American Seeks to Halt Worker Pay Raises

[jimntx]

(think, no more lake house) .

NO MORE LAKE HOUSE? NO MORE LAKE HOUSE?????? Hell, most of us can't afford a tent by the drainage ditch anymore.

Back to the topic...just think who is the #1 negotiator for the f/as. I 'spect we gonna end up with a paycut and have to sew our own uniforms.

 

[FWAAA]

Anyone under 50 who thinks that they are getting a full pension out of this place is out of their minds. All you have to do is look at your total value statement and see how each year they are putting less and less into your fund. They are bankrupting the plan. They will keep it around for as long as they can use it to get concessions.

Absolutely and completely incorrect.

What you're forgetting is that the pension monies are invested in equities and bonds; investments that have performed very well as of late. When pension funds' investments perform well, then the employer doesn't have to contribute a whole helluva lot of cash to keep the plans funded. Perhaps you've noticed the Dow Jones index is currently at an all-time high (north of 14,000)? The whole idea is that the employer contributes money, invests it well, and then uses that money to pay the promised annuities. When the fund isn't fully funded (like right now), then the employer has to contribute extra money (which it has been doing lately).

I don't obsess over whether my life insurance company has enough money on hand to pay off all of its policies right now. So why persist in claiming that AA is "bankrupting" the pension plans? As Planesight mentioned, at 12/31/06, the plans contained $8.6 billion of assets. AA is adding over $350 million this year and with the markets' performance so far this year, I'm predicting that the plans' value at 12/31/07 will exceed $9.0 billion. Perhaps substantially more.

With that said and accepted we should bleed every penny out of this company we can before they transfer all the assetts somewhere else. Forget about security, that was never something this industry offered, get every penny you can as soon as you can, after all, isnt that what upper management is doing?. Dont worry, if the worst that can happen is AA goes bust after we maximize what we can get out of it somebody will pick up the assetts, put them to use and need people to provide the labor thats essential to providing the service.

"Full pay to the last day." Well, good luck with that. That mantra has been a stunning success for other airline employees in the past.

"AA has the oldest fleet" So? They have the largest fleet as well. It stands to reason that ther airline that has the largest fleet would also have the oldest. Besides airliners age by cycles not years, good chance that SWA has the oldest fleeet by that measure.

The reporter who wrote this article obviously isn't as knowledgable as most of the people here. The problem with AA's "he old" fleet isn't that its airplanes are nearing the end of their mechanical functional life. Most AA airplanes have many tens of thousands of cycles left in them. The problem with AA's fleet is its fuel efficiency. Those MD-80s, AB6s and 767s are bleeding the company at the gas pump. More efficient models would save AA hundreds of millions of dollars a year at current fuel prices.

"AA has the highest labor costs" By less than a third of a cent. Hmm, surely the $192,000,000 could account for that. If AA has the highest labor costs while having one of the lowest wages, worst beneifits and least paid time off then the problem lies with how the company manages their labor not what they are paying them.

I'm not sure I agree that AA's unit labor costs are actually the highest. As I've posted before, the other legacies now purchase much more outsourced maintenance and other services (like Indian call centers) than does AA, and it's not clear whether the claims that AA's costs are the highest fully take that into account.

Get ready for more and more of this. As I've mentioned before I went to an IRRA meeting in Washington DC several years ago. Over and over again, every spokesperson from government and the industry dwelled on their opininion that airline workers had "unrealistic expectations". A represntative from the Bush administration bluntly put it that the administration wanted cheap airfares for the public and high profits for the owners and the money was going to come from the workers. You have to understand that the government(at many different levels) is a silent partner in this industry. Every ticket thats sold, every landing thats made, every transaction that occurs generates huge revenues for the government even if the industry claims to be losing billions. We have to realize one basic fact-the planes must fly and they will fly. The industry will not dissapear, too much of the economy is dependant on it and even if the industry posted a loss every year it would still not be in danger of dissapearing. Let them lose money if thats what they want to say they are doing, we must remain indifferent and get a fair share for what we offer and provide. The government, the media and in our case even the unions will be against us, they will be working together to lower our expectations. We must not let them win.

You may be right, but when "everyone" is against you, perhaps your position isn't the winning position. Possible?

When you persist in revealing just how little you understand about the pensions, you reveal to AA a lot more than you probably should.

 

[Barfbag]

I fully realize that It's easy for me to be sitting here(retired), and make this following statement(though I too could lose my defind benefit retiree pension), but you know what......................."Enough is Enough with these bastards at HDQ" !!

