American Seeks to Halt Worker Pay Raises

[Boomer]

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.

FWAA,
When both UAL and USAir filed Chapter 11 they placed their DBPs' with the PBGC. In both cases, the amount they claimed owed to the DBPs' were far lower than the value of those plAAns recognized by the PBGC.

Can you explain the reason for the deficit other than the "assumed rate of return allowed by ERISA" versus the actual recognized by the PBGC?

Given the law which legally prevents DBP plAAN participants from knowing where, when and the amounts invested: we do not know what the actual funded state of the DBP's at AMR because we cannot backtrack the non-supplied information. Even the Fed gives us the minutes thirty to sixty days after their meetings.

Why should any DBP participant refuse the freezing of an AMR DBP PlAAn without such information beinbg devulged in a Sarbanes-Oxley enviroment?

 

[IORFA]

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

According to the info I have, CO tops out at $48.15, if you work more than 225 hours in a quarter, limit 110 a month, they make $53.15. This is domestic. AA makes $44.65 up to 70 hours and $51.35 over 70 hours, no limit. For Int'l, CO tops out at $49.15 and if you work more than 225 hrs a quarter/limit 110 a month, they make $54.15. AA $47.69 for 70 hours and $54.84 over 70 hours. Plus they pay domestic rates to some international destinations that AA pays international rates. I was in Central America once with them and was surprised to hear that they were paid domestic rates for where we were. I think it was Nicarauga. So I am assuming they also got domestic per diem as well. Not sure though. Also WN tops out a an hourly average coverted from the trip for pay structure at $54.77 an hour.
Back to the pension thing, don't forget, at least with F/A's, that a lot have no intention of leaving any time soon, or not at all. Starting, I beleive, NOV.2008 F/A pensions are going to decrease commensurate to the lower wages we are now receiving. This will also help the funding of the overall plan and lessen the contributions that AA must make. Just a thought.

 

[StraaightTaalk]

AA is playing the same cards they have always played. By trying to lower expectations, they are preparing the workforce for what the company really wants: a lower entry-level pay scale with no benefits.

It's like 1983 all over again.

They will then come back with the promise of pay increases for incumbent employees subsidized by a new form of B-scale.

 

[swdriver]

You airline workers had it real good in the 70's, 80's and 90's. You do not need a raise. You need to give about 35% back to your companies.

 

[StraaightTaalk]

You airline workers had it real good in the 70's, 80's and 90's. You do not need a raise. You need to give about 35% back to your companies.

TROLL.

 

[swdriver]

Make that 40%., plus the free travel.

 

[FWAAA]

FWAA,
When both UAL and USAir filed Chapter 11 they placed their DBPs' with the PBGC. In both cases, the amount they claimed owed to the DBPs' were far lower than the value of those plAAns recognized by the PBGC.

Can you explain the reason for the deficit other than the "assumed rate of return allowed by ERISA" versus the actual recognized by the PBGC?

Given the law which legally prevents DBP plAAN participants from knowing where, when and the amounts invested: we do not know what the actual funded state of the DBP's at AMR because we cannot backtrack the non-supplied information. Even the Fed gives us the minutes thirty to sixty days after their meetings.

Why should any DBP participant refuse the freezing of an AMR DBP PlAAn without such information beinbg devulged in a Sarbanes-Oxley enviroment?

About UAL and USAir: Dunno about your specific questions. All I know about them is that both were facing multi-billion dollar minimum required contributions by 2003-04 and obviously, neither had the money nor the means to borrow the money to make those contributions, so both had no alternative but to dump their plans on the PBGC.

I do know why both companies' plans were so underfunded: Equity markets in 2002 were grim; the major indexes had fallen dramatically from their 2000 peaks PLUS interest rates fell to nearly zero as a result of the Fed's desire to prompt continued consumer spending in the wake of the horror of September 11, 2001. So nearly all DB plans in the country became underfunded in a very short period of time. Lots of articles in the financial press outlining how troubled the DB plans had become.

As to how AA was able to keep its plans when UA and US were not: AA's plans didn't become AS underfunded as those competitors, perhaps due to dumb luck or better management of the assets. Maybe some of both.

Two or three years ago, General Motors borrowed something like $15 billion (or was it $20 billion plus?) at favorable rates and dumped it all in its DB plans, as they were severely underfunded. With $200 billion in annual revenue, that was no problem for GM. UA and US could never fund their several billion dollar deficits.

Not to be too flippant, but there's a lot of detail not provided to stockholders or employees, so a lack of info about actual investments in the DB plans is nothing new. AA promised you an annuity when you retire and there's a whole host of laws and rules concerning the trust funds that hold the monies used to pay that retirement annuity. If the plans don't earn as much as assumed, then the employer has to add more money; given that, what difference does it make whether the plans actually earn as much as assumed?

On a related note, get ready for another press release by AA about its recent pension contributions, as CO just did the same thing:

http://biz.yahoo.com/prnews/071011/lath074.html?.v=101

 

[MCI transplant]

Make that 40%., plus the free travel.

<_< ------- Let me correct you Sir! Our travel privileges are not "free"! They are earned!

 

[Bob Owens]

You airline workers had it real good in the 70's, 80's and 90's. You do not need a raise. You need to give about 35% back to your companies.

Wasnt there in the 70s but things werent great in the 80s, and not much better in the 90s. 35%? We have given back a lot more than that.

