Following A Different Path?

[FWAAA]

The good news is that converting to a defined contribution plan might not be all bad, depending on the company's contribution.

Once the money is in your account, it is difficult for the company to spend it and then say they are broke.

Same thing with the DB plans. Once the money is in the DB plan, it is difficult for the company to spend it and say it is broke.

If AA switched to a DC plan and matched WN's contributions, it would cost AA approx double what AA will contribute to the DB plan this year. That's a major reason AA is in no hurry to switch to a DC plan. It would speed up the cash bleed.

 

[Bob Owens]

Well if we go back a few years, in fact months before the concessions of 2003 we can see, in writing, qoutes where Carty says that they are not going after the employees for concessions. Later he said that if they did it would be as a last resort, however it seems that it was the first resort.

The construction of the massive new terminal continues at JFK.

The company still recieved new aircraft.

The company started new routes.

And now they are on a mission to generate $500 million in reduced maintenance costs by contracting in work.

Seems that they went for the cuts first.

The fact is that AA used to do a lot of contract maintenance. They did not lose the work because of high costs, they gave it up because they said they wanted to concentrate all their efforts on their own product. In fact TIMCO and others were helped by such moves. Those outfits were around,but carriers would rather send their equipement to a place that would fix it right, even if it cost a little more. And it would not be much more because the airlines already had the docks, shops and parts on hand to do the work.

We never saw the logic in it. Why not let other carriers help pay your overhead then your costs are minimized?

Deltas JFK maintenance operation costs Delta nothing. The contracted work covers the costs.

AA has the biggest and best facilities at JFK. However we often cant even get our own planes out. Why? Because defeated demoralized workers who cant make ends meet outside the workplace tend to not be as resourcful and productive as well paid workers who can afford to concentrate and enjoy what they do.



Now AA is looking to get into the game after they took away 25% of their workers pay.

Yea, they are going to really put out now. Maybe they should cut pay by another 50% to see how much they will put out then?

The pitch is "Lets beat SWA and Jet Blue". Well, as a worker, why would we want to beat SWA? As a worker wouldnt we be better off in the long run if SWA continued to expand and provide the opportunity for better paying jobs? Does it make sense to want to "beat SWA" when the reward for victory is an ever decreasing standard of living?

When I started with AA the line was to make a sacrifice now so it will pay off in the long run.

Well I did that. Now the company is triple the size it was then but I'm worse off than I was a few years ago.

Twenty years of sacrificing, triple growth, yet they still need more. "We need to "beat SWA". SWA where a mechanic with the same time in gets more vacation, paid Holidays, doubletime, cleaned uniforms, and an extra $20k a year.

Oh but they dont have a company funded pension.

No, the company puts a percentage in their 401K plus pays them enough to max it out.

Last year the company claims that the "Value" of my pension increased by $1772.41. Thats their figure, not mine. They claim the value of it was $1772.41.

Ok, so at best, the company put $1772.41. Or just less than 3% of my yearly pay.I had to give up 25% of my compensation to save a benifit that was worth less than 3% of my pay.

My total long term value, after two decades is, according to AA, $22467.

If the unions are successful at getting the government to allow AA to spread payments over the next 30 years my pension will be frozen.

Lets look at a SWA mechanic with 20 years.
He has been topped out for some time.

He currently earns $37/hr. He also gets Holiday pay. So right off the bat he gets an extra $19000. I think that SWA puts 5% in the 401 K, so thats another $4000.

So the SWA mechanic gets at least $23000 a year more value than a mechanic at AA.At that rate, over a thirty year carreer we basically will be paying $690,000 for a DB pension. Assuming the 401K earns zero interest we would have to be retired for 17 years before the paycuts we took to save DB pays off, thats if the company doesnt freeze it.

At $23000 more in one year the SWA mechanic accumulates more added value than we do in twenty years.

Why would we want to beat SWA? Wouldnt we be better off if SWA took over the whole industry?

 

[Wretched Wrench]

If AA switched to a DC plan and matched WN's contributions, it would cost AA approx double what AA will contribute to the DB plan this year. That's a major reason AA is in no hurry to switch to a DC plan. It would speed up the cash bleed.

Well, FW, that makes sense, but I can't help wondering why AA, on it's own accord, shifted non-union employees to a DC plan a few years ago.