Retired? my uncle Dogfart, told me that he worked with you, and you were a looney then. I guess somethings never change.

 

[donttouchthebeauty]

Absolutely and completely incorrect.

I don't obsess over whether my life insurance company has enough money on hand to pay off all of its policies right now. So why persist in claiming that AA is "bankrupting" the pension plans? As Planesight mentioned, at 12/31/06, the plans contained $8.6 billion of assets. AA is adding over $350 million this year and with the markets' performance so far this year, I'm predicting that the plans' value at 12/31/07 will exceed $9.0 billion. Perhaps substantially more.


FWAAA - I do agree with some of your post - however I think alot of it is wishful thinking.. You are right about the pension not being as big of a burden as other things. However, when you have your direct competitors not having to contibute $350 million to an underfunded pension plan, it does put a damper on things and just think of it this way, $350 million may be more than AMR even profits this year.. The biggest thing for AMR, is the pension being used as their main negotiation tool and will be for a long time. Labor costs are high due to the fact that probably 90% plus, of their workforce has 7 or more years, and the wages of pilots and flight attendants are among the highest. So when they go to negotiate they will likely say, you still make the highest wages and have your retirement, so sorry, but we can't give you more. However we would like to cut your wages somewhat so we can afford to fund the pension plans. Here is our spreadsheet and chart to show you!!!

 

[AirLUVer]

FWAAA - I do agree with some of your post - however I think alot of it is wishful thinking.. You are right about the pension not being as big of a burden as other things. However, when you have your direct competitors not having to contibute $350 million to an underfunded pension plan, it does put a damper on things and just think of it this way, $350 million may be more than AMR even profits this year.. The biggest thing for AMR, is the pension being used as their main negotiation tool and will be for a long time. Labor costs are high due to the fact that probably 90% plus, of their workforce has 7 or more years, and the wages of pilots and flight attendants are among the highest. So when they go to negotiate they will likely say, you still make the highest wages and have your retirement, so sorry, but we can't give you more. However we would like to cut your wages somewhat so we can afford to fund the pension plans. Here is our spreadsheet and chart to show you!!!

But the competitors now have to pay each employee a matching rate for 401k contributions which can be substantially higher than pension contributions (given that the company can plan on growth in the stock/bond market to increase assets in the pension fund, they cannot depend on that to help increase monies in the 401k matches. If a pension fund is well managed (and there are no major stock crashes/disruptions), then it can be much more economical to offer a pension than a 401K matching retirement program.

 

[Bob Owens]

Absolutely and completely incorrect.

What you're forgetting is that the pension monies are invested in equities and bonds; investments that have performed very well as of late. When pension funds' investments perform well, then the employer doesn't have to contribute a whole helluva lot of cash to keep the plans funded. Perhaps you've noticed the Dow Jones index is currently at an all-time high (north of 14,000)? The whole idea is that the employer contributes money, invests it well, and then uses that money to pay the promised annuities. When the fund isn't fully funded (like right now), then the employer has to contribute extra money (which it has been doing lately).

I don't obsess over whether my life insurance company has enough money on hand to pay off all of its policies right now. So why persist in claiming that AA is "bankrupting" the pension plans? As Planesight mentioned, at 12/31/06, the plans contained $8.6 billion of assets. AA is adding over $350 million this year and with the markets' performance so far this year, I'm predicting that the plans' value at 12/31/07 will exceed $9.0 billion. Perhaps substantially more.

Well most retirement funds are put into the same types of invesyments such as 401Ks, IRAs etc, how many financial planners would consider $1200 a year sufficient to meet our retirement needs?

So the plan has $9 Billion in assetts, thats to cover current retirees, their dependanats and all current workers, what are the projected liabilities?

"Full pay to the last day." Well, good luck with that. That mantra has been a stunning success for other airline employees in the past.

Its been successful for management.

The reporter who wrote this article obviously isn't as knowledgable as most of the people here. The problem with AA's "he old" fleet isn't that its airplanes are nearing the end of their mechanical functional life. Most AA airplanes have many tens of thousands of cycles left in them. The problem with AA's fleet is its fuel efficiency. Those MD-80s, AB6s and 767s are bleeding the company at the gas pump. More efficient models would save AA hundreds of millions of dollars a year at current fuel prices.

And the competition has those models?

