More good news about the pensions:
http://www.dfw.com/mld/dfw/business/11865786.htm
Let the TWU v AMFA debate begin anew.
http://www.dfw.com/mld/dfw/business/11865786.htm
Let the TWU v AMFA debate begin anew.
Pension Relief: One Size Does Not Fix All
- Thread starter FWAAA
- Start date
PRINCESS KIDAGAKASH
Veteran
- Oct 9, 2003
- 1,401
- 2
It's really not a TWU versus AMFA thing. It's just that us AA employees who have been here a while smell a skunk. You can put all the perfume on a skunk(pension issue) that you want, but it still stinks!
FWAAA,
You are desperately attempting to spin up the AMFA thing to divert attention from the looming Pension debacle.
From paragraph twenty of the story you linked to: "Over the past two years American has contributed almost $600 million to is employees' defined-benefit plans. If the company had instead paid into a defined contribution system at a rate of 5 percent, the costs would have been roughly $450 million." (Ft. Worth Star-Telegram, Fri, Jun. 10 2005. Brad Foss, AP)
For the last several months, you have been saying that the DBP was actually less expensive than a shift to the DCP. From the article you introduced we see that the DCP is actually 25% cheaper.
More importantly, the author of the article you introduced states that the time period covered is the last two years. What do we know about the contributions into the DBP over the period? We know that the contributions were actually artificially low due to the Kennedy Bill S.2282 that allowed the airlines and steel indsutries to continue shortfunding their pension requirements through 2006.
So not only is the DCP 25% cheaper than the lower amounts placed into the DBP, as allowed by Sen. Kennedys Bill S.2282; but, over the same time period the actuall contributions into the DBP were actually some 30% less than would have otherwise been required.
Do you still say that a DCP is more expensive?
You are desperately attempting to spin up the AMFA thing to divert attention from the looming Pension debacle.
From paragraph twenty of the story you linked to: "Over the past two years American has contributed almost $600 million to is employees' defined-benefit plans. If the company had instead paid into a defined contribution system at a rate of 5 percent, the costs would have been roughly $450 million." (Ft. Worth Star-Telegram, Fri, Jun. 10 2005. Brad Foss, AP)
For the last several months, you have been saying that the DBP was actually less expensive than a shift to the DCP. From the article you introduced we see that the DCP is actually 25% cheaper.
More importantly, the author of the article you introduced states that the time period covered is the last two years. What do we know about the contributions into the DBP over the period? We know that the contributions were actually artificially low due to the Kennedy Bill S.2282 that allowed the airlines and steel indsutries to continue shortfunding their pension requirements through 2006.
So not only is the DCP 25% cheaper than the lower amounts placed into the DBP, as allowed by Sen. Kennedys Bill S.2282; but, over the same time period the actuall contributions into the DBP were actually some 30% less than would have otherwise been required.
Do you still say that a DCP is more expensive?
Opinion Warning-
Among the factors making the survival of the DBP at AA problematic is the continuing fight over the repeal of the Wright Amendment and its’ probable repeal.
The latest misstep by the DFW Airport Operating Authority in their quest to retain Wright: during the rollout of a study commissioned by DFW, an economic analysis of the likely impact on airfares was not presented. The study authors, SH&E, a Boston based aviation consulting group, found that given a Wright repeal: airfares could be expected to fall as much as 50% over competing routes.
So Wright is repealed? If the consultants hired by DFW are correct, and there is no reasonable basis to believe they are wrong, AA will face an even greater percentage of LCC competition over routes flown. Given a 50% reduction in prices over those segments impacts the profitability of the hub at DFW. Given the high fixed cost nature of a hub, interdiction of passenger flows could easily change a fortress into a prison due to eroding revenue streams and increasing costs. With increasing LCC encroachment in the high O&D cities such as Boston, New York and Washington DC, further revenue erosion is likely. The result: difficulty in the ability to fund long-term obligations such as Defined Benefit Pension plans given the high debt load and the continuing high cost of fuel. If debt reduction negotiations are attempted outside of bankruptcy, most creditors will be unlikely to agree without significant cost reductions in labor rates, including the DBP. In bankruptcy, the end result is DBP termination and a significant loss in payouts.
The political reality, as others on the LUV board have stated, is that no politician will get caught defending higher airfares. Further, fewer politicians are going to increase the liability to the US taxpayers to fund the PBGC when the vast majority of Americans do not receive a DBP.
Given the long term, read Bi-Partisan, governmental support for price reductions within the air-carrier industry and an increasing unwillingness by Congress to adopt the Legacy Carriers in a quasi-AMTRAK basis: it is reasonable to assume that Congress will both move to repeal Wright and require the freezing of DBPs as a condition of access to long term funding.
Among the factors making the survival of the DBP at AA problematic is the continuing fight over the repeal of the Wright Amendment and its’ probable repeal.
The latest misstep by the DFW Airport Operating Authority in their quest to retain Wright: during the rollout of a study commissioned by DFW, an economic analysis of the likely impact on airfares was not presented. The study authors, SH&E, a Boston based aviation consulting group, found that given a Wright repeal: airfares could be expected to fall as much as 50% over competing routes.
So Wright is repealed? If the consultants hired by DFW are correct, and there is no reasonable basis to believe they are wrong, AA will face an even greater percentage of LCC competition over routes flown. Given a 50% reduction in prices over those segments impacts the profitability of the hub at DFW. Given the high fixed cost nature of a hub, interdiction of passenger flows could easily change a fortress into a prison due to eroding revenue streams and increasing costs. With increasing LCC encroachment in the high O&D cities such as Boston, New York and Washington DC, further revenue erosion is likely. The result: difficulty in the ability to fund long-term obligations such as Defined Benefit Pension plans given the high debt load and the continuing high cost of fuel. If debt reduction negotiations are attempted outside of bankruptcy, most creditors will be unlikely to agree without significant cost reductions in labor rates, including the DBP. In bankruptcy, the end result is DBP termination and a significant loss in payouts.
The political reality, as others on the LUV board have stated, is that no politician will get caught defending higher airfares. Further, fewer politicians are going to increase the liability to the US taxpayers to fund the PBGC when the vast majority of Americans do not receive a DBP.
Given the long term, read Bi-Partisan, governmental support for price reductions within the air-carrier industry and an increasing unwillingness by Congress to adopt the Legacy Carriers in a quasi-AMTRAK basis: it is reasonable to assume that Congress will both move to repeal Wright and require the freezing of DBPs as a condition of access to long term funding.
operaations
Veteran
- Jul 31, 2003
- 562
- 0
FWAAA said:
so true
FWAAA said:
Cant make a valid point so you focus on making personal attacks?
How pathetic.
Your post however reinforces my position that the only reason why we stiil have the DB is because it costs the company less at the moment. When that changes. it will be gone.
