Will AA declare bankruptcy?

[WorldTraveler]

WT,
AA has made a management decision not to do third party work....They never wanted it.... goes way back to FEDX days in
Tulsa. Management simply told FEDX to get their #### out now..... we dont want it here!!! They made a half ass attempt at the Delta hgr,but set it up to fail.... Why is Delta doing it now if its so unprofitable? We have so much talent going to waste here it's almost sickening....

obviously DL doesn't seem the insourcing they do as unprofitable... in fact they have said many times that Tech Ops insourcing generates some of the highest profit margins in the business.
In short, DL sees the maintenance operation they have as a source of revenue and not just as a cost center - which is apparently the only way AA apparently sees maintenance.

I thought AA did quite a bit of insourcing not that long ago. Not sure of the timeframes you are talking about but others have said AA did do a fair amount of insourcing.....probably more than UA.
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Again, the question is why AA labor can't figure out how to make the assets AA has - including AA people - work to the benefit of the company AND labor. Other companies can figure out how to do it.
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Doesn't matter what organization you are working in, if the intent is solely to look out for your own interests, the organization will ultimately fail.

 

[Super FLUF]

111 pilots pulled the ejection handle yesterday. About twice as many expected on Oct. 1st. What does that tell you?

I have gotten reports that negotiations have not gone well. Extremely heated and the company now floating pay CUTS in a new contract. How generous. Apparently the word "bankruptcy" never comes up directly, but is inferred several times every day. The company has also threatened to shrink the operation even further.

I would just like to take this moment to say how impressed I am at the visionary leadership, and the incredible motivational skills of manAAgement. Worth every dime of PUP money!

 

[Frank Szabo]

obviously DL doesn't seem the insourcing they do as unprofitable... in fact they have said many times that Tech Ops insourcing generates some of the highest profit margins in the business.
In short, DL sees the maintenance operation they have as a source of revenue and not just as a cost center - which is apparently the only way AA apparently sees maintenance.

The maintenance operation is pure cost to Centrepork.

I thought AA did quite a bit of insourcing not that long ago. Not sure of the timeframes you are talking about but others have said AA did do a fair amount of insourcing.....probably more than UA.

... long enough to see there was money to be made and they got the hell out

Again, the question is why AA labor can't figure out how to make the assets AA has - including AA people - work to the benefit of the company AND labor. Other companies can figure out how to do it.

It's really not the place of labor to figure out how to best deploy assets - that comes under the "Manage the Business" clause in the front of the AA/TWU contract book - "the company retains the right to manage the business." Cool - manage, already.

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Doesn't matter what organization you are working in, if the intent is solely to look out for your own interests, the organization will ultimately fail.

You'll get no argument from anyone here on that issue but it seems the Centrepork infestation didn't get that memo nor learn about it in business school.

Perhaps if you, with your wealth of knowlege re: the airline industry, would point out to the management boys the error of their ways and set them upon the path of righteousness, ...

 

[eolesen]

111 pilots pulled the ejection handle yesterday. About twice as many expected on Oct. 1st. What does that tell you?

It tells me they're worried about the stock market dropping.

This (pilots bailing out to protect the value of their B-fund) has happened before, and it will happen again because the B-fund is susceptible to large market fluctuations.

I forget whether it is an automatic 90 day look-back from the date of retirement, or if the pilot has to initiate the lock in advance of their retirement date, but either way, this has nothing to do with the state of affairs at the company, and everything to do with the market and protecting their retirement nest eggs.

 

[TWU informer]

111 pilots pulled the ejection handle yesterday. About twice as many expected on Oct. 1st. What does that tell you?

I have gotten reports that negotiations have not gone well. Extremely heated and the company now floating pay CUTS in a new contract. How generous. Apparently the word "bankruptcy" never comes up directly, but is inferred several times every day. The company has also threatened to shrink the operation even further.

I would just like to take this moment to say how impressed I am at the visionary leadership, and the incredible motivational skills of manAAgement. Worth every dime of PUP money!

Give me just half of what the Pilot's get and the lump sum option that most of us piss ants no longer have, and I will gladly pull the ejection handle myself.

We (TWU Members) gave away the farm to protect their sacred cow pension, I hope each and every one of them enjoy the hell out of it while the rest of us peasants and slaves suffer still trying to fund their sacred cow.

NO, on second thought, File Bankruptcy and F'em all

 

[Super FLUF]

this has nothing to do with the state of affairs at the company, and everything to do with the market and protecting their retirement nest eggs.

B-fund unit values

Apr $96.08
May $94.59
Jun $92.83
Jul $90.81
Aug - unreported, but even LOWER

Then there is the A-fund, which would be almost completely lost in a BANKRUPTCY.

