Arpey Could Give American A Fresh Start ?

[buzzkill]

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On 5/9/2003 3:32:14 AM Wretched Wrench wrote:

"would like to hear concrete things that AA''s CEO could do to make people happy."
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I would trust him more if he were in the same financial boat as the rest of us. That means the same percentage cuts in total compensation and benefits, and having his retirement on the line as ours are, rather than his bankruptcy-proof retirement.

I would also like to see management take the same pay cuts, benefit cuts and layoffs as us.

As things are now, we have much more at stake than he does. So I question his commitment to AA''s survival. If AA goes Chapter 7, we are sunk. He is not.

In other words (his), "lead by example".

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I believe management has taken similar cuts as the unions. Each group picked their own poison, so it is easy to compare apples to oranges. Perhaps management should have been given pay raises over the past two years so that the management paycut percentages didn''t appear smaller than they really were.

 

[Oliver Stone''s Apprentice]

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On 5/9/2003 3:32:14 AM Wretched Wrench wrote:

having his retirement on the line as ours are, rather than his bankruptcy-proof retirement.

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Ahh, I love the smell of ignorance in the springtime...

Whatever is in the standard pension fund and 401(k) of every employee is already bankruptcy proof.

Compared to the other airlines, AA''s pensions are the best funded (62% of current and future obligations), and has been earning a better return (i.e. lower loss given the stock market in the past year) than any of the other airline pension funds.

But keep beating those evil executive retirement plans like a dead horse. Some day, it might actually get up. Really.

 

[Wretched Wrench]

"Ahh, I love the smell of ignorance in the springtime................Whatever is in the standard pension fund and 401(k) of every employee is already bankruptcy proof."

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I have no doubt you are smelling SOMETHING. Indeed, if it is ignorance, it could be your own.

If AA terminates our pension plan, we get only what the PBGC gives, which is a LOT less. That is hardly "bankruptcy proof".

www.pbgc.com

But, yes, the 401k is safe.

 

[buzzkill]

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On 5/8/2003 8:55:18 AM Winglet wrote:

Mr. Arpey''s been in a couple of weeks now and all I''ve heard is the standard boilerplate press releases and letters to employees.

Sounds like the same ol'' strategic plan by the same ol'' senior executives to me. That is . . . a failed one.

Fresh start? What fresh start?

Still looking for a reason to be optimistic . . . . .

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I''ll pose the question again. What could Arpey do to make the unions happy? I''ve heard that he should reduce his salary, benefits, and pension. Is that it?

If you were the new CEO, what would you do?

 

[Oliver Stone''s Apprentice]

Not sure what you expect "bankruptcy proof" to mean, Wrench.

The pension funds are safe. Likewise, the funds in the SERP are safe.

It sounds like you're concerned over whether or not the plan can be terminated. It can, but bankruptcy doesn't force that to happen.

If the company goes thru bankruptcy, and opts not to terminate the plans, the funds can't be touched. Continental Airlines never terminated their plans during either bankruptcy. Neither did Chrysler.

If the plan were terminated and taken over by the PBGC, the maximum guaranteed pension at age 65 is $43,977.24 a year. At age 60, the maximum is $28,585.20.

According to PBGC, the majority of participants in the TWA plans which were terminated by Icahn in January 2001 will receive the benefits earned up until that point under those plans. They stop accruing at the point of termination, however.

Sure, the payouts are a lot less if you were expecting to retire at 55 or 60, but they don't disappear, either.

 

[buzzkill]

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On 5/9/2003 10:43:03 AM eolesen wrote:

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On 5/9/2003 3:32:14 AM Wretched Wrench wrote:

having his retirement on the line as ours are, rather than his bankruptcy-proof retirement.

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Ahh, I love the smell of ignorance in the springtime...

Whatever is in the standard pension fund and 401(k) of every employee is already bankruptcy proof.

Compared to the other airlines, AA''s pensions are the best funded (62% of current and future obligations), and has been earning a better return (i.e. lower loss given the stock market in the past year) than any of the other airline pension funds.

But keep beating those evil executive retirement plans like a dead horse. Some day, it might actually get up. Really.

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Eoleson,

By "bankruptcy proof", do you mean that the money in the various pension funds is separate from AMR assets, and thus untouchable by creditors? If so, I agree that all of AMR''s pensions are "bankruptcy proof". I''m not sure that any of AMR''s pension funds would necessarily be unaffected by bankruptcy. If any fund goes into the PBGC, then the payouts could be lower.

