AMR Loses in BK court

[Realityck]

Read the plan, Sure we can fight for it and take a position on it but in the end the decision is put before a judge or arbitrator and he is going to make his determination based on what was written into the plan and the contract we agreed to. The Judge will likely say we defined our position in the contract-"upon successful resolution of the 1114 process". As I've said before, I hope I'm wrong. 
 
Look at what happened with the supplemental Medical the company was selling.Nobody bought the plan for the regular medical, they bought it for the retiree part, and the company said that in order to be eligible for the retiree part you had to pay into it from when it was offered. So for 15 years or so people paid into the plan saying that when they retire at 55 they get an extra $250 k of coverage. The plan did very well, accumulating around $80 million. Then the company decided to terminate the plan and keep the money, and they did. The chances of winning a lawsuit on that were probably better but Little and company decided not to pursue it. The company tried to spin it by saying they were only going to use those funds for employee benefits, it wasn't going into the General fund, well no kidding, that's all they could use them for but its still found money because that $80 million satisfied obligations that would have had to come out of the General fund. So the net result is the same. 
 
Once again, in negotiations I objected to that language, so if this does go south and we lose the other half confront those who voted YES, especially those who voted yes to bring it back because they knew what it said and they knew why we were against it. 

 
 
 
[SIZE=12pt]You keep on saying that the Bankruptcy Court will decide what happens to the prefunding match. As I have said many times, this is inaccurate. The Court has jurisdiction over only one issue, which is whether the Company can renege on its commitments to pay retiree medical to retired employees. This issue turns on whether these benefits are vested and the judge decided that the contracts of all three unions were “susceptible” to the interpretation that they are. Why anyone would want him to rule any other way is beyond me.[/SIZE]
 
[SIZE=12pt]The issue of whether the Company’s prefunding match will be paid to active employees will, unless the Company gives up on the issue, be decided by an arbitrator, not the Bankruptcy Court. On that issue, the TWU and the APFA (which has the same language) have the edge. The Company could have negotiated language which said that if it was not allowed to abrogate its commitments on medical coverage for retirees that the match would not be paid. It did not. Instead, all that has to happen is that the disputes over these commitments be resolved successfully and the 1114 process to end. I will not predict what an arbitrator will do, but in my view, any final resolution of these issues is enough to require the Company to pay the match.[/SIZE]
 
[SIZE=12pt]As for the Supplemental Medical Plan, it has not been terminated as you claim and continues to cover participants who paid their premiums for this year (2014). The approximate $80 million you mention would be the total for the three participating groups, the TWU, APFA, and Non-Union Employees. The TWU Supplemental Medical Plan participant funds are segregated from the others and are held in a VEBA Trust, and can only be used for the benefit of the TWU participants. American has no claim on the funds beyond its administration fee.[/SIZE]

 

[NYer]

AA didn't lose. We lost, because now we probably will never see the matching funds because there was no successful resolution of the 1114 process.
 
In the end the zero out of pocket plan will be terminated (or as NYER and Overspin say, "they arent losing their benefits, they are just changing the way they pay for it") but the Judge screwed them as well because instead of getting equity they will likely just get coverage for whatever time elapses till it is terminated. Its a joke how AA is complaining how much its costing them, $10 million a month to meet its obligations to people they underpaid over a lifetime of work while they are bringing in around $2.5 billion a month. So its costing them less than one half of one percent of their income to pay for retiree medical.  

 
It says "successful resolution" not successful outcome.
 
The decision Judge Lane gave only forces the Company to seek their modification via an "Adversary Proceeding" and that was the only question before. It wasn't about the merits of the modification of the retiree benefits.
 
Now, if the Company decides not to pursue the issue...then the retiree's can breath easier.