Alaska contract preamble

[OldGuy@AA]

I agree with you on all counts except for the pension piece (not talking about accrued benefits/vesting). A 401k with both an excellent contribution and match actually empowers the membership much more than being beholden to a pension.

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Kev. The 401K was never intended to be the sole source of income for retirees. It was intended to be a supplement to a pension. Now Corporate America has decided that the 401K will replace the pensions. The reality of things is that as soon as AA can dump the pensions on the PBGC they will do so. All it will take is a republican president appointee running the PBGC. The PBGC can't handle the pensions they have now. You add ours to it and then it's a real mess. Guaranteed by the government until the tea partiers get their way and then it disappear. Then what? I do know the crooks that orchestrated this whole thing on both sides of the fence have a pension waiting for them when they are ready to retire. The elitists like Eolesen will tell you a 401K gives you the opportunity to set your own retirement income. Do you or I have any control over the stock market? So in reality the 401K is a complete gamble. You are forced to gamble on the hope you can retire someday when you are too old to work. The sad reality is that those of us who were not old enough to take the retirement will probably never get to retire. We have no medical and now no income other than a glorified Ponzi Scheme called the stock market.
I know this went off topic but I thought it important to try to show how losing our pension and getting a 401K match is not gaining anything.

 

[Kev3188]

I get all of that, but you nailed it when you said, "The reality of things is that as soon as AA can dump the pensions on the PBGC they will do so."

So ask yourself this: For all the decades that we (as in labor) heard "we gotta save the pension," what'd you get? You agreed to deferred compensation in return for an annuity at the end of your career, based on your years of service (so did I, BTW). Now we both have ones that are frozen.

A 401k- with a healthy contribution and match- is much more preferable for several reasons. I've listed them before, but:

1. That $$$ goes into your pocket NOW. You can see it, move it, sit on it. Whatever, really. It doesn't matter. It's there, and can't be taken away at the next turn. Hell, you can park it all in a "cash" account if you really want. Don't have decent fund options available? Move it into a brokerage account.

2. Maybe more importantly, the move from a DB to DC plan frees up a HUGE amount of money as far as the company's "ask" goes. That's money you can leverage to (re)secure other items in a CBA, such as scope, or pre-65 retiree medical.

3. If you find yourself on the wrong side of the dirt (God forbid), your heirs get the full amount. Now. No waiting, and certainly no lesser amount for spousal benefits, like with a pension.

4. Perhaps best of all, it frees up (again, labor as a whole) from having that sword hanging over us. Like I said earlier, how much have we given up to save something that may or may not be there come retirement day? Why should we continue to do so? Companies bank on that mindset, and that's why you see some of the offers we do. Do you think they'd be so quick to stick it to us all if they knew we could just take our money and run to another firm?

 

[WorldTraveler]

Kev is absolutely right.

It is very possible to successfully manage your own portfolio (by yourself or via an investment adviser) more aggressively than large pension funds are managed. My personal returns on my 401K funds exceeds US market indices for this year.

Defined benefit pensions made sense when employers hired people w/ the expectation they would work for a career. DB pension plans don't make sense to the employee if you work for several employees during the course of your career.

Americans don't work for the same employer for a career anymore and neither do most people in western countries.

Expecting to gain pension benefits based on a business model that no longer exists only subjects employees to manipulative attempts by employers to hold those employees hostage... and weaken their bargaining power for better benefits and pay elsewhere.

Further, a DB pension shifts an enormous burden to employers which they cannot reasonably deliver; they don't control the stock market either so they are forced to divert billions of dollars to fund pension plans based on the underperforming stock market. Remember that AMR's pension plans are as much as $10 billion underfunded. There is no realistic way that any airline could bear that kind of obligation while keeping the pension plans solvent.
There is no free lunch and employers have to take the costs of those pensions from someplace.
While lots of people can justifiably be upset w/ Congress, they have done everything they can to help prevent pension terminations in the airline industry and despite what alot of people think, just because most airline employees have benefits which are fully guaranteed by the PBGC, even w/ PBGC's guarantee, there will be significant cuts in the ability to obtain the benefits offered under the original company plans.

