Morale at American Airlines

[Hopeful]

They wanted to take the DB away from the new hires and provide them with a DC that was inferior to what SWA offers.

Knowing what I know now and having seen the statistics of how many carriers default on their pension obligations I too would take the SWA match if I were younger, but at 49 it's too late for me to switch.

I agree....But the TA grandfathered existing members in the DB...New hires would get the 401k match. I personally have no problem with this because potential new hires know what to expect.
For those of us with the time and age in, changing over would not be too beneficial.
But if the company wishes to shed the pension, it would have to cost them way more with respect to our hourly rate. At worst, we would be frozen at current pension benefits.
I'm not saying this is the way to go, but had a substantially higher wage been offered in exchange for freezing the pension,,,and I mean SUBSTANTIAL, the TA vote results might be somewhat different!

 

[FWAAA]

Look at your Total value statement, which they stopped updating in 2008. $1100 was what I got in my pension, a 3% match would have been $2100. AA saved around $1000. Of course underfunding it now will result in huge liabilities in the future because that $1100 probably wont go far in delivering the benifits promised but breaking promises is nothing new at AA.

In 2009, AA contributed no cash to the pensions (because of the huge runup in the stock market before the equity markets collapsed). This year, AA contributed $460 million to the pensions and anticipates a 2011 contribution of $520 million.

A few years ago, the cash savings to AA of the DB plan allowed AA to conserve cash thru the bleakest times earlier last decade. Now, unless the stock market booms again, the piper has to be paid, with about $1.0 billion of pension contributions in 2010-11. The cash outlay now is substantially higher than the defined contribution plan expenses at WN, a reversal of the situation a few years back.

 

[Bob Owens]

In 2009, AA contributed no cash to the pensions (because of the huge runup in the stock market before the equity markets collapsed). This year, AA contributed $460 million to the pensions and anticipates a 2011 contribution of $520 million.

A few years ago, the cash savings to AA of the DB plan allowed AA to conserve cash thru the bleakest times earlier last decade. Now, unless the stock market booms again, the piper has to be paid, with about $1.0 billion of pension contributions in 2010-11. The cash outlay now is substantially higher than the defined contribution plan expenses at WN, a reversal of the situation a few years back.

The $1100 for the pension is AAs number, they add it directly to my wages, health insurance claims paid, SSI etc to calculate the total value of my compensation, but then again they stopped updating it after I started asking about the pension value.
The 3% match is what carriers that went BK offer. SWA gives an 8% match on earnings, including OT and Holiday Pay, so for a 25 year mechanic like myself AA saved around $7000. During negotiations AA admitted that the match they were offering would cost them more now than the DB plan but they expected savings over the long term.
SWA has half the employees, (and half the revenue).

 

[FWAAA]

The $1100 for the pension is AAs number, they add it directly to my wages, health insurance claims paid, SSI etc to calculate the total value of my compensation, but then again they stopped updating it after I started asking about the pension value.
The 3% match is what carriers that went BK offer. SWA gives an 8% match on earnings, including OT and Holiday Pay, so for a 25 year mechanic like myself AA saved around $7000. During negotiations AA admitted that the match they were offering would cost them more now than the DB plan but they expected savings over the long term.
SWA has half the employees, (and half the revenue).

The typical WN employee doesn't take full advantage of the 401(k) match, but that's true at most companies.

WN contributes 15% of all profits to the employee profit sharing plan and offers a 401(k) match. The total expense for both in 2009 was just $203 million, or an average of just $5,846 per employee. AA's pension contribution this year is more than $6k per employee on average and will be higher still in 2011.

 

[Bob Owens]

The typical WN employee doesn't take full advantage of the 401(k) match, but that's true at most companies.

WN contributes 15% of all profits to the employee profit sharing plan and offers a 401(k) match. The total expense for both in 2009 was just $203 million, or an average of just $5,846 per employee. AA's pension contribution this year is more than $6k per employee on average and will be higher still in 2011.

Well thats not what I hear from the mechanics, they take full advantage. AA probably has to pay more now because they didnt pay enough in prior years, they asked us to lobby for them so they could. If the average is that high then its for the execs pensions and to make up for what they didnt pay in the past, if it was $6k AA would defineatly have added that to our Total Value Statement.

