That's incorrect. For years and years, I have consistently posted my view (backed up by the cash flow numbers from AMR) that AA's pension obligations have not been its primary problem. I pointed it out in late 2002 when UA was forced to file Ch 11 in part because its pension obligations were too large to manage, unlike AA. AA was able to manage its 2002 and 2003 minimum contributions until the Congress passed the legislation permitting AA and others more time to make up the underfunding. For most of the last decade, AMR has spent a much smaller percentage of its employee labor expense on its cash pension contributions than WN has spent on its DC plans. And I've pointed that fact out again and again whenever someone ignorantly posts that AA would have to freeze and/or terminate its DB plans.
Yes, I realize that over the long term, DB plans are probably more expensive and are an endangered species. But there's no esacaping the fact that AMR has benefitted from the equity gains in its plans, helping to reduce its current cash outflow to fund its pensions. James Beer and other AMR execs have said the same thing in their quarterly conference calls over the past decade. When you have several billion dollars invested, and the market does well, that certainly helps reduce the drain on cash. Unfortunately, the equity markets' long-term gains have stagnated and in some cases evaporated since 2008, causing AA's funded percentage to fall.
I recently pointed out DL's massive pension underfunding not because I had just discovered it - but in response to someone's (I honestly don't remember who) incorrect posting that DL, because of its bankruptcy and frozen pensions, did not face the same headwind as AA on the pension issue. As we both know, DL's pensions are underfunded by a larger percentage than AA's pensions. Kudos to DL for managing to continue to fund its DB Plans plus fund its Defined Contribution replacements.
The reason why I have far more respect for you than other AA mgmt followers is precisely because you are consistent in what you have said...
but you have also consistently said along with many others that AA's employee expense burden is larger than other airlines because they had the opportunity to terminate their pensions in BK while AA has not.
The simple fact is that "other airlines" is not a definite enough statement to be accurate... which is why I have consistently argued that DL indeed still has responsibility for the frozen pensions of all non pilot PMDL employees as well as nearly all PMNW employees.
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It is accurate to argue that AA's pension underfunding was less than DL's but it does not change the fact that AA is NOT the only US network airline that has defined pension benefit obligations on its books and continues to pay them... in the current year, it is estimated that DL will pay $100M more to fund its FROZEN pensions than AA will pay for its active pensions.
And as we agree, DL does in fact continue to provide pension benefits via defined contribution plans for its current employees.
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Further, even though UA and US terminated their DB plans in BK, they paid plenty for the privilege in the form of bankruptcy claims from their labor groups and from the PBGC who wanted and got a piece of the reorganized companies in BK.
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Terminating pension plans is far from a get out of jail card and freezing a plan only means you no longer continue to accrue benefits.
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The simple fact is that when you consider that AA and DL still maintain DB plans, DL spends money on DC plans, and DL employees on average draw wages on average or higher than AA employees at the same seniority, then AA's cost disadvantage comes because it is in a no growth environment with a senior workforce which is too large for the size of the airline.
The notion that AA is at a competitive disadvantage because it spends more PER EMPLOYEE is simply not accurate.