Remember that many airline employees including most UA and US employees have terminated, not frozen pensions.

The vast majority of Americans had DB pensions at one time and learned to adapt; AA employees are going through the same process of doubt that others have had during the transition but very few employees would go back to DB pensions if given a choice.

It is also not a given that AA will be any more successful dumping its pension obligations on the PBGC than it was during this BK as long as it continues to operate; the PBGC will be very aggressive in seeking equity in companies during BK processes (it is very difficult to terminate pensions outside of BK).
If AA moves to liquidation (unlikely at this point), then pension termination becomes more likely.

 

[OldGuy@AA]

So congress has done everything they can to protect the pensions? Does that include allowing AA to underfund it? I am no Nostrodamus by any means, but I realized when they were allowed to underfund it they would dump it the first chance they got. They tried and the PBGC director fought (for us) so AA froze it. I also am not really concerned about the difference between a frozen plan and a terminated plan since AA has about 15 more years (for me personally) to terminate it. I would be a complete fool to think that it will not be terminated in that time. Yes I realize that many airlines have terminated plans, but ALL of those pay much higher wages than AA does so those employees can at least put more into their 401Ks. Also AA freely admits that the 401 will cost them more. But I suppose this makes sense to you and all other MBAs.

 

[Kev3188]

Dude, that's just it; Congress isn't going to look out for us. Neither is anyone in the C-Suite. *WE* need to be looking out for ourselves. By continuing to be beholden to something that you yourself think will likely be termed, we are allowing ourselves to be played by companies nationwide.

Do you not understand the potential leverage gained for labor simply by switching to a DC plan going forward? That's an honest question, btw...

 

[WorldTraveler]

OldGuy,
remember that many pension plans including AA's were funded solely by investment returns in the late 90s when the stock market was in its heyday. The drop in the stock market came at the same time that the airline industry tanked post 9/11.
Airlines like UA and US which went first into BK had no choice but to terminate their pension plans; they couldn't afford to keep pension plans solvent.

And yes Congress stepped in with the pension protection act that allowed airlines in BK (DL and NW at the time) to stretch out their payments ot their pension plans in exchange for not terminating - and that is exactly what DL and NW did w/ the exception of the PMDL pilot pension plan which had a lump sum feature that was unsustainable. DL and NW would have paid out billions in equity in their new companies to the PBGC to settle claims and chose to freeze their pensions instead. Congress does not want to see pension plans terminated and gave companies options as well as a big stick to make sure companies use options other than termination.

Yes, 401k plans cost more because companies have to fund them today and not put off payments for years like what can be done with DB plans. AA's pension obligations end with your paycheck when they deposit your 401K funds into your account. And that is precisely why companies want 401k plans - so they don't have billions of dollars in liabilities on their books. The price is already paid even if it is higher; companies and investors do not like risk or uncertainty, which is exactly the hallmark of DB plans.

The risk for managing your retirement is now yours. The vast majority of other Americans do it; many pay for managers to help but it is hardly necessary.

You don't need anyone looking after your pension interests when the company pays it to you w/ your paycheck.

As with any statement I make, you can check me in a couple years or more, but I don't see the PBGC defaulting on its pension obligations - there are just too many Americans who have PBGC guaranteed benefits. Like Social Security, it would be political suicide to walk away from those obligations.
Everyone wants to blame someone but who would you like to blame for the drop in the stock market in the early 2000s... the dot com bust was coming and 9/11 pushed the stock market over the cliff (to use today's words).
You seem to expect companies to overcome economic shocks in the US that have not been seen since the Great Depression.

I WANT you to keep your pension and its benefits. And BTW, you can draw your pension much sooner under AA's rules even if frozen than you can under the PBGC's rules if it were frozen.

Congress has screwed up plenty but there isn't much anyone could have done to make pensions any more solvent given the drop in the stock market; whether you want to admit it or not, Congress has done as much as possible to keep those plans from being terminated. DL, NW, and AA employees will come away from BK w/ very different outlooks than will UA and US employees.

And AA and DL still have those pension responsibilties on their books... and have to run businesses sufficiently strong enough to support them. So far, DL has been able to meet its pension obligations which amount to more than $600M per year. We will have to see if AA can do so as well.

