Once UA and DL did away or froze pensions it was only a matter of time the only was to get competitive was to match the competition.
AA does not want to match the competition they want to get better deals than their competition because they have always had that from us.
When I hired on 25 years ago the starting pay at AA was $3/hr less and it was 7 years longer to top out than the other legacy carriers. AA had a cost advantage even though on paper the top wages were around the same, we usually lagged by a small amount.
When we would bring up that our top pay lagged competitors we were told "You guys have a better pension because you have a higher multiplier" We did have a higher multiplier but we did not have a better pension because we lost the first year. Here is how that works out. Lets say two mechanics started the same day at different carriers and retired 30 years later making the same pay;
UA 30 x .0165 x $50,000= $24750
AA 29 x .0167 x $50,000= $24215
However that was not how it was explained to us, they would say "years in the plan" which would skew the numbers.
AA 30 x ,0167 x $50,000= $25050
The AA mechanic would be getting $535 less a year as opposed to the $300 more per year he was told the higher multiplier would give him. The Gap does narrow over time, after 40 years it would narrow to $435, but in order for the higher multiplier to out weigh the loss of the first year the AA mechanic would have to have over 80 years in the plan, not even Al Blackman has that. In other words AA had a cost advantage even back when I hired as far as the pension, despite their unchallenged claim that the higher multiplier made our plan richer and they get away with the same slight of hand with other parts of our contract as well.
I've said all along that giving AA those concessions in 2003 was a huge mistake and the fact that they filed has only made me more certain of that. Some say we saved OH by doing that but they forget that we gave AA a huge advantage over their competitors in OH back in 1995. In addition to a weak scope clause we had given AA a permanent underclass of low paid mechanics and they were able to maintain that low cost structure in the event of a RIF- SRPs and OSMs. None of our competitors had that in their contracts, some still dont despite several trips through BK. The question still remains can AA get it done cheaper? The fact that they still bring work in pretty much answers that question.
In April of 2003, UA was only able to extract a 13% paycut and some stuff that we had given up in 1983 from their mechanics, then what happened? We, outside of BK decided to give AA not only a 17.5% paycut but we gave up things that our peers kept even after several more rounds through the courts. Sure we kept our pensions, but then we lobbied so they could underfund it so AA ended up paying less into our pensions than our competitors paid into the DC plans that replaced the DB plans they either terminated or froze. Now its claimed if AA defaults it would be the biggest default ever! Was lobbying to allow AA time to pay a good move? We kept our prefund retiree medical as well, but we more than paid for it by losing 7 sick days, half pay for the first two and 70 IOD days. We kept our pension but we paid for it with having one less vacation week per year regardless of the step, so in other words since 2003, even at our reduced pay we gave the company $10,480 that our competitors did not get even through BK, our holidays were an even bigger concession, we only got five and we got them at half pay, our brothers at UAL didnt lose any holidays until 2005 and they still got eight at double time.
Holiday hours UA AA
2003 120 20
2004 120 20
2005 120 20
2006 64 20
2007 64 20
2008 64 20
2009 64 20
2010 64 20
2011 64 20
Total 744 180
Mechanics at UAL who worked the holidays were paid an additional 744 ours since 2003 while mechanics at AA who worked the Holidays only recieved an additional 180 hours pay. At $32.75 this comes out to the AA guys earning $18,471 less than their peers who went through BK.
So between just the Vacation and the Holidays we earned roughly $29,000 less than our brothers who went through BK in order to save the pension. These were real time dollars that AA saved, not liabilities that could be offset by a strong staock market like the pension and Retiree medical. We also gave up 70 IOD days and 7 sick days per year and several other concessions that our peers at UAL did not lose. If you suffered a serious injury at work that kept you out over 80 days you could have lost as much as another $18,000 more than your peer at UAL who was out the same amount of time.
Yes their DB pension was dumped in the PBGC, but they recieved a 5% DC that included everything but profit sharing, not just base 2080 hours like AA wanted us to accept for new hires and they proposed to Fleet in a TA outside of BK. The half a percent more, if you matched(UAL requires no contribution from the employee for the 5%) is much like the higher multiplier, the fact that OT funds are not matched wipes out any advantage the extra half a percent gives. They also recieved convertable notes and stock in the new company. Their Retiree Medical was cut, but they never paid into it and the last TA had a sick bank funded plan like Continental has with enough sick time to fund it and a reasonable rate to pay for it (12 days vs 8 and 11 hrs vs 20. On top of that in the rejected TA AA wanted us to give our after tax contributions to them for "credit hours" which would have likely dissapeared in BK, that would be a retro pay cut extending back as much as 20 years).
The fact is that AA currently has a cost advantage over most of their competitors, they hide it in the fact that they have more mechanics because we do the work in house but as far as average hourly rates adjusted for things such as Sick Time hours earned per year, Vacation hours earned per year, Holidays hours earned per Year, AA already has pretty much everyone beat, even the ones that went BK.
