Pilot Pension Issue - Just the Facts

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Jan 11, 2003
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I can not believe what I’m reading, from the same ALPA members that just finished telling me to take the cuts or leave the company. You said the cuts were necessary and I should think about the ones that want to continue working here.

I'm a 25 year employee. I have been demoted from full-time to part-time, my pay was cut from $42,000.00 a year to $27,000.00. I have lost my families healthcare. I have lost my pension plan, and now I’m looking at being classified express. Which will result in my pay being cut to $16,900.00 a year. I’m ready for food stamps. And you're crying! Give me a break!
 
Nobody likes the concessions and it’s easy for an employee to point out pay and productivity excess for other employee groups, but it’s difficult for us to do the same about our own contract. It’s human behavior for this to occur because we all accommodate our thoughts with the questions we ask our selves. I fully understand this point and the depth of the cuts on those who make less than others, which provides those interested in US Airways with 45,000 different opinions on who should make what concession.
ALPA is very pragmatic of the requirement for the pilot’s to give more than other employees to help save the company, but the majority of the pilot’s believe they have given enough and the third proposed cut it the pilot pension plan is facing significant resistance.
Prior to signing the restructuring agreements US Airways employed about 4,700 pilots and 30,000 employees in the other departments. There are 6 times more employees from the other labor group’s and management than ALPA.
ALPA represents 10 percent of the workforce, is 30 percent of the payroll, and took 60 percent of the cuts.
The non-pilot employees represent 90 percent of the workforce, is 70 percent of the payroll, and took 40 percent of the cuts.
ALPA’s total restructuring agreement and modified restructuring agreement pay and benefit concessions were $566 million, plus a $77 million cut in pension pay outs. This represents a total concession of $643 million per year.
The total non-pilot concessions for both agreements is $484 million per year with no pension cuts, which is $159 million less than ALPA.
The average pilot pay and benefit cut is $138,000 per year. ALPA President Duane Woerth told the Senate Appropriations Committee on January 14 the average pilot concession represents 46 percent of a pilot’s total pay and benefits.
The average non-pilot pay and benefit cut is $16,133 per year.
The average pilot pay and benefit cut is about $122,000 per year more than the average non-pilot employee pay and benefit cut.
ALPA is the only employee group that is being asked for a third major concession with the company threatening to distress terminate the pilot pension plan. Management has said that the IAM, AFA, and management pensions are secure.
During the 90’s, the Company did terminate CWA and FSA pensions, but these employee groups would will have 10 years of market performance more than a pilot to improve their defined contribution/401(k) plan market value, whereas most pilots would have less than 10 years total market action to improve an imposed defined contribution plan market value.
Last week at the Senate Appropriations Subcommittee hearing ALPA was “extremelyâ€￾ unhappy with US Airways chief executive officer Dave Siegel’s testimony and I was “deeply disappointedâ€￾ in his remarks. In response to Siegel’s testimony ALPA spokesman Roy Freundlich told the Pittsburgh Post-Gazzette the CEO’s comments were “outrageousâ€￾ and he “betrayedâ€￾ the pilot group.
Some observers have called Freundlich’s comments “inflammatoryâ€￾, but Freundlich’s thoughts are the opinion of the US Airways MEC and rank-and-file members. What’s sad about this development is that any trust that has developed between senior management and ALPA is gone, which does not bode well for the future.
ALPA and its members are upset because the pilot group has provided two retirement concessions, has been the only employee group to provide a retirement concession, and now is being asked to provide a third concession.