 

[cf6mech]

.
Kev. The 401K was never intended to be the sole source of income for retirees. It was intended to be a supplement to a pension. Now Corporate America has decided that the 401K will replace the pensions. The reality of things is that as soon as AA can dump the pensions on the PBGC they will do so. All it will take is a republican president appointee running the PBGC. The PBGC can't handle the pensions they have now. You add ours to it and then it's a real mess. Guaranteed by the government until the tea partiers get their way and then it disappear. Then what? I do know the crooks that orchestrated this whole thing on both sides of the fence have a pension waiting for them when they are ready to retire. The elitists like Eolesen will tell you a 401K gives you the opportunity to set your own retirement income. Do you or I have any control over the stock market? So in reality the 401K is a complete gamble. You are forced to gamble on the hope you can retire someday when you are too old to work. The sad reality is that those of us who were not old enough to take the retirement will probably never get to retire. We have no medical and now no income other than a glorified Ponzi Scheme called the stock market.
I know this went off topic but I thought it important to try to show how losing our pension and getting a 401K match is not gaining anything.



Oldguy, I really like you and agree with most of what you have to say till, you go conspiracy theory political left wing radical,...come on, your smarter than that, you think anyone in Washington right now has your back,....really?

 

[Overspeed]

the jobs in Tulsa will go away by themselves due to contract language and aircraft retirement. I have no control over that and I blame the owners of our contract and the advisors for allowing such damaging language to be in the agreement in the first place!
if it does happen that way then we gave away the jobs for nothing just like in 2003. cherry picking I think not, this is fact

That's a lie Chuck and you know it.

The new scope language protects existing work as well as future work. 35% of direct labor spend means exactly that 35 of today and 35% of tomorrow Chuck. You can add Chuck your a professional remember. If AA spends $1.5B today and new aircraft drop it to $1B then outsourcing drops from $525M to $350M which means Chuck? $350M is less than $525M. Then when it grows back up to $1.5B then yes the outsourcing goes up but so does the insourcing which in the TWU scope formula.

Not true with AMFA at AS Chuck. They never stopped AS from closing all overhaul in OAK and laying off 350 AMTs did they. Great union Chuck unless that's what you want. Lose those pesky overhaul AMTs then you can get your geo-pay and line premium. Let's look at SWA, they have a scope clause that only secures 4 lines of overhaul for 600 plus aircraft. How many lines do we have in TUL Chuck? 31 just in case you forgot. That's way more than AS or SWA Chuck. You are the one who is anti union Chuck. You hate those overhaul union jobs. Nice Chuck, nice.

 

[Overspeed]

OldGuy,
remember that many pension plans including AA's were funded solely by investment returns in the late 90s when the stock market was in its heyday. The drop in the stock market came at the same time that the airline industry tanked post 9/11.
Airlines like UA and US which went first into BK had no choice but to terminate their pension plans; they couldn't afford to keep pension plans solvent.

And yes Congress stepped in with the pension protection act that allowed airlines in BK (DL and NW at the time) to stretch out their payments ot their pension plans in exchange for not terminating - and that is exactly what DL and NW did w/ the exception of the PMDL pilot pension plan which had a lump sum feature that was unsustainable. DL and NW would have paid out billions in equity in their new companies to the PBGC to settle claims and chose to freeze their pensions instead. Congress does not want to see pension plans terminated and gave companies options as well as a big stick to make sure companies use options other than termination.

Yes, 401k plans cost more because companies have to fund them today and not put off payments for years like what can be done with DB plans. AA's pension obligations end with your paycheck when they deposit your 401K funds into your account. And that is precisely why companies want 401k plans - so they don't have billions of dollars in liabilities on their books. The price is already paid even if it is higher; companies and investors do not like risk or uncertainty, which is exactly the hallmark of DB plans.

The risk for managing your retirement is now yours. The vast majority of other Americans do it; many pay for managers to help but it is hardly necessary.

You don't need anyone looking after your pension interests when the company pays it to you w/ your paycheck.

