Contracts

[damajagua]

Its been two weeks since AMR declare chapter 11.
Does anyone here know how long before there are
changes to our rate of pay or changes to our
contracts in general. Looking at other bankruptcies
in the past other companies have asked for immediate
relief from a judge. That has not been the case here.
I was just wondering if anyone have any idea how
long this process will take. Am talking specifically
issues that deal with out contracts. Rate of pay,
insurance premiums, vacations, etc, etc.

 

[Hopeful]

Its been two weeks since AMR declare chapter 11.
Does anyone here know how long before there are
changes to our rate of pay or changes to our
contracts in general. Looking at other bankruptcies
in the past other companies have asked for immediate
relief from a judge. That has not been the case here.
I was just wondering if anyone have any idea how
long this process will take. Am talking specifically
issues that deal with out contracts. Rate of pay,
insurance premiums, vacations, etc, etc.

I would say it will be announced AFTER the holidays!

 

[AA Tulsa Mechanic]

Its been two weeks since AMR declare chapter 11.
Does anyone here know how long before there are
changes to our rate of pay or changes to our
contracts in general. Looking at other bankruptcies
in the past other companies have asked for immediate
relief from a judge. That has not been the case here.
I was just wondering if anyone have any idea how
long this process will take. Am talking specifically
issues that deal with out contracts. Rate of pay,
insurance premiums, vacations, etc, etc.

There was a letter put out our manager read to us the day after the BK announcement. It said pay and benefits would remain the same for 4 months until anything would or could be changed. We will see if that holds true or not.

 

[Deleted member 14439]

This makes it sound like a "proposal" is forthcoming. It would seem to me there is not much to "vote" on. We take it or the judge imposes it. Merry Christmas!!!

 

[Hopeful]

There was a letter put out our manager read to us the day after the BK announcement. It said pay and benefits would remain the same for 4 months until anything would or could be changed. We will see if that holds true or not.

I would say that AA made it clear pension costs and prefunding medical are the big issues among work rules. Personally i don't see further reductions in pay and holidays and sick time etc....I'm probably way off, but I think they're going after the larger issues.

 

[limit]

I would say that AA made it clear pension costs and prefunding medical are the big issues among work rules. Personally i don't see further reductions in pay and holidays and sick time etc....I'm probably way off, but I think they're going after the larger issues.

Retiree medical and Scope , as far TWU is concerned will be the two major issues in my opinion.
Pension for TWU will be modified but not to the extend some believe.
In any case I do not expect any major movement on the contracts until after AA is well into discussions with the secured creditors, whenever that is.

 

[WorldTraveler]

much about employee contracts are tied to the fleet plan which itself revolves around AA's ability to restructure or terminate leases. They have until basically the end of January to do that so it is possible they are waiting until they have a better idea about the fleet before they proceed with employee related issues.

 

[Buck]

If the pension and retiree medical are truly the problem and will ultimately be modified, then we could see a very competitive wage with the other carriers.

 

[Frank Szabo]

I would say that AA made it clear pension costs and prefunding medical are the big issues among work rules. Personally i don't see further reductions in pay and holidays and sick time etc....I'm probably way off, but I think they're going after the larger issues.

Whether or not it's true, many of the business-types have said the pension is cheaper for the company to maintain than a 401k-type of retirement plan. Unless there are things going on we aren't aware of and that really is the case I can't imagine why the company would want to increase their costs to provide competitive wages and benefits.

I personally plan to work 'til 65 (or whenever Social (In)Security says I'm entitled to full benefits and maybe longer (and double dip) if health allows, just as a means of staying out of the bars unless some other hopes come to fruition - the Early Retiree Medical is of no consequence and I look forward to a refund.

If AMR truly wants to "compete", they'll have to offer competitive wages and the same for a benefits package, as do other airlines presently. We are rather low on the wage scale and most certainly on hoildays. If it's decided to take more from the employees during this strategic BK filing, many may vote with their feet, the quality of new hire replacements will undoubtedly suffer and the company will be in much worse shape than it is now - I believe they know that - if not, their business model is most deserving of failure.

