AAA Alpa Thread 10/19-10/25

[traderjake]

Thanks for making my point.

Why don't you talk to somebody who was on the Retirement Committee. You might have a more informed opinion.

 

[Phoenix]

Thank's for covering that, Jim. I was going to do the research to post exactly what AA's beef with ALPA back in '63 was but you saved me the trouble. Guys like Phoenix love revising history to suit their purposes.

Revise? You're the one who gave a history that jim corrected.

I said ALPA attempted to force their will on the AAL pilots. AAL left instead. No denying that.

 

[AAA73Pilot]

Thanks for making my point.

Why don't you talk to somebody who was on the Retirement Committee. You might have a more informed opinion.

My opinion stands.

I talked to someone on the MEC who was OUTVOTED when the deal was done. Or was that more ALPA double dealing?
Actually reconfirmed it this weekend. The reason for doing so is our esteemed ex-mec chairman is the only one ALPA could get to lead the pro ALPA leftovers on the property. And that is going to be really funny watching him defend ALPA and his RECORD at the same time.

 

[Bob Loblaw]

Swelblog.com

Swelbar on Airlines

SUNDAY, OCTOBER 21, 2007

Circular Logic: US Airways and the Economics of Entitlement

Since US Airways’ failure to convince the US Congress, employees and the Delta Unsecured Creditors Committee that their deal provided many stakeholders with a long-term blueprint for success, issues faced by the US Airways’ management team continue to get more and more parochial. The recent news announcing the continued downsizing of Pittsburgh has elicited responses from Congressmen that this writer finds baffling. And the move by unhappy former US Airways’ East pilots - caused by an arbitrator’s ruling regarding the seniority integration with the former America West pilots - to consider an alternative union to the Air Line Pilots Association is troubling.

The Pulldown of Pittsburg – A Long History of Weak Hub Economics

To start, let me reiterate my views on the market: there are too many network legacy carriers; too many low cost carriers; too many regional carriers as a result of having too many network legacy carriers; and there are too many hubs which keep too many network legacy carriers and regional carriers operating.

Defining Entitlement Economics: all are conferred a lifelong right to employment and/or abundant service despite the fact that the economics of the US airline industry, particularly its domestic operations, have changed significantly since the early 1990’s.

Remember the early 1990’s: It was during this time that the industry emerged from a recession that was triggered by the Gulf War. American exited Nashville and Raleigh-Durham. Continental was emerging from Bankruptcy #? and exited Denver. Delta’s presence in the Western US, purchased from Western Airlines, was being pulled down. Other carrier’s were also reducing west coast capacity as the market was being impacted by the growth of Southwest and question marks about how successful United would be following its ESOP agreement reached in 1994. And I am confident that I have missed other significant events during this period. What I do sense, is that we are about to embark on a similar period.

The period also marked the beginning of the end for US Airways as accidents, increased competition and the hangover of management decisions to “give away the storeâ€￾ in collective bargaining agreements to all employees from each of the companies it acquired during the late 1980’s were being fully realized. It was at this time, that the management team was changed significantly to see just how many tricks could be pulled out of the hat of an airline with a bloated cost structure and a revenue base under attack from all directions.

Last week there were two articles that caught my eye. The first story, by Dan Fitzpatrick of the Pittsburgh Post-Gazette click here defines the unfortunate position Doug Parker, US Airways’ CEO, finds himself in as his management decisions are being challenged by an uninformed Senator Arlen Specter. An enlightened David Grossman of the USA Today click here does a wonderful job of describing the declining economics of the Pittsburgh hub while at the same time capturing the consumer friendliness of the facility. The facts outlined by Mr. Grossman were intact before US Airways’ merger with America West and should have been a signal of things to come for each the employees, customers and city fathers in Pittsburgh along with the Pennsylvania congressional delegation.

So Senator Specter:

- When you say you might not help US Airways with political issues in Washington DC - that is truly unfortunate. I thought you represented all of Pennsylvania and not just Pittsburgh. I thought that the Senate was interested in the success of companies and industries, particularly those that are inextricably linked to the health of the US economy and assuring that US industry can be as competitive as it can be in the global economy.

- US Airways has reciprocated, and has shown the Pittsburgh area consideration in return for Congress’ support in building a new airport. Quite honestly, the reciprocation has come in spades as Pittsburgh has been among the most overserved cities in the US when considering the fact that only 20% of the airport’s traffic was local Pittsburgh traffic (pointed out in Mr. Grossman’s article). Simply stated, this is just bad economics for an airline hub and all Mr. Parker is doing is making a prudent management decision that should contribute to his company’s financial health.

