OP
goingboeing
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AAmech said:
We can't even get the parts to repair our own aircraft in a timely manner much less another customers aircraft.
Ual And Usair
- Thread starter goingboeing
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We can't even get the parts to repair our own aircraft in a timely manner much less another customers aircraft.
aafsc said:
Don't be so sure the pension is gone even if UAL kills all of theirs.
As you correctly point out, AA made its 2004 contributions prior to June 30, 2004 and expects to easily make its 2005 contributions, estimated at just over $400 million.
Although WN does not have a DB pension, it spends plenty on 401k matches, employee profit sharing, employee stock purchase and stock options. Don't know exactly what percentage of WN's total employee expense these items comprise, but I am certain it is not miniscule. I'm guessing it's not much less than AA's percentage (just under 7%). Lots of people think that WN doesn't have any retirement-related expense just because its employees have no DB plans, but nothing could be further from the truth.
AMR's 2004 legally required minimum pension contribution of $461 million is less than 7% of AMR's expected 2004 total employee expense of just over $6.7 billion. Even if AA were to somehow dump its DB plan, it would have to replace it with something, right?
The good news is that AA's plan, while underfunded, is in much better shape than the plans at UAL or DL, and AA has much more revenue than either of those two with which to make up the shortfalls. Besides, higher interest rates (which everyone seems to think are on the horizon) will cause AA's plan to once again be completely funded (if not overfunded) in short order. Add possible stock market gains, and the pension issue isn't the problem at AA that it is elsewhere.
OP
goingboeing
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AAmech said:
I've recently seen some MD80 Light 'C ' checks slip to 4 days because of parts not reaching the aircraft in a timely manner.
A mechanic on my crew today waited 8 hours [the whole shift]for a part that should have been in the load center pre-pull. [He never got the part]As a result that particular area of the aircraft is already behind and we cannot afford to lose 8 hours on a 72 hour check.
Our avionics techs do not even have some of the test equipment they need to perform functional checks in a timely manner.Last week they had to wait a whole shift for some test equipment that had to come from another hangar.This caused the aircraft to become a 4 day check instead of 3.
I can go on with example after example of parts and tooling issues that have a dramatic effect on the production.
I do not know what AA you work for but it is not the same AA that I work for!
Sorry-- I should have been more clear. I am talking about DB pensions. Even UA isn't talking about no retirement program at all (at least not yet); they are talking about going from DB to a DC / 401(k) / cash balance plan of some sort.FWAAA said:
So to clarify, if UA succeeds in getting rid of their *DB* pensions programs, even if it is replaced with something else, DB programs will become a thing of the past at all major airlines that currently have them, at least for the "lower level" / front line employees. Including AA.
And, if UA-- or anyone else-- manages to get rid of ANY type of retirement program, including DC / cash balance / matching 401(k)s / etc., the others will follow along in short order. Gotta remain competitive, you know, in the great race to the bottom...
local 12 proud
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not to worry we now have a new program called CI which will make us more effecient, only draw back is it will require more management and less labor :blink: lets throw more money down the toilet on these ideas, heck if all else fails they can blame labor and come for more :down:goingboeing said:
You are confusing two different issues. AA is making the minimum required payments, but they are accruing a liability into the future. SW is making all of its payments now, there is no liability. Employee stock purchase plans do not cost the company anything, AA has one. Stock options are an expense, but a non-cash expense, in reality the share holder, not the company picks up the the tab. Profit sharing is given out only if there is a profit, AA has this too now, so SW is not on the hook if they have a bad quarter or year.
There is really no debate here traditional pension plans are far more expensive than a 401k. Its just been proven over and over, not just by AA.
I also just can't understand why union membership fights this so much, if you have a DB plan with an airline, IT WILL GO AWAY BEFORE YOU RETIRE, and there really isn't much question about it. You can stick your head in sand and pretend its not real, but when you go to retire you'll be getting the minimum.
MCI transplant
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<_< Going-----Maybe I can get an answeer from you! I was told TUL currently does not have it's 145 F.A.A. Certification! But MCIE, and AFW, does! Is this true? And what type of third partly work are you refurring to? I do realize you can do curtain types of work using your 121. But, without the "NEW" 145, isn't the type of work your talking about limited???
Oneflyer said:
I'm not confusing any issues, and the facts are on my side. While it is entirely possible that the DB plans will eventually disappear, it is not a given that the DB plans are always more expensive than DC plans. And it is not a given that AA will quickly cancel its plans if UAL is successful in terminating its DB plans.
Even if the DB plan is more expensive for AA than a DC plan, what really matters is not the cost of each component of employee compensation; what matters is the overall cost of labor. If the DB plan is affordable for AA, and its employees don't demand a DC plan like the employees have at WN, who is to say that AA will cancel its DB plan? WN now pays its mechanics more than does AA. AA's 738 pilots now make less per hour than 737 pilots at WN. WN FAs will soon make more per hour than AA FAs (if they don't already).
