AMR Earnings: $162M Loss

[Frank Szabo]

You are wrong. There's more to it than that. The point was the company did not want to return all the money, only the part we contributed from our paychecks and they want to keep the match. Otherwise its no different than saying that since a 401K match sucks compared to a DB we should, after 21 years give them back the matching funds and worry about our own retirement.

See wrenchers response.

I understand the part that the company doesn't want to give us their contributions + account earnings back - that's what I would expect from them. The contris and interst involved would be a nice addition to the bastards' bottom line, wouldn't it? Otherwise, it's just something else the company reneged on with the assistance and blessings of the twu.

As far as the label of "Retiree Medical", that should be renamed to "Early Retiree Medical" in order to cut the confusion as to the value of this but that won't happen as that would be a more honest name rather than the one that implies this is one's insurance for retirement. That allows the twu the appearance of "fighting" - for something that's of relatively little value in exchange for letting the company of the hook re: more important issues.

 

[Bob Owens]

I understand the part that the company doesn't want to give us their contributions + account earnings back - that's what I would expect from them. The contris and interst involved would be a nice addition to the bastards' bottom line, wouldn't it? Otherwise, it's just something else the company reneged on with the assistance and blessings of the twu.

As far as the label of "Retiree Medical", that should be renamed to "Early Retiree Medical" in order to cut the confusion as to the value of this but that won't happen as that would be a more honest name rather than the one that implies this is one's insurance for retirement. That allows the twu the appearance of "fighting" - for something that's of relatively little value in exchange for letting the company of the hook re: more important issues.

First off, think of it as deferred compensation, we had fully company funded retiree medical as part of our compensation package until this concession 21 years ago. Our peers maintained their fully funded retiree medical until the BK wave of 2003-05. So for 15 years AA had a competitive edge as far as Retiree Medical costs over their rivals that we funded through our contributions (I wont even get into Flex Benefits). Keep in mind that most people have wives that are younger than them, it covers them as well.

I agree that the other items are more important, but we dont want to let them slip this out of our wallets then turn around and have us negotiating for our own money back as something else. People need to know the value of the plan and what they would be signing away to the company if we gave them what they are asking for. Basically the lump sum they were offering the base guys in the TA was to be funded by our prefunding (I know its benefits money but thats still $57 million that would not have to come from the General fund in the future).

To me its worth contributing $3/week in the hope that I can get out of here before 65, and if I dont, I may forfeit the company match, but I will get all I put in, plus interest, refunded to me. If they want to take that option away then give me back all of the money in my fund.

 

[eolesen]

My guess... all you are legally entitled to are your contributions plus interest, which is what happened with other work groups who were given back their pre-funding since 2003.

It also wouldn't surprise me if that stipulation was buried somewhere in the original language around pre-funding. AMR's lawyers ain't dumb, and the TWU's not exactly known for reading all the fine print...

 

[Bob Owens]

My guess... all you are legally entitled to are your contributions plus interest, which is what happened with other work groups who were given back their pre-funding since 2003.

It also wouldn't surprise me if that stipulation was buried somewhere in the original language around pre-funding. AMR's lawyers ain't dumb, and the TWU's not exactly known for reading all the fine print...

It's in writing from the company, pretty clear, that if the company terminates the plan we get both contributions so we can use the money to buy the insurance on the outside. Of course if we are dumb enough to simply give them half then shame on us. Back in the early 90 s the TWU was taking a lot of heat over the fact that we were paying for something none of our peers were and this was an improvement to the plan. The letter was signed by Terri L Teat.

 

[ULM148]

Exactly, why the lower the bar so they can try and lower it even more.

Case in point-Prefunding of Retiree Medical.
Since 1990 we have been contributing to a trust for retiree medical, that trust is matched dollar for dollar by the company, this was a concession back in 1990 because prior to that Retiree Medical was completely paid for by the company as part of our compensation package. The match by the company is basically deferred compensation, the money is for us, for us to pay to the company when we retire for continued Medical coverage (so you see they get the money back later anyway but we get Medical in exchange for it, the fund is so if the company goes bankrupt we can use money from the Trust to buy coverage on the outside) Back in the early 90s this was a huge gain for the company because it shifted costs to the workers and lowered their liability, pretty much eliminates it except for those who use more money than the fund has in their account, since some never use it, or dont use all of it, and in that case only get back half, the company gets to use the other half for that, in addition to that any worker who left the company prior to retirement forfieted his deferred compensation as well, the company match stayed in the fund. The more people they terminate the more funds they get to confiscate and keep in the fund. Its similar in some ways to the defined benefit pension except that its partially funded by us, if its properly invested the company could pay nothing except for the match which comes out to roughly less than $2 million a year. ($12/month x 11500 members).