- Finally, your decision to fly Southwest is certainly yours and I agree that they are a very good competitor in the markets they serve. Government policy in the US aviation market has led to significant market fragmentation and as a result the consumer has benefited from lower ticket prices. But I urge you to look in the mirror and ask yourself who is serving Allentown, Harrisburg, Wilkes Barre-Scranton and Erie. It sure is not the low cost carriers that have been the darlings of Capitol Hill. It is the network legacy carriers that invest in the right sized airplanes to serve those markets when the low cost sector tries to lure those travelers to the big markets they only serve.

So US Airways East Pilots:

- When you say you are unhappy with the Air Line Pilots Association over an arbitrator’s decision and you want to leave ALPA - for the historical success of non-national unions? - be careful for what you ask for. How do you really think things will be better for you and your followers under a new union with little clout?

- It is time to simply recognize that the merger deal with America West was the most important component of the Plan of Reorganization that permitted you and the remaining work force to emerge from bankruptcy #2. Your problems began a long time ago and are not the result of this agreement. Without it, my guess is the US Airways logo (whichever one it is) rests somewhere with Pan Am, Eastern, and TWA.

So Senator Specter, you are not entitled to service in this economic environment just because you have had it in the past; and US Airways’ employees are not entitled to employment. What is troubling to this writer is to have Senators not looking around their own state and recognizing that it is the network legacy carriers that are serving “yourâ€￾ cities of all sizes – not just the largest markets despite the difficult economics facing the industry. If you think that the low cost carriers are the answer to your service dilemmas, then keep making statements about not wanting to help a carrier that has invested, and generated, billions in “yourâ€￾ economy when they visit your office in Washington DC. If you think about it carefully, your logic is circular.

To the US Airways’ pilots, your circular logic is more like the virtuous circle of failure that began long ago. You finally have a CEO that is committed to the operation, committed to finding success comprised of a network with limited short term upside and committed to avoiding a walk down the plank that promises no return. But if the world begins to change along the lines suggested by the last two posts in this blog, then it will be nothing different than the parochial interests that stood in the way of commercial opportunities at the “Old US Airwaysâ€￾.

 

[nostradamus]

Well stated Prechilli. I think that EastUS owes an apology at a bare minimum! I wouldn't hold my breath waiting on him though.

You choose to have a cartoon of a person urinating on what you feel is the symbol of the person you are asking to apologize for calling you a name of an object your cartoon his holding in its hand.

Thank you for bringing clarity to the situation.

 

[nostradamus]

Thank's for covering that, Jim. I was going to do the research to post exactly what AA's beef with ALPA back in '63 was but you saved me the trouble. Guys like Phoenix love revising history to suit their purposes.

One should do their own research on matters that they are seeking the truth on. Relying on one posters opinion that is not backed up with factual proof is a weakness.

 

[Richard]

Keep it on topic folks, and stop the sniping.

Nostradamus check your PM's.

No more warnings. If we close this topic it will remain closed and any subsequent threads will be closed.

 

[exB717Flyer]

I said ALPA attempted to force their will on the AAL pilots. AAL left instead. No denying that.

And I said the reason the APA split no longer exists. Jim backed that up. You try to justify USAPA by pointing to the alleged success of the non-ALPA carriers and I submit that the APA is not something you'd want to emulate. Also, recall that the Eagle pilots dumped the APA for ALPA!

 

[john john]

Finally, the judge in the case said the company met the criteria for a distressed termination, BUT it had to be taken care of through the collective bargaining agreement. So in effect, our boys kowtowed to the ALPA advisor's and gave away the DB plan. In addition, the company had placed an absolute 1 week only, take it or leave it clause. Knowing our weak MEC would cave and not allow a vote. Once again don't you love after the fact information, turns out the DB plan was not in as bad of shape as presented by the company.

The agents DP plan was teammate without a union in 1990 ever employee group kept there’s. This was one of the main reason the agents went union. Now were all in the same line trying to get better pensions. Even play field now it nice to have a voice this time around

 

[700UW]

The non-union plan was frozen in 1992, not terminated until 2005 in the second bankruptcy.

And Fleet got a new pension with the IAMNPF.

