the survivors.

This is a cutthroat industry as airlines whack at each other normally using labor for hatchets but, it does not have to be that way. We could organize in trade groups and put the burden of business on managements back!!!

Just my opinions!!!

 

[Bob Owens]

Well it looks like your questions have been answed by my fellow coworkers.

Since AA would have filed had the concessions been rejected, and since you have posted numerous times that you would rather take your chances in front of a bankruptcy judge, the logical conclusion is that you wish that AA had filed Ch 11 instead of accomplishing its savings outside bankruptcy. Understand logic, smart guy?


What makes you so sure that AA would file? If you recall they had a drop dead date, that was subsequently changed after the Flight Attendants rejected concessions. Are you saying that there is no way that the company could have been bluffing? If that is what you are saying how can you, an "outsider", be so sure? How can you be so certain as to the actions of others?

Once again, I said I would rather take the chance of going before a bankruptcy judge than give concessions that were "more than adequate". Thats not the same as saying "I wish we went bankrupt". The fact is you are trying to mislead. Your first statement said that I wished that we went bankrupt-a flat out lie. Your follow up said that I "wish that AA had filed C-11 instead of accomplishing its cost savings outside of bankruptcy". I think that it would have been great if AA could have "accomplished its cost saving outside of bankruptcy, but that does not mean that I feel that I should be willing to fund it. The fact is the other 60% of costs should have been looked at, and if those other creditors were unwilling to renegotiate their terms then fine, lets go, we have been giving the company very favorable terms, that required us to make sacrifices that workers at competing airlines did not have to make, for the last twenty years. I resent the fact that the only thing that avoiding bankruptcy did was protect the stockholders, banks and other creditors. Their contracts, which no doubt were struck during much better times giving those creditors great returns, remain intact while ours were gutted.

We were told that the costs of going though BK would be somewhere around $700 million, or just less than double of what you considered "chump change" to a company with as you claim $18 billion in revenue. For $700 million they could have slashed at that 60% intead of our 40%. So instead of slashing our wages and benifits as much as they were, they at best could have cut us 14% like UAL, that is if the judge refused to take into consideration the cost saving concessions that were already in place such as OSMs, junior fleet service clerks , cross utilization, F S R&D, long pay progressions, prefunding, Flex Benifits etc. Of all the cases that were shown to us of examples where contracts were voided the bankrupt company was at a cost disadvantage to their rivals, who were not going bankrupt. That has not been the case at this company with the TWU for at least the last twenty years.

You did not come to a logical conclusion, your process was flawed because you chose to ignore critical elements, at best you made an assumption. An assumption that was obviously heavily influenced by your desire to support an opinion you are trying to sell to my fellow mechanics. At worst you were attempting to decieve and once again trying to use what your ego tells you is your superior intellect to baffle us with Bull$#!+. I do not need to say any more.