Question on Pilot Pension Termination

Andy S.

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Dec 21, 2002
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According to an article in today''s WSJ, if the pilots do not voluntarily agree to the termination or modification of their pension plan, the Company could only terminate that plan by voiding the entire contract (i.e. Section 1113 motion). I have not seen this particular issue addressed before, so I am curious as to whether or not the reporter got his facts right. [BR][BR]As I understand Section 1113, it is an all-or-none action. That is, Management could not petition to selectively void sections of the contract. Does this apply to pensions as well? Or to put another way, can the pensions be terminated involuntarily without voiding the entire pilots'' contract?[BR][BR]Anyone with a good answer to this?[BR][BR]thanks,[BR][BR]Andy S.
 

Andy S.

Member
Dec 21, 2002
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[P]
[BLOCKQUOTE][BR]----------------[BR]On 1/20/2003 9:47:00 AM kiloromeo wrote:
[P]The judge forced a 13% pay cut for the IAM at UAL without voiding the contract...seems like they can[/P]----------------[/BLOCKQUOTE]
[P]That was done under Section 1113(e) and is considered temporary until a new contract is negotiated or terminated under Section 1113©.[BR][BR]Andy S.[/P]
 

autofixer

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Aug 20, 2002
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Go for it...see what happens!
 

PITbull

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Dec 29, 2002
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If I am not mistaken, ALPA spent $457 Million dollars in annual savings to the Company for a 1113 letter this past summer so that the co. would not "motion" for abrogation of their agreement. That, I believe was the point for all the pilot sacrificing at the time. Pilots bought their way with cash to preserve their pensions and working conditions in exchange for this huge monetary sacrifice they (ALPA) received a 19.2% stake in the company and one board seat.

Siegel had said he would not motion for the abrogation of the agreement for ALPA or any group. So, I say, abrogation of the agreements IS NOT an option. There are only three ways to terminate a defined pension plan..
1. Co. and union agree
2. Abrogation of the contract
3. PBGC terminates plan

Other than that...ALPA will have to work out a better solution for themselves from where is sit. As far as going forward...we will not always be "broke" as a company. Times will improve and money will start coming in by early 2004 as predicted by our CEO. I believe the co. should be able to contribute to the defined pension plans especially in light of the fact that WE ALL TO A WAGE CUT THAT HITS PENSION AS A CONSEQUENCE. So, the Co. will contribute less than previous years. Also, when US goes to war in IRAQ, we get hit with another 5% wage hit. Do you think the co. calculated the savings to the contribution on that "hit"?
 
C

chipmunn

Guest
The Company would like ALPA to voluntarily terminate its pension, but ALPA spokeman Roy Freundlich told the Pittsburgh Post-Gazzette the union would not agree to additional concessions. In addition, it appears the PBGC will not terminate the plan as well.

Therefore, I believe the only option for US Airways to rid itself of this obligation is for the Company to file a S.1113 motion to cancel the pilot retirement plan. If the court agrees to change the collective bargaining agreement, ALPA is free to strike, which is being discussed within the pilot group and the Strike Preparedness Committee.

Meanwhile, the Company has told ALPA it will not negotiate a replacement plan unless the pilots voluntarily terminate the pension plan. This approach is unacceptable to ALPA.

The MEC will not terminate the plan and then bet on something to come later.

Again, I believe it is in the company's best interest to obtain a legislative solution to this problem.

Chip
 

Andy S.

Member
Dec 21, 2002
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[blockquote]
----------------
On 1/21/2003 1:33:38 AM chipmunn wrote:

The Company would like ALPA to voluntarily terminate its pension, but ALPA spokeman Roy Freundlich told the Pittsburgh Post-Gazzette the union would not agree to additional concessions. In addition, it appears the PBGC will not terminate the plan as well.

Therefore, I believe the only option for US Airways to rid itself of this obligation is for the Company to file a S.1113 motion to cancel the pilot retirement plan. If the court agrees to change the collective bargaining agreement, ALPA is free to strike, which is being discussed within the pilot group and the Strike Preparedness Committee.

Meanwhile, the Company has told ALPA it will not negotiate a replacement plan unless the pilots voluntarily terminate the pension plan. This approach is unacceptable to ALPA.

The MEC will not terminate the plan and then bet on something to come later.

Again, I believe it is in the company's best interest to obtain a legislative solution to this problem.

Chip

----------------
[/blockquote]

Chip,

Well, that answers part of the question. However, the original question goes to the operation of Section 1113©.

Let me restate it. It is my understanding that under 1113, the Company can only seek to void the ENTIRE working agreement, not just individual pieces. Thus, for the Company to void the pension, it must void the ENTIRE contract.

Now I realize that the Company will likely just impose the contract ALPA ratify minus the pension, but working under an imposed contract (which is subject to further changes at the Company's will) does carry some additional risks.

