In a bankruptcy, as a matter of procedure retiree benefit issues are addressed in the Court’s 1114 Hearings. In case you don’t know because you didn’t bother to check it out before you started pumping your AMFA rhetoric, the Retiree Committee consists of the TWU, APFA, APA, as well as the non-union & management Retiree Representatives. It has nothing to do with the contract vote and the judge hasn’t made any ruling yet. Neither has anyone on the Retiree Committee asked for any active employees’ company prefunding match.
The short answer Chuck is OldGuy@AA doesn’t know what he’s talking about. Also, if the Judge denies AA's request for a Summary Judgement and calls for a hearing, he would be the logical one to determine what terminate means, not AA with it's modify nonsense.
And who from the TWU sits on the 1114 committee?
Where we went wrong was agreeing to allow the 1114 process to determine where our money ends up. Will it end up going back to us or will it be used to continue to provide benefits for the retirees? No retiree group ever won the right to keep their health benefits in BK, even outside of BK retirees have not been very successful in keeping company paid medical benefits once the company decides to terminate or "modify" them. Ellen Shultz wrote a good book called "Retirement Heist" a couple of years ago about that. She mentions how retirees sued their employer after the employer "modified" their free lifetime retiree medical to one they had to pay through the nose for. The company argued that "lifetime" didn't mean "at no cost", and the court ruled in favor of the company.
What people lose site of is that Prefunding and Retiree medical are two separate parts of a package. It should have been kept that way. The company always had the right to back out of prefunding, but not retiree medical. It says so in the prefunding document. In the event the company backed out participants were entitled to their contributions and the match, if the participant backed out they were only entitled to their contributions. there was no need to tie our prefunding agreement to the 1114 process.
When we retire our contributions to the prefunding plan stops, we are entitled to medical coverage for life from American Airlines. Thats between AA and the retirees. According to the prefunding document all the match reverts to the company as soon as they sign up for retiree medical, the employee part is drawn down over 10 years. So if the company decided to cancel retiree medical some retirees would be entitled to a portion of their contributions but none of the match because the match was already used to provide coverage. Should the court rule in favor of the Retirees where do you think the money will come from to continue to provide them benefits? The retirees have a good argument, they aren't asking for free medical, they are asking for Medical they already paid for. The question is whether or not the company can shed that liability in BK. My guess is yes they can. But wouldnt that make retirees creditors entitled to some share of the equity?
Ed Koziatek has already made his view clear, that our money from the company would be used to continue to pay his medical bills, but thats not supported by the language in the prefunding document, but then again nobody is there to argue our side either. So there is nothing stopping them from striking a deal to use our money that remains in the fund from providing benefits to retirees until the fund runs out of money. AA is able to get out of retiree medical and it doesn't cost them a penny, the retirees don't become creditors but we lose thousands of dollars.
I hope it doesn't happen, but it could and if it does you can thank the people who wrote it and the people who voted YEs for it.
