AA at pension disadvantage!

[FWAAA]

Thanks for proving my point. If they are refusing to fund the plan fully now, what makes you think they will obey the law in the future?

Proving your point? Hardly.

Your post implies that AA has not been "obeying" the law up to this point. Nothing could be further from the truth.

AA refuses to make up the entire deficiency right now because the law does not require AA to contribute it all now. Don't like that? You should have lobbied for a change in the law.

 

[eolesen]

Thanks for proving my point. If they are refusing to fund the plan fully now, what makes you think they will obey the law in the future?

Do you pre-pay your mortgage just because you have an extra thousand or two lying around? Or do you put it in savings?

The smart person would put it in savings, since it is liquidity that can't be accessed once you make a payment. Same thing with pensions -- over fund the plan beyond near-term needs, and you potentially hurt yourself if there's an unexpected need for short-term cash.


As long as the AMR pension funds are meeting current obligations (which it is), and future cash-flow appears to be sufficient to fund the next 3-5 years obligations (which it does), there's no reason to fully fund any of the plans beyond the legally required payments right now.

Plus, as long as interest rates continuing to rise, that shortfall gets smaller every day because the underlying investments are accruing more interest.

 

[Bob Owens]

AA might very well ask the represented employees whether they want the pensions frozen or not. I don't know how that referendum would play out? Would you rather have a frozen pension plus future retirement additions in a defined contribution plan?

That depends on what it costs us. So far the cost-over $20k a year- is not worth it. $20k/year less so they can contribute less than $2k a year into a pension, its a bad deal.

So given that huge benefit it didn't have yesterday, is AA really gonna try to convince the employees to freeze the plans to get the same treatment as NW and DL?

No, why would they? Right now they have a free ride. They will let the liability pile up and use it to get more concessions down the road. If they get rid of it what would they have left?

Or is AA gonna keep lobbying its paid-for Congress to amend the law next session to give AA (and CO) the same 17 years and same beneficial interest assumptions?

Why not? Another 17 years of concessions instead of just 10?

As I've pointed out many times before (with recent agreement from Mr Owens in several posts), the AA DB plans have been cheaper for the last few years for AA than a WN-style DC plan would have been. WN's retirement contributions are a much larger % of its total revenues and employee comp. Now that AA has a decade to make up the shortfall in its plans, it looks like AA will have that same cost advantage over WN (and over UA, which now has DC retirement plans) for up to 10 years.

Not only has it been cheaper but it has more than paid for itself in concessions, add on to that they dont have to pay it till way off in the future, instead of right away in a DC plan and AA would be nuts to shed the DB pension.

Color me eternally optimistic, but I don't see anything happening to the AA DB plans.

Its easy for you to be that way, as you have stated many times before you do not work at AA, you simply benifit from it.

$230 million/year over 10 years is nothing to a $23 billion/year company. Sure, AA would like to have the extra 7 years that DL and NW got, but 10 years is sure better than paying $2.3 billion next year (as current law required).

They have over $5 billion, I'd rather that it was paid now.

Now that AA has $2.3 billion more free cash than it did yesterday, look for AA to pay down some serious debt this quarter as well as potential orders for fuel efficient airplanes.

Or another carrier.

 

[twaokc]

Now that AA has $2.3 billion more free cash than it did yesterday, look for AA to pay down some serious debt this quarter as well as potential orders for fuel efficient airplanes.


Or another carrier.


With that 2.3 billion sitting around, Ichan is looking very strong at AA right now. I would love to see it. Not for the few TWA people that are left, but for all of the NATIVES.

 

[Bob Owens]

Do you pre-pay your mortgage just because you have an extra thousand or two lying around? Or do you put it in savings?

The smart person would put it in savings, since it is liquidity that can't be accessed once you make a payment. Same thing with pensions -- over fund the plan beyond near-term needs, and you potentially hurt yourself if there's an unexpected need for short-term cash.
As long as the AMR pension funds are meeting current obligations (which it is), and future cash-flow appears to be sufficient to fund the next 3-5 years obligations (which it does), there's no reason to fully fund any of the plans beyond the legally required payments right now.