 

[FWAAA]

Well, FW, that makes sense, but I can't help wondering why AA, on it's own accord, shifted non-union employees to a DC plan a few years ago.

[post="276093"][/post]​

My guess is that AA acted on the fact that over the long-term, DC plans are cheaper than DB plans. And if the equity markets cooperate, there's lots more upside for the participant in a DC plan.

Plus a lot of potential downside, but then again, DB plans have a lot of downside potential, especially for the pilots at other airlines whose plans have been terminated and shifted to the PBGC.

 

[Wretched Wrench]

WSJ US Senator Grassley Lambastes Airlines Over Pensions

By JOHN GODFREY
June 7, 2005 10:00 a.m.

Of DOW JONES NEWSWIRES
WASHINGTON -- Market analysts will be watching Tuesday's U.S. Senate Finance Committee hearing on airline pensions to measure panel members' sentiment toward an industry-sought break in pension funding requirements.

But they will only have to listen to committee Chairman Charles Grassley's opening remarks to know that airlines face at least one skeptic.

Pensions plans at United Airlines, a subsidiary of UAL Corp. (UALAQ), are underfunded by $9.8 billion; at Northwest Airlines Corp. (NWAC) by roughly $3.8 billion, and at Delta Air Lines Inc. (DAL) by $5.3 billion.

"These airlines promised benefits that were too rich, and they and their unions refused to rein in those benefits even after it became painfully clear that the companies could not afford them," Grassley said in his prepared opening remarks.

Committee aides said last week they are still listening to Delta and Northwest's request for an extension of time to fully fund their pensions, but that no decisions have been made on whether to grant that relief.

Tuesday's hearing was originally intended to provide a discussion of pension funding rules generally, but was refocused on airlines given the recent agreement of the Pension Benefit Guaranty Corp. to take over United's pension plans.

PBGC's guaranty will only make up for $6.6 billion of the $9.8 billion by which United's pensions are underfunded.

"We are here to look at a tragedy - the bankruptcy of United Airlines and the massive losses in their employee pension funds," Grassley explained in his prepared open remarks.

Those scheduled to testify include Glenn F. Tilton, UAL chairman, president and CEO; Douglas M. Steenland, the president and CEO of Northwest; and Gerald Grinstein, CEO for Delta.

Grassley said many businesses inside and outside the airline industry have more than adequately funded their pensions, but there were still many bad actors and United's case is a good a example.

"Like Enron, workers' lives and retirements have been ruined," Grassley said, comparing United's bankruptcy and dumping of its pension plans to the failed energy company.

"Like Enron and the phony accounting they used to hide their losses, we will learn that United's pension plans used illusory investment gains - kept on their books years after it was clear they would never materialize - to hide and disguise the true financial condition of their pension plans," Grassley said.

The problem for lawmakers, Grassley said, is that what United did was "perfectly legal", and even worse is "accepted practice by pension plans everywhere."

As a result, Grassley said, "pension plans of other airlines, some of whom are represented here today, are billions and billions underfunded."

Grassley specifically targets two accounting techniques companies used to hide their pension plans' financial ill health.

One, called "smoothing techniques", allow pension plans to credit paper investment gains and then carry them into the future as long as five years, even if those paper investment gains have long since evaporated.

"As the stock market plummeted in 2000, 2001, and 2002, United used these smoothing techniques to make their pension plans look like the late 90s stock market boom had never ended," Grassley says.

Grassley also criticized the companies' ability to use what he called "stale, non-market interest rates" to value their pension liabilities.

 

[Wretched Wrench]

Just in case there are still people convinced that the Company is going to kill off our pensions.... here it is in writing:

[post="275926"][/post]​

"We are, together, working hard to maintain our defined benefit pension plans."

"We hope not to resort to a freeze or to the termination of our pension plans. "

"With the help of Congress, we at American have a very realistic chance of returning to our historic status of fully funded defined benefit plans."

----------------------------------------------------------------------------------------------

Well, Former, we have it in writing, all right. Just as you said.

Not exactly "Boiler Plate" is it? One could say that it is worth less than the paper it is printed on.

What the company is saying is that they would like to have SOME of the advantages of bankruptcy without ANY of the disadvantages of bankruptcy.

