AA Pilot''s Pension - Value Summary Scared Cow

[Mach85ER]

[blockquote]
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"What makes you entitled to so much more?"

RV4
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[/blockquote]


Because at 6:30 am at some crappy South American airport with 150 people sleeping in back, my problems and workday just can't end with a "could not duplicate, ops check normal", or "unable to reproduce problem, request further observation" logbook entries.

I say this with respect for MX, but in the end , you only get what you negotitate.

 

[Mach85ER]

A couple of small points.

First, RV4 mentions a $3500 month retirement.

What is the final average monthly earnings for a mechanic that gets this?

For "Hopeful", get a F-ing clue.

Why don't you get someone to take their wife and kids to stay a month at the Ballpark Inn, or the Sleep inn in Arlington. That is where a B777 Captain at American Airline stays when training to command a $ 120 million dollar airplane at American Airlines. Everyone would rather get a root canal and a prostate exam than stay at these dives. I problaby wouldn't have stayed at these places as a broke college student. One of our FO's took a bullet in his face at the Sleep Inn lot one night. I never see many AMR ground crews hanging around there in their off time.

Stick with the facts.

 

[Hopeful]

AAMD80DRVR:

Not to make light of the Alaska Air crash, mainteneance f***ED so bad with that jackscrew, Chuck Yeager himself couldn't fly it.

 

[Mach85ER]

[blockquote]
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On 3/15/2003 9:27:52 PM Hopeful wrote:

MACH85ER:

Amazing! You can negotiate such high wages and pensions, but you can't get better hotel accomodations?

I'll take the flea bag hotels to be able to live in higher class than the rest of us!
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[/blockquote]



Who is "us"?
And what opulence do you think "they" live in?

 

[Hopeful]

MACH85ER:

Amazing! You can negotiate such high wages and pensions, but you can't get better hotel accomodations?

I'll take the flea bag hotels to be able to live in higher class than the rest of us!

 

[j7915]

[blockquote]----------------On 3/15/2003 7:16:25 PM AA80Driver wrote: [blockquote]
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On 3/15/2003 3:56:27 PM Hopeful wrote:

Just remember this:

WHEN THE AIRCRAFT IS ON AUTOPILOT, MAINTENANCE IS FLYING IT!
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[/blockquote]

When the autopilot @#$%'s up, is maintenance still flying it?

We had a saying in the military for pilot bashers: "choose your rate, choose your fate". If it's that great a deal, then go for it.
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A little more co-operation would benefit everyone. forget what other airlines are doing, when they were bouncing up and down financially AA created jobs and paid the rent.

Blaming mechanics because they are not pilots is reaching for desperate excuses. In my case the first bad choice I made is to have parents that left me with lousy eyes, OK? So piloting for money is not an option.

However if pilots would help strenghthen the mechanics hold on our work then we could consistently do better in negotiations. When has a pilot refused to fly an aircraft to a contract overhaul base?

No single group in aviation is as strong as the pilots, and yet they don't seem live up to what the Wall Street Journal proclaims is their ex-military leadership background, and make sure the support people are taken care of also.

 

[RV4]

I think the mechanics would have a stronger hold on their work and their future if every negotiations wasn't centered around station staffing formulas to protect the fleet service employment interest.

I am not advocating the Pilot's stand and finght our battles or protect our interest. It is bad enough that the TWU places "me too" clauses in our contract that hold back other work groups.

My point on this thread is that the "sacred cow" lump sum pension of the Pilots is too expensive when we are all faced with concessions for survival.

We have been told before that the Pilots were not strong because they seperated themsleves from the AFL-CIO and "the rest of labor", now j7915 is begging them to assist us to save work?

 

[RV4]

Back to the topic:

Airline crisis bedevils pension insurer
AMR bankruptcy would step up pressure on already limited funds

The shadow of a possible bankruptcy filing by AMR Corp. falls far beyond the employees and stockholders of the world's largest airline.