As with any statement I make, you can check me in a couple years or more, but I don't see the PBGC defaulting on its pension obligations - there are just too many Americans who have PBGC guaranteed benefits. Like Social Security, it would be political suicide to walk away from those obligations.
Everyone wants to blame someone but who would you like to blame for the drop in the stock market in the early 2000s... the dot com bust was coming and 9/11 pushed the stock market over the cliff (to use today's words).
You seem to expect companies to overcome economic shocks in the US that have not been seen since the Great Depression.

I WANT you to keep your pension and its benefits. And BTW, you can draw your pension much sooner under AA's rules even if frozen than you can under the PBGC's rules if it were frozen.

Congress has screwed up plenty but there isn't much anyone could have done to make pensions any more solvent given the drop in the stock market; whether you want to admit it or not, Congress has done as much as possible to keep those plans from being terminated. DL, NW, and AA employees will come away from BK w/ very different outlooks than will UA and US employees.

And AA and DL still have those pension responsibilties on their books... and have to run businesses sufficiently strong enough to support them. So far, DL has been able to meet its pension obligations which amount to more than $600M per year. We will have to see if AA can do so as well.

Why do you justify cutting pensions because others don't have it? Wouldn't it be better for all workers, non-union as well, to have a pension plan? Corporate America has done an excellent job of portraying unions as greedy when it is exactly the opposite. The money managers on Wall Street want the blue and white collar workers to put their money in 401k's managed by them with big bonuses and commissions while they promise the middle class that they will be rich someday. It's BS and you know it. 401k's are not the way to go because they are risky, very risky. How much did workers lose on great companies like Enron?

 

[Chuck Schalk]

That's a lie Chuck and you know it.

The new scope language protects existing work as well as future work. 35% of direct labor spend means exactly that 35 of today and 35% of tomorrow Chuck. You can add Chuck your a professional remember. If AA spends $1.5B today and new aircraft drop it to $1B then outsourcing drops from $525M to $350M which means Chuck? $350M is less than $525M. Then when it grows back up to $1.5B then yes the outsourcing goes up but so does the insourcing which in the TWU scope formula.

Not true with AMFA at AS Chuck. They never stopped AS from closing all overhaul in OAK and laying off 350 AMTs did they. Great union Chuck unless that's what you want. Lose those pesky overhaul AMTs then you can get your geo-pay and line premium. Let's look at SWA, they have a scope clause that only secures 4 lines of overhaul for 600 plus aircraft. How many lines do we have in TUL Chuck? 31 just in case you forgot. That's way more than AS or SWA Chuck. You are the one who is anti union Chuck. You hate those overhaul union jobs. Nice Chuck, nice.

(3 2) At the request of the Director of the Air Transport Division, discussions may be initiated with the Vice President – Employee Relations, quarterly or on reasonable request, to ascertain by type of aircraft, engine, or component part the amount and type of work which has been contracted out during the previous calendar quarter. The percentage set forth in paragraph (e) above may be exceeded in the event: (i) the Company’s then-present employees do not have the normal time and/or skills to perform the work; or (ii) the Company’s equipment or facilities are insufficient or are being fully utilized at the time the Company contracts out the work
(e) Contracting Out of Work. In the interest of providing stable employment, but nevertheless to permit the Company to maintain and continue the development of air transportation under applicable laws, the Company will perform aircraft and aircraft component maintenance and overhaul, and other related work, as its present employees have the normal time and the skills to perform, and for which the Company can reasonably make available the necessary facilities. The Company may contract out up to 35% of the aircraft-related maintenance work (both Line and Base) covered by this Agreement.

The cap of 35% can be exceeded....which means that you are the half truth teller! Nothing in this TWU contract is irion clad! You are the anti-union man defending an anti-union contract with open language the coompany can use against us. Like I said, the contract itself will decide the fate of Tulsa not me.