I'm not sure I agree that AA's unit labor costs are actually the highest. As I've posted before, the other legacies now purchase much more outsourced maintenance and other services (like Indian call centers) than does AA, and it's not clear whether the claims that AA's costs are the highest fully take that into account.

Thanks, I forgot about that point.

You may be right, but when "everyone" is against you, perhaps your position isn't the winning position. Possible?

Thats the hand we were dealt.

When you persist in revealing just how little you understand about the pensions, you reveal to AA a lot more than you probably should.

The point is that AA is not putting away enough to cover their liabilities. I say they are doing this so that when the ball drops they will claim that the pension liability is too great and freeze the plan, but only after they have extracted bilion$ in concessions for years.

Most of the other pension funds got into trouble because it was assumed that the rate of return on investments would be higher and they failed to put enough away. Like I said if we had only a 401K and only put away $1200 a year I doubt that anyone would say that we were putting enough away.

 

[Bob Owens]

. Labor costs are high due to the fact that probably 90% plus, of their workforce has 7 or more years, and the wages of pilots and flight attendants are among the highest. So when they go to negotiate they will likely say, you still make the highest wages and have your retirement, so sorry, but we can't give you more. However we would like to cut your wages somewhat so we can afford to fund the pension plans. Here is our spreadsheet and chart to show you!!!

Actually FWAAA brought up a point made some time ago about labor costs. SWA has the highest paid workers but one of the lowest labor costs because a lot of work is subbed out. Lower labor costs do not automatically mean lower operating costs if you are paying someone else to provide the labor. It can but if you have the volume of work it shouldnt. UALs total cost for maintenence actually increased when the farmed out a lot of OH, sure labor costs went down but in the end it cost them more for the same thing. The fact that AA keeps more work "in house" and also brings work in may make it appear that AA's labor costs are high but in reality those labor costs lower their operating costs. Another factor is that more than likely the company did not subtract the costs associated with providing services to other carriers. So the higher labor costs is just another BS misleading tactic the company is using. As workers we should completely dismiss such figures and stick to what are we paid as the number one airline in the country compared to SWA or UPS.

 

[FWAAA]

FWAAA - I do agree with some of your post - however I think alot of it is wishful thinking.. You are right about the pension not being as big of a burden as other things. However, when you have your direct competitors not having to contibute $350 million to an underfunded pension plan, it does put a damper on things and just think of it this way, $350 million may be more than AMR even profits this year.. The biggest thing for AMR, is the pension being used as their main negotiation tool and will be for a long time. Labor costs are high due to the fact that probably 90% plus, of their workforce has 7 or more years, and the wages of pilots and flight attendants are among the highest. So when they go to negotiate they will likely say, you still make the highest wages and have your retirement, so sorry, but we can't give you more. However we would like to cut your wages somewhat so we can afford to fund the pension plans. Here is our spreadsheet and chart to show you!!!

AA's profits this year will likely exceed $1 billion even after the pension contributions. For the first two quarters alone, AMR is showing almost $500 million of profit.

AA's defined benefit plans will cost it about $364 million this year, but as AirLUVer mentioned, don't forget the defined contribution plans at AA's competitors and their significant costs.

For instance, Southwest spent $301 million last year on its retirement plans despite having much smaller revenue than AMR.

Another example: UAL. Last year, UAL spent $222 million on its defined contribution plans, and its revenue was substantially less than AMR. On top of that, its expected 2007 Other post-retirement plan contributions of $173 million is not much smaller than AMR's 2007 contribution of $200 million.

Both WN and UAL spend an awful lot on retirement just like AMR. WN's expenses are more than double that of AA as a percentage of revenue and as a percentage of employee comp.

It's not wishful thinking for me; I'm not employed by AMR nor any of its subs and will not receive any pension from same. Just trying to inject some facts into what is often nothing more than a circle jerk of disgruntled mechanics and rampers.

 

[donttouchthebeauty]

So the higher labor costs is just another BS misleading tactic the company is using. As workers we should completely dismiss such figures and stick to what are we paid as the number one airline in the country compared to SWA or UPS.
[/quote]



You cannot compare your wages to SWA or UPS... You are a legacy carrier, not a cargo company or a point to point carrier. SWA is not paid per flight hour they are paid per segment (from what i understand) or something of the sort. AMR has to be compared to their counterparts such as NWA, DAL, UAL, US, CAL.... As far as flight attendants go, I believe CAL tops out higher than AMR..