At the federally chartered agency that insures the pension benefits of 44 million retirees, officials are fretfully watching the airline industry and proposing rule changes aimed at stemming the tide of pension defaults.

Already dealing with a multibillion-dollar deficit, the Pension Benefit Guaranty Corp. fears a dominolike collapse of a large portion of the airline industry, as carriers seeking a level playing field follow each other into bankruptcy court and unload their burdensome pensions.

Experts outside the agency share those concerns. A similar rolling collapse across the steel industry contributed to an $11.4 billion loss for the agency last year.

That pool of red ink was five times larger than any in the 28-year history of the agency, which steps in to cover payment of pension benefits when a company goes bankrupt.

Even as the parent of American Airlines Inc. tries to slash costs and stay afloat, the prospect of the Fort Worth-based carrier heading to bankruptcy court looms larger as the industry downturn persists.

For both the airline industry and the pension agency, the question of airline pensions is huge.

Pension costs from bankrupt airlines could hammer the PBGC again, experts say. At the same time, the cost of supporting those pensions is a drag on the airlines as they try to stem their losses.

"The airlines have confirmed that pensions are their biggest problem – this will be the straw that breaks that camel's back," said analyst Christopher Struve of Fitch Ratings, which studies companies' financial health.

Two airlines are already under bankruptcy protection – US Airways Group Inc. and UAL Corp., parent of United Airlines.

A bankruptcy judge recently approved a plan for the PBGC to take over US Airways' pilots' pension, although the deal is not final.

UAL, meanwhile, has asked for another six months to come up with a bankruptcy reorganization plan that is expected to include the abandonment of its pension plan to the PBGC.

Last week, AMR started lining up loans and consultants that could help it through a bankruptcy. An AMR spokeswoman declined to comment on any speculation surrounding a bankruptcy filing.

According to Fitch Ratings, AMR's pension plan needs $3 billion more in assets to cover its obligations to present and future retirees – a shortfall known as underfunding. US Airways' pension is underfunded by $3 billion, and United's by $4.1 billion.

Overall, the airline industry's pensions have $28 billion in assets to cover $46 billion in obligations, placing the funding level at about 60 percent, Fitch says.

"Historically, having your plan fall below 60 percent funded means your fund is going to be assumed by the PBGC," Fitch's Mr. Struve said.

The airline industry's pension plans have gone from a $1 billion surplus in 1999 to $20 billion in underfunding in 2002, Fitch estimates. If the PBGC had to swallow that entire $20 billion in underfunding today, it would nearly eliminate the agency's $25 billion in assets.

In testimony to the Senate Finance Committee on Tuesday, the PBGC's executive director urged that steps be taken now to strengthen the agency's position. One solution he offered was toughening rules governing the funding levels that companies must maintain in their pensions.

"The current $3.6 billion deficit, even though it is the largest in history, does not create an immediate liquidity problem for PBGC – we will be able to continue paying benefits for a number of years," executive director Steven A. Kandarian said. "But with $29 billion in benefit liabilities and only $25 billion in assets, we should not wait to put the insurance program on a sound financial basis."

Shortfalls


Pension shortfalls have been a major problem for corporate America over the last year. Investment losses have hurt many companies' bottom lines and forced some to shore up their pensions with cash.

The PBGC estimates that the total underfunding in defined- benefit plans now exceeds $300 billion, the largest number ever recorded. Merrill Lynch estimates that earnings of companies in the Standard & Poor's 500-stock index will be reduced by 10 percent in 2003 because of pension losses.

For many airlines – facing a tough economy, heavy competition and threats of terrorism – pension troubles may be insurmountable.

"We believe it is highly probable that the PBGC also will assume United's pension," Mr. Struve said.

Mr. Struve worries that if United and US Airways succeed in having the PBGC assume their pension liabilities, all of the other major airlines may follow suit to survive.

"These guys are facing monstrous cash calls for the next few years at the worst possible time," Mr. Struve added. "It's pretty hard to envision a world where the other guys retain their pensions."