 

[Overspeed]

(3 2) At the request of the Director of the Air Transport Division, discussions may be initiated with the Vice President – Employee Relations, quarterly or on reasonable request, to ascertain by type of aircraft, engine, or component part the amount and type of work which has been contracted out during the previous calendar quarter. The percentage set forth in paragraph (e) above may be exceeded in the event: (i) the Company’s then-present employees do not have the normal time and/or skills to perform the work; or (ii) the Company’s equipment or facilities are insufficient or are being fully utilized at the time the Company contracts out the work
(e) Contracting Out of Work. In the interest of providing stable employment, but nevertheless to permit the Company to maintain and continue the development of air transportation under applicable laws, the Company will perform aircraft and aircraft component maintenance and overhaul, and other related work, as its present employees have the normal time and the skills to perform, and for which the Company can reasonably make available the necessary facilities. The Company may contract out up to 35% of the aircraft-related maintenance work (both Line and Base) covered by this Agreement.

The cap of 35% can be exceeded....which means that you are the half truth teller! Nothing in this TWU contract is irion clad! You are the anti-union man defending an anti-union contract with open language the coompany can use against us. Like I said, the contract itself will decide the fate of Tulsa not me.

Chuck, you interpret things the way you want them to but you are wrong. What's excluded? Do you know? No. Did you ask for the intent from the people that were there? Probably from Bob who always states things in his own way but never as the language intended. I asked. The excluded work is still included in the formula. All maintenance labor and material is included. Tulsa will survive in spite of you Chuck. And while it may dip short term, it will grow again. That is not true with AMFA in either the SWA or AS language. When is AMFA bringing in heavy overhaul, any heavy overhaul at AS? Never per their scope clause. 4 lines for 622 aircraft at SWA, want that at AA? That would mean shutting down 27 docks along with the jobs and we haven't even talked about the engine shop. Chuck do you even belive our own BS?

What about 20% outsourcing cap at UA? They were outsourcing at 45% when the IBT came in and AMFA got tossed. Great job AMFA defending scope at UA.

 

[WorldTraveler]

Why do you justify cutting pensions because others don't have it? Wouldn't it be better for all workers, non-union as well, to have a pension plan? Corporate America has done an excellent job of portraying unions as greedy when it is exactly the opposite. The money managers on Wall Street want the blue and white collar workers to put their money in 401k's managed by them with big bonuses and commissions while they promise the middle class that they will be rich someday. It's BS nd you know it. 401k's are not the way to go because they are risky, very risky. How much did workers lose on great companies like Enron?

I'm not justifying taking anything from anybody.
I am realistic enough to say that if the stock market declined, it is no more realistic to expect a company to retain pensions that are based on a shaky stock market than it is for you to expect to retain the same level of returns you would have in your 401K over the same period.
Lots of Americans lots alot of money over the stock market declines of the 2000s. I'm not sure why you think that you as a holder of a DB pension should be exempt... or how you believe any employer can overcome the huge declines in stock market values which affects how much those companies have to put into their pensions.

I'm all about keeping commitments... but as Kev notes, 401ks are not as bad as you want to believe they are... and Congress has done as good of a job as possible to keep AA, DL, and NW from termination their pensions, opting instead for a freeze.

Not ideal by any means but we don't live in an ideal world. Sometimes 2nd best is as good as it gets.

 

[Kev3188]

Why do you justify cutting pensions because others don't have it? Wouldn't it be better for all workers, non-union as well, to have a pension plan? Corporate America has done an excellent job of portraying unions as greedy when it is exactly the opposite. The money managers on Wall Street want the blue and white collar workers to put their money in 401k's managed by them with big bonuses and commissions while they promise the middle class that they will be rich someday. It's BS and you know it. 401k's are not the way to go because they are risky, very risky. How much did workers lose on great companies like Enron?

I haven't seen anyone justifying "cutting" pensions. Guess what; yours is frozen (as is mine). It's not coming back.

I'm agitating for a move that will reclaim some power back for labor. What are you standing for?

P.S I've had a 401k under two different administrators now (ING & Fidelity); at no point ever was I told I'd be rich.

 

[Glenn Quagmire]

I'm agitating for a move that will reclaim some power back for labor. What are you standing for?

He will "get 'em next time"...blah blah blah.

He is not standing for anything Kev. He has been on his knees since 2003.

This person Overspeed is the epitome of what is wrong with big labor today.

 

[1AA]

His pension is based on his Union International position salary.
He does not have to live under the terms he negotiated.
This is covered in JetNet under benefits. He may come back and say it is not true but it is in writing on the company website. I read it. This is unionism? More like Communism.