AMR Corporation Reports 2007 Net Profit of $504 Million

[ch53D]

Exactly correct and I agree with you. Everyone sacrificed (to the tune of at least $8.1 billion) and the primary beneficiaries were the pilots, whose generous pensions remain intact. Everyone else's pension, as you correctly point out, would have been covered by the PBGC had AA filed for Ch 11 and terminated the pensions ala US or UA. You'd think those pilots would be sorta grateful that everyone sacrificed so they could benefit.



The company may threaten Ch 11 and may say the pensions are at risk, but now that they're funded at 96%, that would be a very hollow threat. For all practical purposes, they're fully funded, and if they were terminated now and handed to the PBGC, the pilots would get their full pension. They'd come up short only if the pension were severely underfunded (like the other airlines' pensions when they were terminated).

Here's the PBGC table for max pay out per year.

http://www.pbgc.gov/media/news-archive/new...07/pr08-07.html

 

[FWAAA]

Here's the PBGC table for max pay out per year.

http://www.pbgc.gov/media/news-archive/new...07/pr08-07.html

Uhh, thanks.

The PBGC maximum payout are for underfunded plans that can't afford to pay out the promised benefits. Participants of terminated (yet funded) plans receive more.

I don't know if that's true, FWAAA. They'd get their the amount under their qualified plan and maybe a little more, but the lump-sum is in a non-qualifying plan (identical in structure to the executive SERP that everyone thinks is so evil....). That gets handled a lot differently IIRC.

You're probably correct. I stand corrected.

 

[ch53D]

Uhh, thanks.

The PBGC maximum payout are for underfunded plans that can't afford to pay out the promised benefits. Participants of terminated (yet funded) plans receive more.




You're probably correct. I stand corrected.

Do you have a link that states that?

I’m under the impression that once a BK judge terminates the retirement plan you receive only what’s on the PBSC’s table, minus the under funded portion.

 

[FWAAA]

Do you have a link that states that?

On the front page of the PBGC link you provided:

Under the PBGC’s single-employer insurance program, retirees sometimes can receive more than the maximum guaranteed benefit. In general, three conditions must apply: 1) the participant earned a benefit in excess of the maximum guaranteed amount; 2) the participant retired or was eligible to retire three years prior to plan termination; and 3) the plan had sufficient assets to pay benefits above the guaranteed amount.

Certainly doesn't happen very often, but if a company liquidated yet had fully funded its retirement plans, the PBGC limits would be irrelevant.

I’m under the impression that once a BK judge terminates the retirement plan you receive only what’s on the PBSC’s table, minus the under funded portion.

In probably 99% or more of the cases, you'd be correct. But that's only because in the vast majority of terminations, the plans are woefully underfunded. Just like at US, DL and UA, for example. But if the plan has sufficient assets, those assets will provide annuities in excess of the guaranteed maximum.

 

[ch53D]

On the front page of the PBGC link you provided:



Certainly doesn't happen very often, but if a company liquidated yet had fully funded its retirement plans, the PBGC limits would be irrelevant.



In probably 99% or more of the cases, you'd be correct. But that's only because in the vast majority of terminations, the plans are woefully underfunded. Just like at US, DL and UA, for example. But if the plan has sufficient assets, those assets will provide annuities in excess of the guaranteed maximum.

Thank you, but AA is still 4% under funded but better than most.

 

[Bear96]

Exactly correct and I agree with you. Everyone sacrificed (to the tune of at least $8.1 billion) and the primary beneficiaries were the pilots, whose generous pensions remain intact. Everyone else's pension, as you correctly point out, would have been covered by the PBGC had AA filed for Ch 11 and terminated the pensions ala US or UA.

Well, sort of. You are only telling half the story. Only what was accrued up to the date of termination would be "covered by the PBGC." The other half of the story is that with a terminated pension, even though the PBGC may cover the terminated part, you lose the opportunity to accrue additional benefits. With defined benefit pensions, most of the benefits accrue in the last years of employment and close to retirement. That is where you get screwed.

It is misleading to suggest that those employees who had pensions terminated suffer no loss because the PBGC will just somehow "make it all up" if the person is below the PBGC maximum. ALL AA employees benefitted by not having their pensions terminated, not just the pilots.

 

[eolesen]

Pension funding is a constantly moving actuarial target...

With the housing market in a shambles and the unease over whether or not we're really in recession, I can see where AMR (or any other employer for that matter) might want to hold back on over-funding, since it isn't easy to reclaim overpayments, and there's enough available cash to pay shortfalls out of general revenues.

A few too many people quit or get fired, that 4% gap closes up.

A few too many people decide to work past 62, and the 4% gap widens.

AA grounds a couple dozen aircraft, closes a few cities, and RIF's a couple hundred people, and the gap shrinks again...

Guessing when people are going to retire gets more difficult as the housing market continues to tank. It's not as easy as it was two years ago to sell or take equity out of real estate, and a worse situation, you've got a lot of people finding out that the equity they took out (and spent) at the top of the bubble no longer exists....