Delta Air Lines Inc.'s funding gap is the largest, at $4.4 billion, while Continental Airlines Inc. and Northwest Airlines Corp. are burdened with gaps of greater than $3 billion, according to Fitch.

Barring a bankruptcy filing, those gaps must be filled one of two ways – by the airlines injecting some of their scarce cash into the pension plans or by the stock market making a quick turnaround and boosting the plans' returns.

Dallas-based Southwest Airlines Co., the one profitable carrier in a troubled industry, doesn't have a pension plan.

Philip Baggaley, airline credit analyst with Standard & Poor's, said he sees a worst-case scenario in which all but one of the biggest airlines land in bankruptcy court. Under that scenario, the surviving airline would be operating at a serious cost disadvantage.

"If there is an airline which is strong enough to avoid bankruptcy, they would certainly try to negotiate changes to lower their pension costs," Mr. Baggaley said. "But those changes could not be as extensive as the reductions from terminating plans in bankruptcy."

Mr. Baggaley retains some hope that a quick end to a war and even quicker resolution with its unions could save AMR from having to file. But he concedes that there are a lot of ifs in that scenario.

Company-funded firm


Formed in 1974 alongside the Employee Retirement Income Security Act, or ERISA, the PBGC is funded by pension insurance premiums paid by corporations to the tune of $800 million a year. In return, the agency insures the firms' $1.5 trillion in pension benefits.

Those premiums, coupled with the returns of the PBGC's own investments throughout the bull market, helped the agency operate with a surplus beginning in 1996. It was not until 2002, which saw five of history's 10 biggest bankruptcies, that it lost its surplus cushion.

In 2002, the PBGC took over 144 pension plans, a 40 percent increase over 2001, covering 187,000 people. The agency paid $1.5 billion in benefits last year. It expects to pay $2.5 billion to nearly 1 million retirees in 2003.

In his Senate testimony, Mr. Kandarian noted that the pension obligations the agency took over in 2002 were greater than the total for all previous years combined. In addition to the steelmakers, retailers including Grand Union and Bradlees and manufacturers such as Polaroid and Singer also landed on the PBGC's doorstep last year.

The biggest case in 2002 – and in the agency's history – was Bethlehem Steel. The agency booked as a "probable" loss the $3.9 billion it will swallow when it takes in the company's pension fund this year.

Bethlehem's proposed $1.5 billion acquisition by International Steel Group wouldn't have gone through if International Steel had had to assume Bethlehem's $11 billion in debt, much of which was associated with its pension liabilities. Bethlehem had $3.5 billion in assets remaining in its pension to cover a $7.8 billion obligation.

Bethlehem was one of three major steel companies to fold last year, largely due to massive legacy liabilities owed to retirees, who greatly outnumber current employees.

Murky outlook


Mr. Kandarian worries about a continued collapse of the steel and airline industries. He told senators that over the long term, the agency's deficit "may increase dramatically."

"In our most recent annual report, PBGC reported exposure to additional claims totaling $35 billion, which we classify as 'reasonably possible,' " Mr. Kandarian said. "Of this $35 billion, about half represents underfunding in airline and steel plans."

Experts agree that the PBGC's troubles would abate if the "perfect storm" that created the current deficit would reverse course: the stock market demise that has stripped assets from pensions, falling interest rates that have sent pension obligations skyrocketing and an economy that has crippled businesses.

The rash of U.S. corporate bankruptcies is expected to continue this year, although at a slower rate than in 2002, according to a recent PricewaterhouseCoopers report. It stated that about 180 publicly traded companies will file for Chapter 11 in 2003, compared with 189 filings in 2002 and 257 in 2001.

One solution Mr. Kandarian proposed would require companies' pensions keep a higher level of assets relative to obligations.

He also called for requiring companies to report more frequently on the health of their plans.

Another option would be to increase the insurance premiums that companies must pay, but Mr. Kandarian said that might discourage companies from offering pension plans to employees.