On your statement about AA's DB plan liability: Historically low interest rates (combined with lackluster stock market returns since the bear market began) are the major reasons that the plans are "underfunded." The plans are not underfunded because AA purposely underfunded them.
Every pundit in the country is predicting higher interest rates. If rates rise (like they probably will), then the actuarial computations that now show the DB plans are underfunded may very well show the plans are fully funded or even might show a surplus. Same with a stock market recovery. Congress rightfully granted companies some breathing room in making up shortfalls that in a year or two might not be shortfalls. Yes, AA's minimum contributions are less because of the Congressional relief. And if interest rates fall more (how could they?) and the stock market tanks, then AA's DB plans will be even more underfunded. That might spell their doom.
And of course, higher interest rates are a double edged sword now that AA's debt burden is in the stratosphere and it is a poorer credit risk than it used to be.
On employee stock purchase plans not costing the company anything - you are incorrect. WN sells stock to employees at a 10% discount to market price. That 10% is a cost. In the last few years, WN has bought hundreds of millions of dollars of its own stock to sell to its employees and to satisfy employee stock options. Does AA sell stock to its employees at a discount or at market price?
In this year's 10-K, WN disclosed that the board authorized up to $300 million of stock repurchases to satisfy option exercise:
http://ir.10kwizard.com/filing.php?repo=te...ource=770&fg=24 (pages 24-25)
When you said that stock options don't represent a cash expense, you are incorrect. Not all companies expense them on their income statement, but the exercise of the options by the employees represents cash out the door to the employees. In a cashless exercise, the employee is just paid the difference. If the employee buys the stock, the company has to buy stock to sell to the employee for the (presumably) lower option price. Of course the stockholders pay - but by that token, stockholders pay all corporate expenses, including all components of compensation. I agree with Warren Buffett that options should be expensed. Nevertheless, WN does not expense its options. Pages 49-51 of WN's 10-K discloses the massive potential liability for unexercised stock options. It's in the hundreds of millions of dollars.
Conventional wisdom is that DC plans are always cheaper than DB plans. Perhaps they are. But the amount spent by WN for its contributions to DC plans for its employees is staggering.
Company contributions to DC plans were in excess of 10% of total employee compensation in 2003, and much higher than 10% in the two prior years. Add to that the fact that WN now pays its employees more per hour than AA, and it is apparent that WN's DB plans, in combination with stock options and employee stock purchase plans, comprises a substantial expense for that company. They are expensive. And AA's $461 million DB plan contribution for 2004 looks cheap by comparison.
Over the long-term horizon, you are right. DB plans will probably completely disappear in the private sector.
But in the short term, I disagree that AA will simply play "follow the leader" if UAL cancels its DB plans. For one thing, I predict that UAL will liquidate if the plans are terminated. And its liquidation is obvious if a judge should force UAL to continue them. UAL can't afford to pay them and continue as a going concern.
UAL does not have the cash on hand or revenue to pay even its minimum contributions to its grossly underfunded plans.
AA, on the other hand, spends more on ice, soda, snacks, food and alcohol than its annual pension contributions. AA's pension contributions are paid up for this year (contrast that to UAL). AA's reasonable contributions for next year will be no problem to fund. AA slashed its employees' pay more than at UAL, and some of that difference makes the DB plans rather affordable.
MCI transplant
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<_< Limit-----Don't really matter anyway!limit said:
I've come to the same conclusion as goingboeing! I don't believe a.a. is really interested in third part work in TUL, or MCIE! Which is the bottom line, at least at MCIE!!!!! :down:
I think you have it wrong here. Southwest doesn't buy stock to cover the options, they issue new stock. Same thing with share purchase agreements, Southwest isn't going out and buying stock on the open market then selling it back to employees at a 10% discount, they're just issuing new stock and taking the cash.
The BOD isn't authorizing the repurchase of stock for use in converting stock options, they're using the PROCEEDS from the excercise of options to buy back stock.
MCI transplant said:
I do not see third party work coming in but not because of lack of interest.
We are only kidding ourselves if we think that AA can outbid outfits that pay a lot less for labor and can pretty much use their workforce as slaves.
I can guaranty you that many repair stations (if not all) do not care about the finished product as much as we do.
As long as nothing falls out of the sky, you can bet the only change we will see is work going out, not work coming in.
limit said:
I agree. The only way MCI will stay open is if they can find third party work. But the wages at most (if not all repair stations) is at rock bottom and AA can't compete with that. The people at MCI do excellent work and have many years of experience but unfortunately, potentail customers only look at price. I beleive MCI's days are numbered due to lack of work, a very senior workforce that is about ready to retire, and the fact that the base itself is antiquated (approaching 50 years old. It opened in 1957.)
MCI transplant
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<_< When your wrong, your wrong!!! It seems I was! At least as cocerning TUL!! Congats on your new "Navy" 737 contract!!!! 