The first pilot pension concession was provided in the first restructuring agreement with a reduction in a pilot’s final average earnings. Shortly after signing this agreement, management came back to ALPA and said after discussion with the PBGC, the pilot pension would have to be adjusted again with a reduction in the multiplier and a cap in the accrual of 50 percent.
What’s important to note is that the Treasury Department has a representative on the ATSB and the PBGC as well as the PBGC a sitting member on the unsecured creditor’s committee. What ALPA wants to know is why does the company not know what the government wants and why is the requested pension cuts being renegotiated time-and-time again, shortly after a TA is ratified? Why do the pilot’s have to give again just a few weeks after signing a new agreement?
Recognizing the close discussion between the parties (US Airways, ATSB, and the PBGC), ALPA agreed to management’s plan to provide restoration funding and the MEC ratified the modified restructuring agreement to help the company submit its Plan of Reorganization by the December 20 deadline.
However, shortly thereafter ALPA was notified that the PBGC rejected management’s pension restoration funding plan, but only the pilot plan was at risk of a “distressed terminationâ€￾ and the company would fund every other employee defined benefit retirement plan.
What virtually every ALPA member wants to know is “why aren’t retirement cuts being taken by management, the IAM, and AFA?â€￾ Why do the pilot’s have to take three retirement cuts and no other employee is taking a cut during the bankruptcy process? Is that fair?
Meanwhile, the Pittsburgh Post-Gazette wrote on January 19, “Just when you thought it couldn’t get any worse for US Airways employees, the airline is demanding a drastic reduction in the amount of annual pension contributions it makes. The airline hopes to achieve this through a bill in Congress, but chances look slim because out-of-state lawmakers fear that other ailing companies may seek similar favorable treatment. Without changes in the law, the airline says its only option is to eliminate the pilot’s pension and replace it with a new, less generous one. Otherwise, the airline says, it won’t be able to survive.â€￾
The Post Gazzette’s call: “It must seem for many US Airways employees that the cure to the airline’s financial woes is worse than the disease.â€￾
ALPA believes management is not doing its part to obtain legislative relief and that is why Freundlich said US Airways’ action is “outrageousâ€￾. Moreover, some pilot’s want to know why is the Company “in the pilot’s pocket again before the ink is dry on the last agreement?â€￾ In response, ALPA has said it will not agree to a third cut in retirement benefits and the pilot group has engaged in a significant congressional lobby campaign to obtain legislative relief.
Nobody knows how the discussion to terminate the pilot’s pension will proceed, but there are reports without pilot participation in the process, the company may not be able to terminate the pilot pension before March 31. If true, then the company may violate its bankruptcy financing terms and not be able to emerge from its reorganization that could cause the airline to file for a Chapter 7 liquidation.
Separately, in my opinion, the biggest issue I see forthcoming is that there has been major damage done between ALPA and Siegel, which is likely to have a major negative impact on the corporation moving forward.
What we all need to realize is that perception is reality and it’s your reality that determines your destiny. Let’s hope the pilot pension issue can be resolved because this problem has now become US Airways’ largest bankruptcy obstacle and after management has come so far to successfully reorganize the company, it would be sad to see the airline fail and management’s final destiny “something less than desirableâ€￾.
Meanwhile, one pilot emailed me today an interesting comment, which is now the sentiment of the majority of pilots. This pilot said, “If he (Siegel) thinks he is going to leave this company with the prestige of having negotiated the biggest givebacks in history while preserving labor peace, he has just hit the wall. How many companies will risk their labor relations to hire the man that terminated the retirement of his pilots? He will have Lorenzo written all over him. He needs a mutually acceptable agreement or everything he has worked for is gone.â€￾
Chip
 