 

[FWAAA]

Well most retirement funds are put into the same types of invesyments such as 401Ks, IRAs etc, how many financial planners would consider $1200 a year sufficient to meet our retirement needs?

So the plan has $9 Billion in assetts, thats to cover current retirees, their dependanats and all current workers, what are the projected liabilities?

Most of the other pension funds got into trouble because it was assumed that the rate of return on investments would be higher and they failed to put enough away. Like I said if we had only a 401K and only put away $1200 a year I doubt that anyone would say that we were putting enough away.

IF AA only "put away" $1,200 for you last year, it's because the actuaries concluded that's all that was necessary given the assets already there. If the DOW goes to 20,000 in a couple of years after Hillary's elected (stranger things have happened), then AA's plans may go from underfunded to overfunded and AA might be able to skip contributions entirely for a year or two.

The ABO (accumulated benefit obligation) was $10.153 billion as of 12/31/06 and the PBO (projected benefit obligation) was $11.048 billion on that date.

Last year, the plans paid out $605 million in retirement checks; AA contributed $329 million; and the plan assets increased in value by $1.063 billion. So $605 million went out and $1.392 billion was added, for a net gain of $787 million. That's all on page 75 of the 2006 AMR 10-K. That might help explain why AA only added $1,200 on your behalf. AA promised you a fixed annuity, not a certian amount of contributions each year. As we've discussed before, the massive concessions have greatly reduced the pension liabilities - further reducing the required additions.

 

[FWAAA]

So the higher labor costs is just another BS misleading tactic the company is using. As workers we should completely dismiss such figures and stick to what are we paid as the number one airline in the country compared to SWA or UPS.
You cannot compare your wages to SWA or UPS... You are a legacy carrier, not a cargo company or a point to point carrier. SWA is not paid per flight hour they are paid per segment (from what i understand) or something of the sort. AMR has to be compared to their counterparts such as NWA, DAL, UAL, US, CAL.... As far as flight attendants go, I believe CAL tops out higher than AMR..

WN pays its flight personnel by the flight segment but Bob Owens is a wrench, and WN wrenches are paid by the hour; more than $10 more per hour than AA's wrenches, IIRC. Not everyone is a flight attendant just because you are.

You may be right about CAL, but I doubt it. In January, 2006, the CAL FAs accepted $72 million in annual concessions:

http://www.usatoday.com/travel/flights/200...ttendants_x.htm

Given the prior two bankruptcies plus these concessions, I really doubt that CAL FAs top out at higher wages than AA's FAs.

 

[Bob Owens]

AA's defined benefit plans will cost it about $364 million this year, but as AirLUVer mentioned, don't forget the defined contribution plans at AA's competitors and their significant costs.

For instance, Southwest spent $301 million last year on its retirement plans despite having much smaller revenue than AMR.

Another example: UAL. Last year, UAL spent $222 million on its defined contribution plans, and its revenue was substantially less than AMR. On top of that, its expected 2007 Other post-retirement plan contributions of $173 million is not much smaller than AMR's 2007 contribution of $200 million.

Both WN and UAL spend an awful lot on retirement just like AMR. WN's expenses are more than double that of AA as a percentage of revenue and as a percentage of employee comp.

It's not wishful thinking for me; I'm not employed by AMR nor any of its subs and will not receive any pension from same. Just trying to inject some facts into what is often nothing more than a circle jerk of disgruntled mechanics and rampers.

Exactly, thats why I say call their bluff about the pension. Dont let them use it as a threat.

Right now, AAs pension plan gives it a cost advantage, especially since they are underfunding it. In the future, after years of underfunding, especially if the markets take a dive, the pension could show up as a huge liability thats when they would try and dump it but by keeping it around now it pays for itself many times over not only in smaller pension costs but concessions as well.

So forget the pension, if they want to take it let them freeze it and give away the only bargaining chip they think they have. Not only would AA have a hard time keeping people if they discontinued the pension by how many people would start with a comapny that offered no pension, lousy wages, only five paid days off a year plus working oddball shifts weekends, and holidays.