 

[IORFA]

No problem, I guess I could be wrong. After the main door closes, run up to the cockpit, tell your boss that he is wrong, his flight manual is wrong along with the FAA/ICAO as well.

I would not recommend doing this, my humble suggestion would be to keep your mouth shut and enjoy one of the most nonintrusive, benign supervisor-subordinate relationships existing in todays working world.

There is that ego I was talking about, I knew it wasn't too far away. Always at the ready to remind one and all who is really in charge and makes all the decisions. Sounds like you need to come off your high horse and rejoin reality.

 

[BoeingBoy]

As someone said, the big hit when the PBGC takes over a pension comes from the way they calculate benefits - even for a fully funded plan.

The PBGC uses the calculations as specified in the retirement plan, but based on a retirement date 3 years prior to when the plan is terminated. So if you turn 55 on the day the PBGC takes over the plan, they calculate your benefits as though you'd retired at age 52. Of course, that calculation includes early retirement and length of service penalties as specified by the plan, which can be sizable.

The PBGC then divides employees covered by the terminated plan into groups - PC1, PC2, PC3, etc. They then take the money in the plan and divide it among the PC1 group until that group gets the full calculated benefit or the money runs out. If there's money left over, they do the same with the PC2 group. Then the PC3 group, and so on.

If an employee's calculated benefit is less than the PBGC guarnatee, that employee gets the guaranteed amount. That would basically be younger employees or those having less longevity when talking about pilots. For other lower paid workgroups, it is possible that the guarantee would be higher than the calculated payout for most/all of the group.

Lastly, it's my layman's understanding that there can be quite a difference between the funding level of a plan on a continuing basis, and that same plan's funding level on a termination basis. My very limited understanding is that a fully funded plan on a continuing basis has enough money and will earn enough at the assumed rate of return to pay current and expected future benefits. For a termination basis, the question is whether there is enough money in the plan to pay all accrued benefits as of the termination date - with no future earnings figured in.

Jim

 

[Veritas]

After the main door closes, run up to the cockpit, tell your boss that he is wrong...

Being in command of the aircraft does not make you the boss. You do not have the authority to hire, fire or discipline any of the crew members.

 

[Mach85ER]

1.

"My supervisor, yeah riiiiggggghhhhhhht. Maybe you escaped from the cat ranch."

2.

There is that ego I was talking about, I knew it wasn't too far away. Always at the ready to remind one and all who is really in charge and makes all the decisions. Sounds like you need to come off your high horse and rejoin reality.

3.

Being in command of the aircraft does not make you the boss. You do not have the authority to hire, fire or discipline any of the crew members.[/quote


One garden chair $4.99,
One 12 pack of beer $13.50,
One old fishing pole with 100' of 50lb test, 75$
One open clearing, free
Three cat toys cast for bait, priceless

For the record, the great crews I've worked with as a team created a great solution to every problem.
It's been a pleasure work with the majority of pros that make this job still fun

 

[IORFA]

Being in command of the aircraft does not make you the boss. You do not have the authority to hire, fire or discipline any of the crew members.

Veritas you know that, I know that, the rest of the world knows that. Problem here is our pilot friend is stuck in the 60's waiting to catch up to the rest of the world. Luckily, there aren't too many like him around AA. I personnally only have come in contact with 1 and know of 1 more. For all I know, it could have been Mach85ER. After reading what he writes, I really wouldn't be too surprised if it was. The only good thing is that AA doesn't buy this type of B/S either. My personnal contact with this mentality earned me 3 days of PAID vacation and earned my pilot friend a nice long talk with the Chief. Must have been fun to reteach an old dog all the new tricks!!! Either way, no matter how much fact and logic you throw at someone like Mach85ER, you will just be wasting your breath.

 

[IORFA]

One garden chair $4.99,
One 12 pack of beer $13.50,
One old fishing pole with 100' of 50lb test, 75$
One open clearing, free
Three cat toys cast for bait, priceless


Now you really are starting to show how small minded and bitter you are. Sad, very sad.

 

[eolesen]

Captain's authority only applies to safety of flight. That's it. They don't decide who gets upgraded, who gets drinks comp'd, or who goes thru customs first...

And, apparently, they don't get to decide whether or not licorice gets stuffed up their butt-crack on a layover:

BA 777 Pilot's Past...

 

[Mach85ER]

Captain's authority only applies to safety of flight. That's it. They don't decide who gets upgraded, who gets drinks comp'd, or who goes thru customs first...

It runs a little deeper than that eolesen, but your short summary is just about right. There is a fine line between doing the right thing or going overboard when the Captain starts getting involved with things in back, but sometimes it needs to be done. 99.9% of the time I've seen it done, it's been done to keep the system from throwing the FA's or passengers "under the bus".

It has been a distinct pleasure getting something done for the FA's when it didn't even involve a "safety of flight" item.

Funny how it works sometimes eolesen.

As for the BA Captain, good for him. It's been a long time since I've seen proof of someone having that much fun in this industry involving more than one gender.