 

[eolesen]

Whether or not it's true, many of the business-types have said the pension is cheaper for the company to maintain than a 401k-type of retirement plan. Unless there are things going on we aren't aware of and that really is the case I can't imagine why the company would want to increase their costs to provide competitive wages and benefits.

Conventional wisdom is DB plans can be cheaper in the long run, but they only work that way when you have more employees generating cash to put into the plans than you have retirees drawing from the plans.

With life expectancy always increasing, AA is probably close to the point where they will have more retirees than active employees. That was certainly the case at GM, and also at TW if I remember.


DC plans cost a little more up-front, but you know that your obligation to the employee ends on their last day of service. I've been gone over 5 years, but assuming I live to my grandparents' age, AA (or the PBGC) will still on the hook for over $500K once I start drawing my pension.

Multiply that across tens of thousands of retirees.

 

[limit]

AA (or the PBGC) will still on the hook for over $500K once I start drawing my pension.

Multiply that across tens of thousands of retirees.

Lets assume 20 years at 25000 per year.
Your 25000 at age 65 is frozen in time, it stays at 25000 for the rest of your life.
There is no inflation adjustment.

 

[WorldTraveler]

Conventional wisdom is DB plans can be cheaper in the long run, but they only work that way when you have more employees generating cash to put into the plans than you have retirees drawing from the plans.

With life expectancy always increasing, AA is probably close to the point where they will have more retirees than active employees. That was certainly the case at GM, and also at TW if I remember.


DC plans cost a little more up-front, but you know that your obligation to the employee ends on their last day of service. I've been gone over 5 years, but assuming I live to my grandparents' age, AA (or the PBGC) will still on the hook for over $500K once I start drawing my pension.

Multiply that across tens of thousands of retirees.

retirement obligations with DC plans end with each paycheck... the company has no responsibility for how you invest the money that is put in your account.
.
DC plans are no different than Social security.. they work when you have alot of people working to support a relatively small number of people on retirement. As companies age, which is true of network carriers, they are not growing and their workforce is also aging... it is as unsustainable as Social Security... the difference is that AA can't keep moving money around and selling unlimited amounts of bonds to China to keep the company aflotat which is how the US gov't deals with its defined benefit problem.

Frank,
the reason AA - purely from an economic perspective - has no incentive to increase its benefits and pay is because it has to cut costs to an older, graying workforce... it they cut alot of costs in BK and begin to think about growing again after BK, then it will be necessary to increase pay to levels somewhat comparable with the industry. Right now there is simply no economic reason for them to pay their employees more. Tough to hear but that is the reality..... hopefully when the pilot and AMT shortage hits full force, AA will have fixed its business model and will be in a position to attract employees, esp. in those areas where high pay elsewhere (pilots) or cross-utilization of skills (AMTs) allows people to go where they stand to gain the most. Given that esp. for pilots the decision you make when you join an airline affects your pay for a lifetime, there will be very careful decisions being made regarding careers in the next 5-7 years as the US industry finally finds a place of stability.

 

[eolesen]

Lets assume 20 years at 25000 per year.
Your 25000 at age 65 is frozen in time, it stays at 25000 for the rest of your life.
There is no inflation adjustment.

What's your point? 20 years at 25000 per year is still $500K over 20 years...

With life expectancy increasing, it's not at all unfathomable to think that many retirees will be drawing a pension longer than they were employed.

 

[Bob Owens]

Whether or not it's true, many of the business-types have said the pension is cheaper for the company to maintain than a 401k-type of retirement plan. Unless there are things going on we aren't aware of and that really is the case I can't imagine why the company would want to increase their costs to provide competitive wages and benefits.

Read the book "Retirement Heist" by Ellen Shultz. She touches on the reasons why they go after the DB pensions.
When you get to write he rules chances are you will win.

 

[limit]

What's your point? 20 years at 25000 per year is still $500K over 20 years...

With life expectancy increasing, it's not at all unfathomable to think that many retirees will be drawing a pension longer than they were employed.

The point is 20 years from now AA will be paying you with inflated dollars.
At 3% inflation on your 20th year AA will spent 13800 of today's dollars on you.