How the Pension Benefit Guaranty Corp. Enabled the American/US Airways Merger

[usa1]

http://www.thestreet.com/story/13119080/1/how-the-pension-guaranty-corp-enabled-the-americanus-airways-merger.html
 
LUS employees will be working to fund a frozen LAA defined pension .... getting nothing in return, for their terminated defined pension and terminated retirement healthcare?

 

[swamt]

Interesting read, thx for posting...

 

[JABORD]

http://www.thestreet.com/story/13119080/1/how-the-pension-guaranty-corp-enabled-the-americanus-airways-merger.html
 
LUS employees will be working to fund a frozen LAA defined pension .... getting nothing in return, for their terminated defined pension and terminated retirement healthcare?

Your point from the LUS employee perspective is well made. Remember, if the article is accurate, the LAA management needed some arm twisting to be convinced and the majority of LAA employees also were not on board. Mind you that dissenting management group has been obscenely rewarded in many ways.
The play by the PBGC leadership was brilliant regarding negating the attempt by AA to shun a liability that we now know they more than have the ability to follow through on. He was the right guy at the right time to protect his organization from being burdened any further and has earned the accolades.
The unions that were in agreement with the merger also did so not necessarily with membership support and the gal in charge of the FA's was masterful in playing into the naivety of a work group of which many still seem to have difficulty hiding their giddyness, no matter how fleeting or short term their gains appear to be. I'm sure the FA leader will also carry her rewards long after she exits from her existing role.
As for labor, I can only speak for some on the M&E side. The attempt by AA to skirt their 'promise' of a defined pension will not be forgotten. Many believe that the 'new' AA will continue to lobby Congress to extend the funding requirement of the pensions. If successful, another  economic downturn or other type of threat in the future will provide an excuse to disavow their responsibility to the workforce. Or, again more specific to my group, our union leadership will continue to express their insistance of knowing what's best for us and will work with AA to change our pension from it,s current form.
One side note, I'm sure the writer of the piece you've referenced will appreciate the additional books you've helped to sell.

 

[Phoenix]

If anyone thinks the PBGC is averse to absorbing more pension plan obligations, I am not easily convinced.  The PBGC gets all the real money and gets to use math magic to rewrite the new amounts owed out (for pennies on the dollar).   The only possible down side for the PBGC is the need to hire too many mathematicians too quickly to rewrite too many plans at once.
 
The real issue at play regarding the pensions is many times greater than the pensions themselves, IMHO.   Did the LAA unions agree to keep their pension (yet frozen) in exchange for giving up the profit sharing that LUS unions had?  A short term preferential benefit for a select portion of the employees (the ones getting to make the decision to give up what others had) in exchange for a theoretically unlimited benefit to other employees (the ones that were excluded from the decision that cost them).   
 
The frozen pensions at LAA are miniscule compared to the Profit Sharing that was abandoned.  But perhaps the promise to save what was left of the LAA employee pensions was more beneficial to them than the money in LUS profit sharing, and more beneficial than the possibility of negotiating a similar profit sharing for all new american employees.  
 
United, Continental, Delta, Northwest, and USAir all lost their pensions.  LAA didn't get to keep their pension for free....  
 
Things are rarely as they first appear.  

 

[usa1]

Sad part is the LUS employees still working get help fund a pension they get nothing from. 
 
And please don't bring up profit sharing CWA was just got ripped off 40% of theirs.

 

[usa1]

And this ... http://aviationblog.dallasnews.com/2015/04/brace-yourselves-for-big-airline-earnings.html/

 

[700UW]

The IAM represented groups at US get a pension, the IAMNPF.

Ramp, Mechanic and Related and Maintenance Training Specialists, all three of those CBAs contain the IAMNPF.

 

[Buck]

I guess that the existing American Mechanics that will be "offered" an opportunity to participate in the IAM pension, do not have to do so even if it is part of a contract negotiation?
 
As to the High Labor Coast in the article, who are they referring to? Surely not the Mechanics...

 

[scorpion 2]

The IAM represented groups at US get a pension, the IAMNPF.
Ramp, Mechanic and Related and Maintenance Training Specialists, all three of those CBAs contain the IAMNPF.

A pension fund in name only. They would be better off with our measly 5.5% 401 match rather than continuing in a plan restrictive as the iamnpf.   

 

[Buck]

Is it true that the average payout in this Mechanic and Related Pension is $1300.00 a month? 
 
Does the IAMPF need the AA Mechanics existing pensions to remain or become solvent?

 

[700UW]

No they dont need the AA plan to keep it solvent, its 105% funded, and not every IAM member is in the IAMNPF.

 

[Buck]

No they dont need the AA plan to keep it solvent, its 105% funded, and not every IAM member is in the IAMNPF700

700UW do you have any examples of a retirees payout? 

 

[WorldTraveler]

The IAM represented groups at US get a pension, the IAMNPF.
Ramp, Mechanic and Related and Maintenance Training Specialists, all three of those CBAs contain the IAMNPF.

and that pension is a replacement pension from what was terminated in BK. and those employees STILL will receive their US pensions - just that it will come from the PBGC.

 

United, Continental, Delta, Northwest, and USAir all lost their pensions.  LAA didn't get to keep their pension for free....  
 
Things are rarely as they first appear.

correction.

only the original DL pilot pensions were terminated.

All other pensions at DL and NW were frozen, not terminated, and it is precisely because the Pension Protection Act worked to keep DL from terminating all but its original pilots' pensions that the PBGC came to AA armed with a case of how airline pensions could be saved.

and the PBGC did extract a $2 billion claim from DL for the pilot pension so the figure of $10 billion from AA for all pensions was probably about right when adjusted for inflation and AA's older workforce.

 

[scorpion 2]

No they dont need the AA plan to keep it solvent, its 105% funded, and not every IAM member is in the IAMNPF.

How funded would it be under the LAA plan rules?  Go at 55 with 15% penalty. Full at 60. No restrictions on employment after retirement. No notification of reemployment to the LAA plan to gain approval for unrestricted payout under the plan.  
 
Any plan can be 105% funded with the right rules. Social Security is 200% funded if they change the rules.    

 

[700UW]

It depends on how long you have been in the plan and what the multiplier is.