Plus, as long as interest rates continuing to rise, that shortfall gets smaller every day because the underlying investments are accruing more interest.

If I had 25% of my yearly earnings in cash just lying around(AA has over $5 billion in cash and takes in around $20 billion) I most certainly would take some of that and pay down debt. The fact is that money came from us through concessions and its only morally right that they live up to their promise to fund it. Lobbying to change the law in order for them to "legally" underfund it by an even greater margin and spread out catching up to an already unsound standard that allows too much underfunding to start with over a 7 year period breaks the promise they made to their employees. That money was not given up so AA could go on a buying spree. We did not force our families to do without so AA could go out and pull a fast one and put our pensions more at risk, which they and Congress have done.

AA has over $5 billion in cash , this is up $4billion since 2003 and their total debt stayed at $20 billion, so in other words it went down $4billion or 20% already. Now they dont want to settle up the pension, which they claimed they would.They have it, it and much more came from our concessions, its time to pay up.

Proving your point? Hardly.

Your post implies that AA has not been "obeying" the law up to this point. Nothing could be further from the truth.

AA refuses to make up the entire deficiency right now because the law does not require AA to contribute it all now. Don't like that? You should have lobbied for a change in the law.

Thats why anyone who can not legally cast a vote should be barred from the political process. The fact is that although we can vote, we as individuals lack the resources to effectively lobby. And lobbying has more of an impact on legislation than voting. This dominance that corporations have with capital, both financial and political, is what makes our "Democracy" a joke.

Sure AA is "following the law", just as slavemasters were in their time. It doesnt mean the law is just.

By the end of this year, I expect AA to have well over $6 billion of unrestricted cash (of course extra debt repayments will reduce that).

Or they could prepay leases like they did in order to run up the $3.5 billion loss they claimed they had when they "were on the courthouse steps".

It seems that "Former Moderator" is not in agreement with your philosophy on debt reduction. see above

If they don't have the money now,what makes you think they will have it 8,10,17 years from now?

Come contract time they will try to use it to get more concessions. This is a liability that they know we wont want them to default on so they now get to use it again and again and again.

 

[PRINCESS KIDAGAKASH]

Do you pre-pay your mortgage just because you have an extra thousand or two lying around? Or do you put it in savings?

The smart person would put it in savings, since it is liquidity that can't be accessed once you make a payment.

No,a smart person pays down their mortgage until they pay it off. Like I did several years ago. I am no longer held hostage to the crooked banks and live debt free. Once your mortgage is gone you can save all you want. I no longer finance vehicles either. I buy them outright or don't buy them at all.

 

[Bob Owens]

Now that AA has $2.3 billion more free cash than it did yesterday, look for AA to pay down some serious debt this quarter as well as potential orders for fuel efficient airplanes.
Or another carrier.
With that 2.3 billion sitting around, Ichan is looking very strong at AA right now. I would love to see it. Not for the few TWA people that are left, but for all of the NATIVES.

Ichann, Arpey whatever, they all have the same objective, to make money the easiest way possible. It doesnt matter who it is up there we have to learn to say NO.You make Ichan out to be the Devil himself in order to justify the cowardice of TWA employees who voted yes to every concessions he demanded.

 

[twaokc]

Ichann, Arpey whatever, they all have the same objective, to make money the easiest way possible. It doesnt matter who it is up there we have to learn to say NO.You make Ichan out to be the Devil himself in order to justify the cowardice of TWA employees who voted yes to every concessions he demanded.

Say no to Ichan, and see what happens..

 

[Bob Owens]

Say no to Ichan, and see what happens..

How would you know?