As far as the SERP for executives, I think there is a lot of misunderstanding about what it really is. It is a fund almost identical to the pilots'' B fund. It was created in 1985, but never funded. When an exec retired who was covered by the SERP, the company always simply wrote a check. Last fall, the BOD decided to partially fund the plan to a level consistent with the rest of AMR''s pension plans.

Below is an excerpt from an article on msnbc.com from 4/17/03.

"The executive fund in question allows top executives to put some of their pensions outside the reach of the airline’s creditors. It is perfectly legal, but immediately drew the scrutiny of American’s employees, many of whom felt it was in bad faith for executives to create such an arrangement even as they asked for massive wage concessions.

The plan is similar to one provided for American’s pilots, known as a “B-fund†which diverts some pension funds to an irrevocable trust. The pilots’ plan is fully funded by the company, while the executives’ plan — known as the Supplemental Executive Retirement Plan — is only 60 percent funded. In both cases, the money is placed outside the company’s domain."

 

[Oliver Stone''s Apprentice]

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On 5/9/2003 4:09:01 PM buzzkill wrote:

If you were the new CEO, what would you do?

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• Declare bankruptcy, and terminate leases on all non-Boeing/McD aircraft, while leaving employee pay alone
  
• Value pricing
  
• Eliminate first class, but keep MRTC
  
• Value pricing
  
• Move headquarters to Oklahoma, where property taxes and the overall cost of living is lower than in Denton/Tarrant/Dallas Counties
  
• Value pricing
  
• Downsize DFW
  
• Value pricing
  

 

[Bob Owens]

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On 5/9/2003 4:09:01 PM buzzkill wrote:


I'll pose the question again. What could Arpey do to make the unions happy? I've heard that he should reduce his salary, benefits, and pension. Is that it?

If you were the new CEO, what would you do?

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Lets see.
-Restore Sick time
The new policy will end up costing the company more as workers will now call in sick at least three days to insure that they have completely recovered and do not suffer a relapse of the illlness instead of returning to work as soon as they feel better.

-Restore IOD bank
The new policy will cost the company lost revenue. The maint manual calls for loads of special jacks, adapters and stands that AA never bothered to purchase. Mechanics would often "hump" the heavy items that the special equipement was supposed to be used on, or reach off unsuitable stands to accomplish their work. Before the mechanic knew if he should get hurt he would be taken care of for at least 80 days. Now the company says "too bad after 10". If they dont own the jack, if the ladder wobbles, rails are missing, or it does not properly reach, the job does not get done and the plane sits. Why take the risk?

-Give back the vacation.
Especially for our newer workers. Few people in this country report to work 255 days a year. Its too much, you will end up with workers going "postal". We lost one of our mechanics up in Boston to suicide this week. Nice job Carty and Little.

-Change the line premium to 25% instead of 55 cents.
This more accurately reflects the higher cost of living and the market value for line mechanics.

-Allow A&Ps to keep their premiums.
An A&P license carries the same liabilities in the shop.

-Restore system protection to March 1 2001. If there is a surpluss of manpower then allow the surpluss time to be bid as unpaid TL. If there are no bidders then the least senior are assigned off.

Simple as that. Total cost around $55 million/year. Then watch the performance go back up.

Oh yea, and raise ticket prices by $25 across the board.

 

[Bob Owens]

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On 5/9/2003 4:16:29 PM eolesen wrote:

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On 5/9/2003 4:09:01 PM buzzkill wrote:

If you were the new CEO, what would you do?

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• Declare bankruptcy, and terminate leases on all non-Boeing/McD aircraft, while leaving employee pay alone
  
  Value pricing
  
  Eliminate first class, but keep MRTC
  
  Value pricing
  
  Move headquarters to Oklahoma, where property taxes and the overall cost of living is lower than in Denton/Tarrant/Dallas Counties
  
  Value pricing
  
  Downsize DFW
  
  Value pricing
  

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What would they do with all those first class modules? The ones like on the 777. How much did they each cost again?