From the beginning of my monitoring this site, my motivation was to be able reassure a pilot retiree about the status of US.

Now, uhm.... I'm concerned, less about the airline as a going concern, but more about the retirement, itself, obviously.

Does anybody have any facts about the status of let's say a 2001 retiree who took a lump sum? Perhaps, we don't know what could happen? Is it even feasible that the PBGC would want payback!? How could that be?

Good luck to all.
 
MLT-

Excellent analysis. Sadly, I think that you've put your finger on the main determining factor in the character of the political economy of the US. It is great when we can all do better! BUT, in the long run our whole middle class driven society will not work if the divergence between those that succeed, and those that do ok, but just get by continues to grow! For example, healthcare and housing.

Do we really want it to be such a crap shoot for our kids who are smart, responsible and dedicated when they go to choose careers! A honest, reasonably well-informed, but unforunate decision can make such a HUGE difference in your fortunes!? D

on't tell me that parents aren't at least subconsciously worried about such an eventuality for their kids; why all the 'enrichment' programs for 5 year olds? why all the developmental activities? why don't we enjoy our child's childhood anymore? Because we are afraid that if we and our child don't do everything right, they might end up at the bottom end of your calculation. I think that's a problem.

I post this to show how somebody can have an overwhelming self-interest (a healthy and secure US pilot pension) and still be able to hold on to a principle (divergence between the lucky haves and the unlucky haven'ts) that is not necessarily supportive of that self-interest.

That's what drives me crazy about this bulletin board.

Good luck to all.
 
The irony is exquisite, it would appear Chip and other flying corporate cheerleaders have reached a state of fuel exhaustion. They point fingers at others, who will never see a six figure income, and find that our major investor, Doc Bronner, receives a salary of approximately $300,000 while driving a $22 billion pension fund. The reality is that the party is over. We all realize the potential job market for some occupations is limited, mechs can turn wrenches on any piece of equipment, ground folks are not above entering the various service industries, but pilots, well,?? Chip has preached ad nauseum our responsibility to our company and fellow employees with the superlative leadership Dave&Friends have to offer. So, I say, sit down, buckle up and enjoy the ride, and I might add, be careful what you wish for.
 
[P]
[BLOCKQUOTE][BR]----------------[BR]On 1/20/2003 12:04:55 PM wings396 wrote:
[P]The point that Chip and his ALPA buddies fail to recognize is that even though they have given up a lot, they can still have a modest living with what is left. On the other hand the pay that is left for the CWA & IAM members leaves us with food stamps, some partial unemployment and a free school lunch for the kids. The ALPA percentage may be greater, but the impact is far greater for those who will earn less than 25k a year now. None of us want more than to have a decent home and put food on the table without taking handouts. I doubt that any pilots will fall as far as we will with their income cut. We can't even fathom retiring and will probobly have to work until we are 70, or we drop. [/P]----------------[/BLOCKQUOTE]
[P][/P]wings396-you are so right....but remember,they probably have maxed out credit and all that goes with their salary just like the rest of us.i'm sure their poverty level starts at 90k.[img src='http://www.usaviation.com/idealbb/images/smilies/8.gif']
 
Chip,[BR]I agree with you that the pilot group has conceeded an incredible amount. One thing needs to be corrected though, all groups gave back a percentage of their wages. The groups who have been fortunate to keep their pensions did in fact take a hit on their retirement. Our wages also impact our final average earnings. I am not posting this in an attempt to engage you in a p......ing match, only to clarify the facts.[BR][BR]In an attempt to follow your example I created the following scenario for a company.[BR][BR]100 employees, annual payroll $1,000.[BR]Pilot roster-10% = 10 employees[BR]Payroll 30% = $300.00[BR]each pilot =$30.00[BR]60% giveback =$18.00[BR]take home =$12.00[BR][BR]Other roster-90%=90 employees[BR]Payroll 70%=$700.00 [BR]each employee =$7.70[BR]40% giveback =$3.08[BR]take home =$4.62[BR][BR]I believe Chip the "other employees" look at this and say we are almost at poverty wages and we cannot possibly give anymore. I'm not saying it is fair to the pilot group to carry the burden, only that the other groups are not in a situation to contribute.
 
[blockquote]
----------------
On 1/20/2003 12:04:55 PM wings396 wrote:

The point that Chip and his ALPA buddies fail to recognize is that even though they have given up a lot, they can still have a modest living with what is left. On the other hand the pay that is left for the CWA & IAM members leaves us with food stamps, some partial unemployment and a free school lunch for the kids. The ALPA percentage may be greater, but the impact is far greater for those who will earn less than 25k a year now. None of us want more than to have a decent home and put food on the table without taking handouts. I doubt that any pilots will fall as far as we will with their income cut. We can't even fathom retiring and will probobly have to work until we are 70, or we drop.
----------------
[/blockquote]

I think I read somewhere on this board the definition of overpaid as being someone who makes a dollar more than me.Chip is asking you to walk in his shoes which to you probably looks pretty good right now.Many of our fellow employees are on the street paying the ultimate price. Many that are left with a job are having to make major adjustments to their finances to avoid their own personal BK.I think it's asking way to much to expect non pilot employees to see this from a pilots viewpoint.Therefore, as a pilot I am requesting that you not even try.This is a pilot issue and we will attempt to deal with it on our own.