"Raising premiums enough to cover losses of the size the PBGC endured in 2002 could prove counterproductive, driving the financially healthy companies out of the defined-benefit system," Mr. Kandarian testified.

Disturbing similarities


Several experts have drawn parallels between the PBGC's situation and the savings and loan crisis of the 1980s, in which taxpayers had to cover depositors' losses when the industry collapsed.

Like the Federal Savings and Loan Insurance Corp., the PBGC is a quasi-government agency that guarantees a private liability – the FSLIC insures deposits and the PBGC insures pension benefits.

In 1996, Dr. Zvi Bodie of Boston University, an authority on pensions, wrote a paper in which he predicted heavy deficits at the PBGC if the economy, the stock market and interest rates all suffered protracted declines at the same time. Such a confluence of events, he said, could land taxpayers in a predicament in which a bailout might be the only option.

"History never repeats itself in the same way," Dr. Bodie said. "I never predicted the stock market and interest rates would fall at the same time. I merely said it was possible, and sure enough, it happened."

In October, he presented the PBGC with some solutions. They included requiring firms to pay higher premiums to the PBGC, depending on how aggressively they invest their pension plans' assets.

In his paper, he recalled a statement in the PBGC's 1992 annual report by former Secretary of Labor Lynn Martin: "One would have to be an ostrich with its head buried in the sand to ignore the warnings and not learn from the analogy of the savings and loan crisis."

Even before any sort of parallel crisis unfolds, lawmakers appear to be directing their attention to the PBGC's situation.

Although a spokeswoman for the Senate Finance Committee said no more hearings are planned for now, the House Education and the Workforce Committee has said it may schedule hearings on the agency's health in the spring.

"They still have reserves to more than pay out their benefits for quite a few years," said Kevin Smith, spokesman for the committee. "That doesn't constitute any sort of crisis. Now, if this continues to happen for several years, that might change."

 

[Mach85ER]

[blockquote]
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On 3/15/2003 7:58:57 PM Mach85ER wrote:

A couple of small points.

First, RV4 mentions a $3500 month retirement.

What is the final average monthly earnings for a mechanic that gets this?


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[/blockquote]



RV4,
Would you mind answering the question instead of bashing another employee groups benefit?

 

[Mach85ER]

RV4

I thought you said the retirement benefit for a mechanic was $3500/ month after he is retired.

My question is, if in retirement he receives $3500/month, what was his monthly pay as an active AA mechanic right before he retired?

thx

 

[RV4]

[blockquote]
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On 3/16/2003 8:57:10 AM Mach85ER wrote:

[blockquote]
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On 3/15/2003 7:58:57 PM Mach85ER wrote:

A couple of small points.

First, RV4 mentions a $3500 month retirement.

What is the final average monthly earnings for a mechanic that gets this?


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[/blockquote]



RV4,
Would you mind answering the question instead of bashing another employee groups benefit?
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[/blockquote]


I thought it was pretty clear to most. $3500 per month would likely equal a $3500 per month average. If I misunderstand your question I am sorry.

 

[Hopeful]

That $3500.00/month is most likely for a 40 or so year employee. Mechanics retirement benefits are based on his 4 highest years of salary. Then they take that amount and use their formula.

 

[Mach85ER]

What would his monthly salary be BEFORE he retired?

 

[ual06]

It is apparent that RV4 wants to bash others but not leave himself open to bashing. I would like to see him fly that bird he posts. A Pitts?

 

[Hopeful]

Right now, a mech is making about $6000/month. I will gove you an example of retirement though. A 36 year mechanic at JFK just retired at age 61. His retirement is $2800/ month. I don't know what his survivorship option was though. At JFK we also have the most senior crew chief mechanic and by far the oldest and he will be 78 years old this year. He is, by law, drawing his pension of about $48,000. per year. Keep in mind he has 61 years seniority. A far cry from your avg mechanic who makes retirement.