The company saw a windfall when some groups such as Tech services, Pilot Instructors and non-union people accepted or had the proposal impoosed on them. The company expected $57 million just from the M&R group. Thats $57 million that would not have come from the General Fund to cover benefits. essentially what the company did to all those workers, from the Trust perspective, was terminate them and hire them back without a prefunded retiree medical, they refunded what the terminated employees paid into it, just like they do when they terminate an employee, and hired them back without prefunded retiree medical and pocketed millions of dollars, more than enough in the case of the agents and non-union workers to pay for the lump sums they gave in leiu of real pay increases. What they did was, for 50 cents on the dollar, give up a fund that was secure even in BK that was set aside to provide medical benefits when they retire.



So for 21 years we have been contributing to this fund and the company has matched our contributions, keep in mind, this was a concession, the company saved hundreds of millions over the last twenty one years, and now the company wants us to agree to give back our deferred compensation and expose ourselves to not having any coverage when we retire except for Medicare when we reach that age whatever it may be by then. Sure they say they will set up a place where we can buy coverage but they will not guarantee what it will cost, right now we have a guarantee, so long as the company is around to honor it, and if they arent, at least we get all the funds due to us to buy it on our own.

The company, con artists that they are (and some in the union), is selling their proposal as "you no longer have to contribute to prefunding" making it sound like we are being relieved of a financial burden, when in fact its "the company no longer has to contribute to prefunding AND they get to take back the monies they paid to our accounts as deferred compensation and we no longer get the benefit of a prefunded retiree medical", they get $57 million of our money, no longer have to contribute to the secure fund and we only get back what was deducted from our paychecks for the last twenty one years(plus interest). It would be as if we had a 401K match and the company decided after 21 years to no longer match it, and wanted us to return any matching funds already deposited but turned around and said "You no longer have to contribute to a 401K to get the match".

The company was clear back in the early 90s. They promised the TWU that if the plan was terminated by them we are entitled to not only our contributions plus interest but the company match (plus interest)as well. They are trying to pull a fast one by getting us to agree to give them the match, which is deffered compensation. Its no different than getting us to write a check out to AA for up to $10,000 and handing it over to them. This is nothing less than fraud and theft.

So, lets say we were foolish enough to give the company back the matching funds in exchange for something now, like not giving up the DB or keeping OH in house. Pretty much the only two things that differentiate us from the BK carriers. There's nothing to stop the company from filing BK the day after ratification and going after those things anyhow. They get to pocket at least $100 millionjust from the TWU(Fleet, M&R and Stores) . However if we dont give it up and the company terminates the plan in BK we get all of it back instead of half.

The Prefunding account to date is pretty much the only thing, besides pension accruals up to date, that is protected in BK, we would be very foolish to give it up.

Bob,
Thanks for the explanation! I think if more people understood this, they would be more inclined to press their president's at the negotiating table. There are work groups that have absolutely NO knowledge of what you just explained. There is at least one president negotiating for fleet that does not see your explanation. I will not mention who, but I will say that he has no remorse over loosing 1200 cabin jobs and believe's the members should vote on a concessionary contract for the betterment of his career (..ooops...I mean his members). So with that said, I'd like to propose a toast, ...... raise your cup of orange juice!!! Prosper we will, or so he thinks.

Thanks again....

 

[eolesen]

It's in writing from the company, pretty clear, that if the company terminates the plan we get both contributions so we can use the money to buy the insurance on the outside. Of course if we are dumb enough to simply give them half then shame on us. Back in the early 90 s the TWU was taking a lot of heat over the fact that we were paying for something none of our peers were and this was an improvement to the plan. The letter was signed by Terri L Teat.

If that's what it says, then go after the full amounts. I'm just saying that the other workgroups got their pre-funding contribution plus interest, not anything from the company's contributions. Double standards aren't anything new, especially with the non-union side.

I'd be curious to see the letter if you have it in soft-copy.

 

[Bob Owens]

If that's what it says, then go after the full amounts. I'm just saying that the other workgroups got their pre-funding contribution plus interest, not anything from the company's contributions. Double standards aren't anything new, especially with the non-union side.

I'd be curious to see the letter if you have it in soft-copy.

It was actually Teri L Teat.
Give me an E-mail address and I'll scan and send you a copy.

There was also a letter from the Union signed by Ed Koziatek that said

If the plan is unilaterally terminated, such as in bankruptcy, TWU members are entitled to return of their own contributions + Interest, and company contributions plus interest which shall be used to secure continuing medical coverage from an outside insurance carrier