Sound familiar?

Pardon me for sounding cynical, but I've heard this before, and I took a much harder hit on the concessions than you did, despite the blue-collared shirt you are wearing in your(?) picture.

 

[aafsc]

It looks like some congressmen are leaning toward the DL, CO, NW plan; and that is to let the payments be spread over a 25 year period and requiring the pensions to be frozen. This is part of this government's plan to rid this country of defined benefit plans (payments for life after retirement). AA and it's unions' plan is to get the 25 year payment period but keep the plans going. Unfortunately, most people come on here and complain without offering any solutions to this problem. Maybe, AA should just file for bankruptcy, terminate the pensions and take everything from the employees like UA and US did to their employees. I feel the best solution to this problem is to do the following:

1. AA and the unions should work for a bill that lets all employees currently on payroll and those on layoff (when they are recalled) continue to accrue benefits in the pension plans but all new hires would be given a difined contribution plan. AA did this with the non-union people a few years ago. This would eventually end the defined benefit plans when the last person in the DB plan retires. Why do I propose this? Because the reality is this government wants to kill DB plans and this will offer them the opportunity to do so while not harming those who were promised a DB plan. The new hires will know from the start that they will have a defined contribution plan. I'm not thrilled to eventually end the DB pensions but the deck is stacked against working people in this country and hopefully this is a compromise that they will accept. So AA and the unions should pursue this course.

2. Offer the unionized employees a one time opportunity to leave the pension plans. AA did this with non-union people a couple of years ago. They can take what they accrued in the DB plans and roll them over into a 401k and from that point forward AA will make contributions to the individual's account. This way everyone has a choice. Those who want to stay in the DB plan and get pension checks after retirement, can, and those who want to have total control and manage their retirement through a DC plan will be able to do so.

 

[Bob Owens]

Well, FW, that makes sense, but I can't help wondering why AA, on it's own accord, shifted non-union employees to a DC plan a few years ago.

[post="276093"][/post]​

Exactly. The company will hold onto the DB plan for as long as its advantageous to do so, once thats no longer the case, its gone. In the meantime we will have lost years that could have been used to build up a DC plan.

 

[Buck]

Exactly. The company will hold onto the DB plan for as long as its advantageous to do so, once thats no longer the case, its gone. In the meantime we will have lost years that could have been used to build up a DC plan.

[post="276126"][/post]​

Under what rules are the pensions at AA funded? SEC or GAO?

 

[Bob Owens]

aafsc,Jun 9 2005, 01:25 AM]
It looks like some congressmen are leaning toward the DL, CO, NW plan; and that is to let the payments be spread over a 25 year period and requiring the pensions to be frozen. This is part of this government's plan to rid this country of defined benefit plans (payments for life after retirement). AA and it's unions' plan is to get the 25 year payment period but keep the plans going. Unfortunately, most people come on here and complain without offering any solutions to this problem.



Yea, just like AAs plan was to not take from the employees, only to turn around and take more than anyone else ever took.

Maybe, AA should just file for bankruptcy, terminate the pensions and take everything from the employees like UA and US did to their employees.

Why should they file for BK? The TWU will get them everything they could expect without filing for BK. The fact is that our pension costs the company less than UALs DC is going to cost them. Last year the company claimed my pension was increased by $1700. At UAL they would have had to put $3100 in a DC fund.

If your DB pension is based on an unlivable wage then the best you can expect is an unlivable pension.


I feel the best solution to this problem is to do the following:

1. AA and the unions should work for a bill that lets all employees currently on payroll and those on layoff (when they are recalled) continue to accrue benefits in the pension plans but all new hires would be given a difined contribution plan.


Oh how nice. Another B-scale.

AA did this with the non-union people a few years ago. This would eventually end the defined benefit plans when the last person in the DB plan retires. Why do I propose this? Because the reality is this government wants to kill DB plans and this will offer them the opportunity to do so while not harming those who were promised a DB plan.

This government? Arent you letting this company off the hook?

The new hires will know from the start that they will have a defined contribution plan. I'm not thrilled to eventually end the DB pensions but the deck is stacked against working people in this country and hopefully this is a compromise that they will accept. So AA and the unions should pursue this course.

And how do you say it again "I got mine"?