My best to you!
 
Sorry Chip, but your whinning and crying over your pension is going to fall on deaf ears. The Pilot groups concessions were higher then anyone elses because you were the least productive and had the most to give back. That is the bottom line.

Chip said: "During the 90’s, the Company did terminate CWA and FSA pensions, but these employee groups would will have 10 years of market performance more than a pilot to improve their defined contribution/401(k) plan market value, whereas most pilots would have less than 10 years total market action to improve an imposed defined contribution plan market value."

I say, Gimme a break! So the CWA or FSA employees that were 40, 50 or 60 at the time the pensions were frozen in the 90's were better off then a Pilot of the same age today? That is very weak Chip.

Chip said: "What virtually every ALPA member wants to know is “why aren’t retirement cuts being taken by management, the IAM, and AFA?â€￾ Why do the pilot’s have to take three retirement cuts and no other employee is taking a cut during the bankruptcy process? Is that fair?"

I say: Chip, I can't believe that you have the low hangers to even say something like that! You know the drill about CWA, FSA and all non-contract and middle managements loss of pensions in the 90's. Don't you think that this group of employees were saying the same thing?

Let me reitterate what you have said a million times before....Some retirement is better then none, and if you don't like the working conditions then QUIT and allow the rest of us the opportunity to continue to try and make a living here until we find something else.


7.gif']
 
i have tried to get a response to this before.
the only options for the pension problem from alpa or the company are..
legislative relief or distress termination.

at the senate hearing the pbgc indicated that the irs had authority to grant
payment extentions....has anyone approached the irs.
would a pension freeze,which would not affect current retirees, or conversion
to a cash balance account be a less onerous solution than a distress termination.

what is dave s alternative,,,details,,,and is it workable.

it does not appear that the company and alpa are working together to find the
best alternative, indeed , it appears that both sides have stuck their heads
in the sand awaiting something that may never come.

statistics are no substitute for good judgement.....henry clay
 
The point that Chip and his ALPA buddies fail to recognize is that even though they have given up a lot, they can still have a modest living with what is left. On the other hand the pay that is left for the CWA & IAM members leaves us with food stamps, some partial unemployment and a free school lunch for the kids. The ALPA percentage may be greater, but the impact is far greater for those who will earn less than 25k a year now. None of us want more than to have a decent home and put food on the table without taking handouts. I doubt that any pilots will fall as far as we will with their income cut. We can't even fathom retiring and will probobly have to work until we are 70, or we drop.
 
I don't have a dog in this fight, but the company has said the pilots will have a pension. The good captain seems to be stirring the pot with his post and it appears that it may further alienate the pilot group from the other employees. The company I believe has stated that if the pilot pension is terminated there will be no economic windfall for the company. For the captain to allude to the pilots not cooperating and causing the company to liquidate is unconscionable IMHO.{especially after all the sacrifices that have already been made}
 
To use Chips own words... Nobody likes the pay cuts and things that are happening around here more than i do, however what are the alernatives. We must have the pilots huge pensions cut or else we face liquidation. I understand pilots have contributed the most however Dave said at the beginning that the more you make the more youll give> This seems unfair but the alternative is to not have a paying job or pensions period. We must trust DAVE AND CHIP IM SURE THAT dAVE HAD TO HAVE MENTIONED THIS TO YOU AT SOME POINT DURING ONE OF YOU GUYS CHATS IN THE COCKPIT. Again we must look at the alternative and make a determination. It sounds to me Dave has made the choice already and like others in this company, you wont have much say so. Its a shame we are here but remember the consoling words you have said before to your fellow employees and that should bring it in to perspective. Good luck my friends! Were in this all together.
 
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