 

[StraaightTaalk]

Wasnt there in the 70s but things werent great in the 80s, and not much better in the 90s. 35%? We have given back a lot more than that.

Don't mind him, Bob. Swdriver is just another TWA troll trying to flamebait with ridiculous statements.

 

[Boomer]

About UAL and USAir: Dunno about your specific questions. All I know about them is that both were facing multi-billion dollar minimum required contributions by 2003-04 and obviously, neither had the money nor the means to borrow the money to make those contributions, so both had no alternative but to dump their plans on the PBGC.

I do know why both companies' plans were so underfunded: Equity markets in 2002 were grim; the major indexes had fallen dramatically from their 2000 peaks PLUS interest rates fell to nearly zero as a result of the Fed's desire to prompt continued consumer spending in the wake of the horror of September 11, 2001. So nearly all DB plans in the country became underfunded in a very short period of time. Lots of articles in the financial press outlining how troubled the DB plans had become.

As to how AA was able to keep its plans when UA and US were not: AA's plans didn't become AS underfunded as those competitors, perhaps due to dumb luck or better management of the assets. Maybe some of both.

Two or three years ago, General Motors borrowed something like $15 billion (or was it $20 billion plus?) at favorable rates and dumped it all in its DB plans, as they were severely underfunded. With $200 billion in annual revenue, that was no problem for GM. UA and US could never fund their several billion dollar deficits.

Not to be too flippant, but there's a lot of detail not provided to stockholders or employees, so a lack of info about actual investments in the DB plans is nothing new. AA promised you an annuity when you retire and there's a whole host of laws and rules concerning the trust funds that hold the monies used to pay that retirement annuity. If the plans don't earn as much as assumed, then the employer has to add more money; given that, what difference does it make whether the plans actually earn as much as assumed?

On a related note, get ready for another press release by AA about its recent pension contributions, as CO just did the same thing:

http://biz.yahoo.com/prnews/071011/lath074.html?.v=101

FWAA,

You, sir, have a future in politics. That was one of the better non-answer-answers I've witnessed to date.

A Federal law prevents DBP plan participants from knowledge of the actuall investments, both time and place, of their future promised benefits. Without said information: there is no way to project funding status against future claims. The assumed benefit from each and every prior year is booked as actual versus gained. Although AA and CO were given the ability to fix assumed rates of return for future years according to the law, nothing addresses past years.

Alternatively, nothing prevents companies such as AA from chosing to state the actual versus assumed rates of return for each and every year prior to the current law: if everthing is soo clean between the sheets, why doesn't AA voluntarily divuldge said information on a best foot forward basis?

 

[FWAAA]

You, sir, have a future in politics. That was one of the better non-answer-answers I've witnessed to date.

I've been watching a lot of presidential hopefuls evade questions lately.

A Federal law prevents DBP plan participants from knowledge of the actuall investments, both time and place, of their future promised benefits. Without said information: there is no way to project funding status against future claims. The assumed benefit from each and every prior year is booked as actual versus gained. Although AA and CO were given the ability to fix assumed rates of return for future years according to the law, nothing addresses past years.

Alternatively, nothing prevents companies such as AA from chosing to state the actual versus assumed rates of return for each and every year prior to the current law: if everthing is soo clean between the sheets, why doesn't AA voluntarily divuldge said information on a best foot forward basis?

I have no idea why not. Only a WAG here: Maybe some paranoid AMR employee(s) want to prevent other money managers from copying their portfolio without paying a management fee. Compared to most other legacy airline pension funds, AA's funds did not become quite as underfunded - so either thru dumb luck or good money management, they did something right. If AA disclosed the investments, others could free-ride on AA's expertise (or "not as incompetent as the others" skills).

 

[WingNaPrayer]

What really should matter is that as of January 2007, AA's pension obligations were underfunded by 2.3 billion. I wonder how that is going to play into the contract negotiations next spring?

 

[donttouchthebeauty]

What really should matter is that as of January 2007, AA's pension obligations were underfunded by 2.3 billion. I wonder how that is going to play into the contract negotiations next spring?

Per StrAAight and FAMikey - it will be smooth sailing <_<

 

[Boomer]

I've been watching a lot of presidential hopefuls evade questions lately.
I have no idea why not. Only a WAG here: Maybe some paranoid AMR employee(s) want to prevent other money managers from copying their portfolio without paying a management fee. Compared to most other legacy airline pension funds, AA's funds did not become quite as underfunded - so either thru dumb luck or good money management, they did something right. If AA disclosed the investments, others could free-ride on AA's expertise (or "not as incompetent as the others" skills).

FWAA,

Safe answer: logical debate dictates that it is imposible to refute a negative assertation: you cannot prove a negative.

Given that the investment allocations were those made in past years; and, given that investment decisions going forward from that point would have to be dynamic rather than static: it is highly unlikely that controlled shifts in the asset allocation would be despositive with resepect to current positions.

...In short, no one is asking where you are today; the question is where you were in the years preceeding an allowable window: just like the Fed.

If everything is on the up and up...Arpey and compAAny only need issue a statement in compliance with Sarbanes-Oxley stating that their reporting of the funded status of the DBP's is factual with respect to "assumed and booked asset gains" versus actual realized gains for any given year.

If AMR has nothing to hide, why not just put it out?

The fact that they could but refuse to do so leaves me wondering why?

After all, we are into this for shared sacrifice, right?