 

[FWAAA]

Well thats not what I hear from the mechanics, they take full advantage. AA probably has to pay more now because they didnt pay enough in prior years, they asked us to lobby for them so they could. If the average is that high then its for the execs pensions and to make up for what they didnt pay in the past, if it was $6k AA would defineatly have added that to our Total Value Statement.

I'm sorry, Bob, but you're not keeping up. AA contributed zero in 2009 and contributed an average of more than $6,000 per employee this year. Of course AA contributed less in prior years when it was concerned about running out of cash.

The fact is, WN employees don't typically max out their 401(k) contributions and thus save WN significant amounts of money. Perhaps you would, but the typical WN employee does not.

 

[eolesen]

It may be $6K per active employee, but don't forget the biggest difference --- once an employee retires from WN, WN's obligation to that person ends.

Not so at AA. AA continues to own that obligation as long as the employee is alive. There are some retirees who have drawn pensions for longer than they were on payroll at AA. That very situation is part of what killed GM, especially when the UAW was allowing people to retire at 50.

 

[telebender1956]

It may be $6K per active employee, but don't forget the biggest difference --- once an employee retires from WN, WN's obligation to that person ends.

Not so at AA. AA continues to own that obligation as long as the employee is alive. There are some retirees who have drawn pensions for longer than they were on payroll at AA. That very situation is part of what killed GM, especially when the UAW was allowing people to retire at 50.

What's your solution? Have everyone work till they die.One major reason for allowing people to retire at 55 is to create job openings for the next generation coming along behind the 55-60 year old people.This fact is already starting to hit home as people are staying in the workforce LONGER due to the value of 401k's and CONCESSIONS with no real wage and benefit increases in 10 years.This is making it much more difficult for college and technical school grads to find career related employment.The early retirement packages @ AA in the mid 1980's and again in the mid 1990's created thousands of job openings. Look at the Title 1 seniority list and you will see huge numbers from 1985-88 and again 1995-1997 .This was due to the combination of AA growth and early retirements.
Early retirement is good for Companies because it allows them to hire new people at the bottom end of the wage and benefit scale which last for several years.

 

[eolesen]

Don't have an opinion either way, frankly, aside from believing that the only good reason to offer an early retirement plan is to mitigate furloughs or to eliminate a particular class or title group of employees.

Using it to drive down wages is simply short-sighted in my opinion. You may drive away some older workers, but when the pay scale tops out after 10 or 12 years, it doesn't take long before your costs are right back where they were.

Early outs also do very little to mitigate the health care related costs if you're self insured and offer retiree health care. Funding for that comes out of the same pot regardless if you're active or retired and not eligible for Medicare.

Maybe some fraction of IOD's go down, and there's probably a little benefit for lost time, but the offset for that is losing the experience those older workers bring.

 

[Bob Owens]

It may be $6K per active employee, but don't forget the biggest difference --- once an employee retires from WN, WN's obligation to that person ends.

Not so at AA. AA continues to own that obligation as long as the employee is alive. There are some retirees who have drawn pensions for longer than they were on payroll at AA. That very situation is part of what killed GM, especially when the UAW was allowing people to retire at 50.

Wouldnt be a problem if AA didnt take money out of the fund or decide to put in ZERO when the market exceeds expectations . For those that live a long time you also have those who die without collecting a dime, thanks to the toxins the airline exposed them to while they made money for the company.

I dont think our benifits compared to what GM used to offer.

 

[Duke787]

They wanted to take the DB away from the new hires and provide them with a DC that was inferior to what SWA offers.

Knowing what I know now and having seen the statistics of how many carriers default on their pension obligations I too would take the SWA match if I were younger, but at 49 it's too late for me to switch.

I suggest to everyone working anywhere to have a 401k and not depend on social security or the company pension, those are resources you can't control. 401k you can take with you to your next company.

That is the major reason why I would prefer a matching 401k and a pay raise as apposed to a defined pension plan that AA holds over our head. And according to AA it is what is hurting AA fiscally, and I'm all for keeping AA a viable company, not like the UAL pilot union president who said he wanted to squeeze the last golden egg out of the golden goose, back in 2000 when they were doing their summer of pain. The pilots had a good contract for a short time, then lost all their ESOP and their pensions. Short term thinking like that is going to risk AA's and the employee's future.



Not to say all the problems at UAL were the pilots fault. They are professionals who wanted a raise. UAL management really sunk that once great airline.