Why not move HDQ to India? Real estate is even cheaper there. They speak English. They work for cheap. Hey for what they are paying you they can get two workers who will work more hours (since they wont spend time looking for cheap gas) for much less.
Maybe you could open up a 7-11 and SELL gas!​

 

[KCFlyer]

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On 5/9/2003 6:28:18 PM Bob Owens wrote:

Oh yea, and raise ticket prices by $25 across the board.​

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So...you mean they should raise the unrestricted coach fare from DFW to STL from $1254 to $1279?

 

[Winglet]

Institute a business plan that will allow the company to prosper and exapand.

And I'm not talking about the same old tired one we have now:

1. Pray UAL liquidates.
2. Pray the economy gets magically better between now and October, when BK will probably be filed.
3. Pray the business traveller comes back and pays exorbinate prices.
4. Pray that nobody finds out where the new golden BK parachutes for top executives are hidden.

I don't see any difference between Arpey and Carty.

Note I've said nothing about making the union's "happy."

It's management's job to strategically plan and and mine to tactically execute. My job is to fly airplanes safely and keep passengers happy. I do that pretty darn well. If I flew airplanes like management leads this company . . . . . there'd be a lot of bent up and damaged airplanes out there.

 

[WXGuesser]

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On 5/9/2003 4:16:29 PM eolesen wrote:

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On 5/9/2003 4:09:01 PM buzzkill wrote:

If you were the new CEO, what would you do?

----------------​

• Declare bankruptcy, and terminate leases on all non-Boeing/McD aircraft, while leaving employee pay alone
  
• Value pricing
  
• Eliminate first class, but keep MRTC
  
• Value pricing
  
• Move headquarters to Oklahoma, where property taxes and the overall cost of living is lower than in Denton/Tarrant/Dallas Counties
  
• Value pricing
  
• Downsize DFW
  
• Value pricing
  

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Eolesen:

One problem with Oklahoma (other than most of the major cities are blowing away!!!! ) is they have a state income tax, which just about cancels out the cost of living advantage. SORRY!

I know this, because that''s where the company is that they are contracting out the AA weather services to/ moving the weather office to.

And I think you were trying to make a point about value pricing... I didn''t quite catch it

TANSTAAFL

 

[buzzkill]

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On 5/9/2003 10:27:20 PM Winglet wrote:

Institute a business plan that will allow the company to prosper and exapand.

And I''m not talking about the same old tired one we have now:

1. Pray UAL liquidates.
2. Pray the economy gets magically better between now and October, when BK will probably be filed.
3. Pray the business traveller comes back and pays exorbinate prices.
4. Pray that nobody finds out where the new golden BK parachutes for top executives are hidden.

I don''t see any difference between Arpey and Carty.

Note I''ve said nothing about making the union''s "happy."

It''s management''s job to strategically plan and and mine to tactically execute. My job is to fly airplanes safely and keep passengers happy. I do that pretty darn well. If I flew airplanes like management leads this company . . . . . there''d be a lot of bent up and damaged airplanes out there.

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It''s easy to say that AA needs a new business plan and that management doesn''t have one, but what should this new business plan look like? Do you want AA to be like Southwest? JetBlue? If so, how do you go from the airline AA is now into one like Southwest or JetBlue?

Also, to address your description of the new business plan:
1. I''ve never heard that anybody in senior management expects UA to liquidate. In fact, I have repeatedly heard them say that UA would probably not liquidate, and even if they did, it would only help in the short run.
2. We are all praying that the economy gets better.
3. This whole process of paycuts has been about the realization that business travel will not come back the way it once existed. I''ve read lots of posts on here from employees who are holding out hope that this happens, but senior management has time and again said that times have changed.
4. Makes for good rhetoric when you really don''t have a good point about a business plan.

 

[AOA]

I just read that while Crandall was CEO, it was Arpey''s idea to pull the olives out of the passenger salads....

 

[RV4]

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On 5/10/2003 3:59:55 PM Winglet wrote:

Still no business plan, huh, Buzzkill.

If Arpey doesn''t start leading this company soon, there isn''t going to be any company to lead. We have no viable business plan. Even with the putting thousands of employees out of work, and drastic cuts in compensation, Mr. Arpey''s CASM is still way too high and he''s not going to get his 30% premium in these days of Walmart Air. There is no light at the end of his tunnel.

All I''ve heard is boilerplate platitudes out of Mr. Arpey, but certainly nothing that inspires confidence in his leadership or management prowess.

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I suspect the disgruntled employees are a larger danger than NO BUSINESS PLAN at this point.