 

[traderjake]

I can not credit the author because I do have his permission

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I went back and tried to get the NWA numbers but guess what? As the NWA plan is frozen not terminated that is not public INFO. One major difference in our case is we did not have the benefit Of the pension protection act that was finally past 3 or more years After we lost our plan. This gave the fully frozen NWA plan. 17 years To amortize unfunded liability and use a higher assumed rate of 8.85%. Had this not been in place I am told that the NWA plan would have been lost in Bankruptcy also. I did find some interesting numbers for our consideration.

The unfunded benefit of some terminated ALPA DB plans.

USAIRWAYS pilot plan was 51.35% meaning it was funded at 48.65%

UNITED loss of benefit was 26.32% or funded at 73.68%

ALOHA loss if benefit was 23.40% or funded at 76.6%

Delta loss of benefit was 44.26% or funded at 55.74%


Our problem is on one on the Hill would listen to our plea for help (Other than Arlen Specter) or face up to the pension problem for another 3 or 4 years as other Air Lines and General Motors came up on the horizon. Based on the laws in effect at the time we were dealing with our problem the Projected payments due the pilot plan alone were 1.43 billion for 2003-2005. As you remember we were also trying to get the ATSB loan guarantee So we could emerge from bankruptcy of about 1 billion $. The sad thing about it is even with this relief we fell back into bankruptcy 18 months later.

One more thing we did hire an out side Actuary firm .Hewitt and company to Work with our in house ALPA actuaries. Along with ALPA they Worked to validate the company’s estimated cost projections for the DB plan over the Proposed 7 year ATSB Loan period. Sample life examples were run which validated the Actuarial soundness of The Valuation program that was being employed by the Company’s actuary firm Towers And Perrin.

The numbers that I gave were for a terminated plan. This is something that takes a long time to come up with. Look how long it took the PBGC. No DB plan that I know of is
Funded for a shut down only by what the law requires for on going bases. Basically if the plan owes you a $1 in 10 years they do not have to have That $1 on hand today. The time value of money type stuff. As we looked at the plan the numbers we would get would be for An on going plan and would be different.

As I said before the real problem was the future liabilities Of our plan. The future payments for the pilot plan alone Were projected to be 2.178 billion for years 2003-2009 The ATSB loan period. With this kind of payments due the ATSB nor RSA would loan Money for the company to come out of bankruptcy.

Remember UAL did not get the ATSB loan for this reason and lost their plan also. They were then able to get a commercial loan after the ATSB closed. Bottom line is I think the finical markets valued UAL chances and IMHO the pacific Routes and ORD As assets they were wiling to loan into more than what we had.

As we look back now we can see we went bankrupt 18 months later again And all the plans were lost. During that 18 months we had the large target plan were some of our older pilots got up To 100% of pay into the DC plan. Bottom line is nothing really good has happened here In the retirement world but I think until ltr 93 it was dealt with as best as it could be.

A book could be written about what has happened to not Just to USAIR but all DB retirement plans in the US. Would make for interesting Reading I am sure if it had happened to some one else and not my favorite Group of pilots you and me.

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"ALPA gave away our retirement" is a nice sound bite but it's not based on fact. It's like saying you give away your wallet to the man holding a gun in your face.

I hope the people who plan on running USAPA are better informed that the promoters on this board.

 

[P51Pilot]

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"ALPA gave away our retirement" is a nice sound bite but it's not based on fact.

When was the vote? :blink:

 

[traderjake]

The retirement was gone with or without a vote.

The only thing to vote on was whether or not to put the company out of business.

 

[P51Pilot]

The retirement was gone with or without a vote.

The only thing to vote on was whether or not to put the company out of business.

Because you are the almighty and get to make that decision for everyone? Even God gives people free agency.

So a handful get to make the decision instead of it being made "collectively"?

Maybe if there was a structure that allows the leadership not to be isolated from the membership with dictatorial power, the company would have opted for other solutions from the start.

Maybe it would have liquidated, maybe not. Maybe under liquidation, the benefit would have been more and some would have opted to fall in line as creditors. Whatever the majority would have voted, it was their choice, and not yours to make for them.

The arrogance in your answer, that the membership have to be saved from themselves makes every point for switching to USAPA . It is a union and not an oligarchy and rather that it be the normal pyramid structure that ALPA really is, a union with a true inverse pyramid philosophy is needed. After all, ALPA has made it abundantly clear it is all about the dues and nothing else.

 

[Phoenix]

The only thing to vote on was whether or not to put the company out of business.

So then thats two votes I got cheated out of. Dammm ALPA.