You say that the PBGC will not distress terminate the pilot pension plan. That is not my take on their statements to date. If the pension is underfunded and they won't approve US's refunding plan, what exactly do they want US to do?

Thanks for your response.

Andy S.
 

lindy

Advanced
Sep 11, 2002
104
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Chip,

I offered the following on another thread..Is not the one million dollar lump sum payment the main sticking point????

"You have made mention several times of how the pilot group has consented to changes to their contractual retirement package. The FAE has been modified, the multiplyer going forward has been changed, etc.etc. The one change that has not taken place, and probably the most important, is the one million lump sum payment in lieu of a monthly retirement check. Most pilots I know who have retired in the last 3-5 years have taken the lump sum. Every financial advisor I know recommends this course of action.

So, Chip, until this lump sum payment problem gets resolved, I don't see how ALPA is giving Dave much room to maneuver. You can portray this any way you want, with whatever smoke and mirrors are at your disposal. However, as you have stated so eloquently many times before, if we go Chapter 7, nobody gets nothin."
 

ClueByFour

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Aug 20, 2002
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[blockquote]
----------------
On 1/21/2003 1:33:38 AM chipmunn wrote:
If the court agrees to change the collective bargaining agreement, ALPA is free to strike, which is being discussed within the pilot group and the Strike Preparedness Committee.
----------------
[/blockquote]

If that's the case, the U MEC, U ALPA make Charlie Bryant look like a labor genius.

Simply amazing. I'm still wondering where a pilot group numbering over 3k+ and well into their 40s and 50s is planning on finding comperable work or any retirement at all if US goes Chapter 7. Brinksmanship generally only works with a fallback plan.

The ultimate irony is that nobody will see any retirement (above and beyond the 28k/year PBGC minimum) or ongoing compensation AT ALL if the company liquidates, but I guess that line is only apropos when it's not ALPA taking one in the chops.

Oh, the irony here is nothing short of amazing. And, just as a point of reference, if the pension plan falls a whole lot further behind in funding, the PBGC can, in fact, terminate it. Don't discount the possibility just because the propoganda committee at the Airways MEC says that it won't happen.
 

savyinvestor

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Jan 15, 2003
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[blockquote]
----------------
On 1/21/2003 12:00:53 PM oldiebutgoody wrote:

It's really sad. This issue WILL end US Airways. No two ways about it.
----------------
[/blockquote]
It doesn't have to end this way. Common sense says the new pension whatever it is will be better than going chapter 7 plus the loss of future wages and other benefits. The reality of the situation is that ALPA always negotiated from a position of power and that no longer is the case. I realize how difficult the situation is, but the alternative is much worse. Good luck to all labor groups. Savy
 

St. Leibowitz

Member
Aug 19, 2002
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If it affected only the pilots, falling upon their collective sword would be their choice. There 25,000-ish others whom they will take down with them.

"That's just collateral damage."--Timothy McVey
 

mrplanes

Advanced
Sep 17, 2002
224
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Savy:

Common sense will prevail in the end. I hope that Dave understands what is at stake here. BTW, the lump sum payment IS GONE. We agreed to that in LOA 84 which is the agreement our MEC approved with NO vote by the rank and file. All Dave has to do is to commit to us he will follow that agreement and the problem is solved. If he agreed to it in December, why will he not agree to it now? Answer: Because it will cost him MORE to agree to that than a "new" plan he says will be in addition to the PBGC minimum once the current plan is terminated. That is called a "hosing" because he evidently knew this was what he was going to do all along.

Will we strike? Depends on the deal. I can assure you that a great many pilots here would be willing to strike if he does not live up to his agreement. And whatever happens after that happens. Because the worst we will do is what the PBGC minimum is. No matter what. And most guys really don't "need" this job after 25 or 30 years of earning the kind of money we have been earning. You don't make that kind of money for that long and not have a substantial reserve available for a lost medical or other catastrophe. This being "the other catastrophe".

So it is my fervent hope something can be worked out. And this is not a negotiation. We already did that. He agreed to it and so did we. If he and his Harvard buddies cannot guarantee to us what they agreed to in December it is my opinion that we will stop flying the jets. And we will not fly them until he follows up on his committment or until he shuts the doors. And that is HIS choice, not ours.

We don't need or want any sympathy from other groups. Everyone here got hosed. And some more than others. That is a shame but reality. This pilot group is done being hosed. I assure you of that. Not a threat. Fact. Pure and simple fact. And what happens after we decide to stop flying the jets is pure and simple up to Dave.

mr
 

mrplanes

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Sep 17, 2002
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pitguy:

With all due respect (and I truly mean that) I hope Dave does not have the same attitude as you. This is not a bluff I can assure you of that. You have no idea how strongly this group feels about this issue. The last time I saw this kind of solidarity was when Lorenzo hosed the CAL guys the first time. Honestly. If he thinks we're bluffing, he better have plan B ready when we park 'em.

mr
 

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