I've noticed that a few of the guys on the bottom of the recall list have returned to JFK. That means the company has pretty much exhausted the list and nearly 100 people who were on recall quit the company. Thats in addition to the 5 to 10 percent a year you can expect to see over the next few years through normal attrition. Pretyy soon AA wont have enough people to do their own work, let alone outside contractors. The JFK Express now consistantly lists openings for mechanics at other carriers as well. AA and the TWU secretly opened the contract a while back and raised some Title II positions by $5/hr because they couldnt get anybody (a real union would not have let the company off the hook so easily and gotten something for all the members but not the Totally Worthless Union). Even with the higher wage 5 paid days off a year when the normal minimum is at least 20 (10 holidays and two weeks vacation) kept qualified people away, as a result most of the time the air conditioning in the hangars dont work. Should be interesting in the winter when the heat dont work.

 

[donttouchthebeauty]

WN pays its flight personnel by the flight segment but Bob Owens is a wrench, and WN wrenches are paid by the hour; more than $10 more per hour than AA's wrenches, IIRC. Not everyone is a flight attendant just because you are.

You may be right about CAL, but I doubt it. In January, 2006, the CAL FAs accepted $72 million in annual concessions:

http://www.usatoday.com/travel/flights/200...ttendants_x.htm

Given the prior two bankruptcies plus these concessions, I really doubt that CAL FAs top out at higher wages than AA's FAs.

Don't doubt too much, I believe they top out at $53 an hour... And I never said everyone was a flight attendant.

 

[FWAAA]

Exactly, thats why I say call their bluff about the pension. Dont let them use it as a threat.

Exactly correct. Don't let any idiot stooge from your union or anyone from the company play the false pension card. It's basically a non-issue. As we've discussed before, no AA employees other than pilots make enough money to get a pension in excess of the PBGC guarantee unless they retire early (before 65). Dunno how old NHBB was when he retired, but if before 65, it's possible (but unlikely) that his pension exceeds the PBGC maximum.

The other group that might fear a pension freeze/termination would be those who doubt their ability to invest their replacement defined contribution plan to make up the difference. And those who fear a general stock/bond market meltdown that interferes with their retirement plan growth.

I agree with you - if the market tanks, and the plans go way underfunded, and AA might change its tune and seriously consider freezing/terminating the plans. But until that happens, AA's got what no other airline has: Close to $10 billion invested which more than pays for the current pension checks. Last year's checks = $605 million and last year's pension plan gains = $1.063 billion. And a mere $364 million required contribution from the company this year. Despite all the bleating from the uninformed about how AA's pension is way too expensive and is at risk, quite the opposite is true, and Arpey knows it. That's why he's shoveled over a billion and a half into the plans during 2003-07. It's cheaper than the alternatives. Lots cheaper.

Even better when compared to UAL: UAL spent over $660 milllion on bankruptcy lawyers, accountants, consultants and investment bankers during its bankruptcy. AA didn't. That's two years of pension contributions for AA. Or 2.5 times as much as the PUP/PSP stock payouts to the execs during 2006-07. Another reason Arpey was so dead set against Ch 11: He realized he could get big concessions just by threatening to do a US/UAL without spending all that green. Too bad the three major unions were too stupid in 2003 to demand sufficient upside for their members in exchange for those huge concessions. It was a big gamble (indirectly by the rank and file, since it was their money on the table) and the bet paid off. But since the rank and file had a mere 35 million options instead of, say, 50% or 75% of the total outstanding stock, the gamble paid off handsomely for the execs and not so well for the rank and file. If I paid dues to those stupid bastards (APA, APFA or TWU) I'd be very angry.

 

[jimntx]

You cannot compare your wages to SWA or UPS... You are a legacy carrier, not a cargo company or a point to point carrier. SWA is not paid per flight hour they are paid per segment (from what i understand) or something of the sort. AMR has to be compared to their counterparts such as NWA, DAL, UAL, US, CAL.... As far as flight attendants go, I believe CAL tops out higher than AMR..

Au contraire, Don't. It is very simple to compare SWA f/a wages to AA or UA or CAL f/a wages. SWA f/as are paid by the "trip"--which is (IIRC) 221 air miles. (The fact that the air mile distance between DAL and HOU is the same is NOT purely coincidental. ) HOU to PHX is 1048 air miles, or 4.75 trips. Take the total pay for a one-way leg, divide by the flying time, and you have, voila, an hourly rate for SWA f/as which can be compared to the rest of us.

I don't remember the exact pay, but I worked it out when the SWA f/as got their new contract. Their top of scale is well over $50/hr. I know that their TOS is over $10/hr higher than AA domestic TOS. Also, in their new contract they get paid for cleaning the a/c, I believe. It isn't flight pay, but it's more than we make on the legs we have to clean (which is nada, zippo, zilch).