 

[twaokc]

How would you know?

ask ant twa f/a

 

[aafsc]

Now that AA has $2.3 billion more free cash than it did yesterday, look for AA to pay down some serious debt this quarter as well as potential orders for fuel efficient airplanes.
Or another carrier.
With that 2.3 billion sitting around, Ichan is looking very strong at AA right now. I would love to see it. Not for the few TWA people that are left, but for all of the NATIVES.

You want us nAAtives to have the same fate as you twaers simply because we would not cheerfully and obediently step aside and let you have everything we built. Hate to burst your bitter bubble, but it isn't going to happen. Trump tried to get a hold of AA in the late 1980s and was unsucessful. There are ways to fend off people like Icahn. We nAAtives know all about him and I would rather shut AA down if he ever got a hold of it instead of working for him at THE LOWEST COMPENSATION IN THE INDUSTRY LIKE YOU DID AT twa!

 

[Boomer]

Actually, or should I say Actuarily,

We don't really know what the status of the AA Underfunding of Pension Obligations really is because we are prevented by law from knowing what assumptions were used in calculating the assumed rate of return in prior years that may be built into current estimates; and, because the pension funding status states that your plaan is only undefunded when it reaches 80% of the plaan costs over the period in which the calculations are done.

Now, AA could actually tell us how they calculate the costs and what values they use for the assumed rate of return versus how those values differ from PBGC calculations; but, we are legally barred from forcing that information.

Of course, that type of information would only be worthwhile if it were distributed in a legally binding format such as a 10k filing with the SEC.

As we discovered from the US Air and UAL defaults with the PBGC, the amount of underfunding claimed by the carriers was vastly different from that claimed by the PBGC at the specific point in time of the default.

 

[twaokc]

You want us nAAtives to have the same fate as you twaers simply because we would not cheerfully and obediently step aside and let you have everything we built. Hate to burst your bitter bubble, but it isn't going to happen. Trump tried to get a hold of AA in the late 1980s and was unsucessful. There are ways to fend off people like Icahn. We nAAtives know all about him and I would rather shut AA down if he ever got a hold of it instead of working for him at THE LOWEST COMPENSATION IN THE INDUSTRY LIKE YOU DID AT twa!

aafsc
Either way, you will get what is coming to you...

 

[TIME FOR CHANGE]

aafsc
Either way, you will get what is coming to you...

Dont we all

 

[jimntx]

No,a smart person pays down their mortgage until they pay it off. Like I did several years ago. I am no longer held hostage to the crooked banks and live debt free. Once your mortgage is gone you can save all you want. I no longer finance vehicles either. I buy them outright or don't buy them at all.

Princess, I'm not a big fan of this law, but on this point, you are missing the point. Yes, you are debt free, and good for you (My house is paid for also. Good for me, too. ), but...

1. Your home is an asset whose value is not readily accessible in case of an emergency. It can be accessed through cash-out mortgages or selling it, etc., but that takes some time.
2. We do not know what is going to happen vis a vis fuel prices, the future of NWA (suddenly available Asian routes?), etc. If NWA should go Ch. 7 and we had just spent $2.3B of the $5.5B we have "overfunding" the pension plan for the future, we would not have the money to buy routes or airplanes to fly them.
(And, yes it would be overfunding the plan. The $2.3B the company owes the plan is based on the assumption that every employee currently on the payroll will stay with the company until they are eligible for a full retirement. That ain't gonna happen. Take me for instance, I won't live long enough to get a "full" pension. I will have to work until almost 67 just to get my 10 years that will qualify me for lifetime travel benefits. (If I'm wrong about that and I can "retire" sooner and still get the travel benefits, I probably won't stay that long. I have no desire to out-Juanita Juanita.))
3. Spending the entire $5.5B on debt reduction will only eliminate about 1/4 of the total debt right now. And, would hamstring the company as far as strategic options that would cost money--buying/starting routes, getting a/c.

Right now it is best to have a pile of readily available cash; so that the company can move quickly if necessary. And, Lord knows, if fuel goes down and NWA survives, we could sure use some new airplanes. Unfortunately, Wal-Mart has not had a sale on those for some time now.