2. Offer the unionized employees a one time opportunity to leave the pension plans. AA did this with non-union people a couple of years ago. They can take what they accrued in the DB plans and roll them over into a 401k and from that point forward AA will make contributions to the individual's account.


The whole $22000?

 

[Wretched Wrench]

from:http://www.pulsejournal.com/featr/content/...E_PENSIONS.html

In 2003, Leo Mullin, then chief executive of Delta, was roundly criticized by employees, customers and some politicians after Securities and Exchange Commission documents showed the airline had created bankruptcy-proof pension trusts for almost three dozen executives, and had retooled their compensation targets to pay millions in bonuses despite heavy losses at Delta.
Grinstein, a long-time Delta director, took part in approving the changes, but later said it was a mistake.

Sound familiar?

The White House wants to fix the pension problem for all companies by boosting the PBGC premiums paid by employers, as well as tightening rules that have allowed companies to disguise underfunding in their plans.

First good idea that little twit has had. We will need that, as I fear we will end up in PBGC some time. This also makes me fear that the White House is planning on more pension defaults.

 

[TonyB]

WSJ US Senator Grassley Lambastes Airlines Over Pensions

By JOHN GODFREY
June 7, 2005 10:00 a.m.

Of DOW JONES NEWSWIRES
..."Like Enron and the phony accounting they used to hide their losses, we will learn that United's pension plans used illusory investment gains - kept on their books years after it was clear they would never materialize - to hide and disguise the true financial condition of their pension plans," Grassley said.

The problem for lawmakers, Grassley said, is that what United did was "perfectly legal", and even worse is "accepted practice by pension plans everywhere."

As a result, Grassley said, "pension plans of other airlines, some of whom are represented here today, are billions and billions underfunded."...

[post="276098"][/post]​

:angry: :angry:
The above caption says it all. What UAL has done is perfectly legal. This should be enough to convince all that the government will back corporations to the hilt. We are to hope that congress acts in the working class' behalf? You have to be nuts to beleive that bull. Politicians, whether republicrat or democan,
only help corporate America screw the working man and woman. Corporate elite are allowed to get over like fat rats, with their bankruptcy proof pensions and their bonuses while the working class is bent over once again. Am I spewing class envy? Perhaps. Am I instigating class warfare? Absolutely! But guess what? The first shots have been already fired by the ruling elite. They want your pensions, your wages, your health insurance; and if they can do it, they want your job done by slave labor in China too. This is not a warning shot across the bow but a direct hit amid ship! While the "ship" of labor is dead in the water, taking on more than the bilge pumps can handle and listing, our illustrious "captains" of labor have already gotten on the life boats and abondoned ship and cut a deal for themselves. We are on our own! It is time to take matters into our own hands instead of hoping congress will act or someone will help us. All the gains obtained in the early days of the labor movement were not given to us . We had to fight and take them. Many were hurt and many were murdered by the Pinkerton, Police and Federal army of the ruling elite, yet labor persevered. Our union leaders of today tell us we can't do anything or a judge will issue an injunctiion. What do we do? We go back to our televisions and watch NASCAR, baseball or American Idol and we ####(female dog) and moan that the union isn't doing anything. Perhaps I am expecting too much from my generation. I cant' imagine Mike Quill sitting idly by while modern day robber barons pilfer and loot the kitty of the working man! :down: :down:

 

[PRINCESS KIDAGAKASH]

The hearing they had on the pension "crisis" was a bunch of B.S.! The republicans were slamming the CEO's for allowing the unions to have a pension at all. How dare these airline employees get a pension! What a future this country is headed for!
No pension,No retirement healthcare,No nothing! All the present government cares about is short term corporate profits and the stock market scam. I see another Great Depression on the horizon.

 

[TonyB]

The hearing they had on the pension "crisis" was a bunch of B.S.! The republicans were slamming the CEO's for allowing the unions to have a pension at all. How dare these airline employees get a pension! What a future this country is headed for!
No pension,No retirement healthcare,No nothing! All the present government cares about is short term corporate profits and the stock market scam. I see another Great Depression on the horizon.

[post="276173"][/post]​

And what are we going to do about it, Princess?

 

[PRINCESS KIDAGAKASH]

We need a NATIONAL AIRLINE EMPLOYEE WALKOUT that what we need to do about it!