So what you are saying is that when the B-fund was highest, hardly anyone retired because nobody would be interested in cashing out when the B-fund unit value maxes out. Now that the B-fund has dropped precipitously, there is a surge in retirements so that the pilots can "protect their nest egg" by capturing that low unit value. On top of that, you argue that the company threatening us with bankruptcy has no effect whatsoever to those that are about to have their entire A-fund eviscerated.

You display an abysmal lack of knowledge in both the retirement fund issue as well as the reason for the mass exodus.

To add to your "nothing to see here....move along....", a bunch of management pilots are bailing. AA VP flight training bailed, S80 flight training manager bailed, and 767/757 fleet captain bailed. In addition, I counted about a dozen check airmen that bailed.

Yeah....nothing going on. Maybe they will announce our new code share with the White Star Line. Very apropos.

 

[Bob Owens]

I think you're really a bit ignorant as to why WN is successful, Bob...

They don't need to ask the employees to take responsibility because the unions already know they already share that responsibility with management.

Ask anyone there who has been around for more than a few years, and they fully understand that their success is all about costs and productivity. No featherbedding, no arguing over who should pick up a newspaper off the cabin floor, or who should deal with a problem unfolding in front of them.

I've never heard an employee at WN say "it's not my job". I've seen mechanics throw bags. I've seen clerks help change a tire. And I've seen pilots pick up trash.

The employees there understand that no one workgroup or subset of employees can operate in a vacuum.

They understand that keeping the company profitable is their best chance at getting a fair wage.

You guys? Exact opposites in just about every way possible.

You're in it just for your own workgroup, and could give a rat's ass about the impact of what you are asking for on fleet service, flight service, or pilots.

I lost track of how many times I heard "it's not my job" from you in particular, but also from the majority of AA's employees. If it isn't in your job description, you absolve yourself of any responsibility...

So... if you think you really deserve WN's wages, maybe you need to think about why they get paid a decent wage. They're getting rewarded for keeping a collaborative culture.

I don't see how AA will ever come close to replicating that culture. Not without radical change at every level including labor.

You've seen WN mechanics throw bags, or you heard about it? The fact is I've spoken to scores of mechanics and they say it almost never happens, makes for a good story though. By the way I've thrown bags on occasion as well, in fact our contract allows for cross utilization.
As far as me saying "It's not my job" show me one example of where it has to do with the operational side of the business where
I've said that. What I've said it that managerial decisions on how the company conducts their business is not my job, and it's not, it's the job of those who get the big bucks. If AA wants to pay me WN mechanics wages to throw bags you would not hear me object, just as I didn't object to throwing bags on 9-11 so stranded passengers could go where they needed to go.

The word collaborative at AA carries a different meaning, it means you do as I say and it's your fault if what I say goes wrong. Shared sacrifice is not equal sacrifice and labor is a bag of bricks.

The majority of AA employees? Do you get around that much that you can comment on the majority?

Featherbedding? Ok, provide examples. If you can.

 

[Bob Owens]

Give me just half of what the Pilot's get and the lump sum option that most of us piss ants no longer have, and I will gladly pull the ejection handle myself.

We (TWU Members) gave away the farm to protect their sacred cow pension, I hope each and every one of them enjoy the hell out of it while the rest of us peasants and slaves suffer still trying to fund their sacred cow.

NO, on second thought, File Bankruptcy and F'em all

Be nice, they never took a nickel from us, they took it from the company and we foolishly agreed to allow the company to take it from us.

 

[wcs]

Be nice, they never took a nickel from us, they took it from the company and we foolishly agreed to allow the company to take it from us.

Well said Mr. Owens

 

[TWU informer]

Be nice, they never took a nickel from us, they took it from the company and we foolishly agreed to allow the company to take it from us.

And it will be the company that takes it back from the Pilots via Bankruptcy not us, and most likely taking more from us while they are it. And I don't remember foolishly "allowing" anything. Last I remember, we are working under a "without further ratification" agreement signed by James C. Little. And like you, I know the TWU runs roughshod in negotiations, yet you are willing to take the blame and/or blame the rest of us for their past sins. I refuse to take credit or blame for anything the TWU has done, period.

 

[Super FLUF]

I guess I don't know how many times I have to point this out, but the AA pilot's pension money is mostly out of the hands of the company and a BK judge. The B fund, which is the bulk of the money, is COMPLETELY independent of the company. The smaller A fund would take a beating, and that would suck to some of the gummers. However, the money lost in the A fund could easily be made whole by staying and flying the line for an extra year or two. The reason we have guys punching out early en masse is so that they can collect on the (full) A fund and not have to work that extra year or two to make up for a decimated A fund.

There seems to be confusion due to past bankrupt carriers like Delta and USAir. Those carriers had their pensions set up just the opposite. They had huge A funds that were controlled by their respective companies and they were plundered in BK and the pilots lost massive amounts of money.

Sorry to disappoint some of the bitter people here who seem to think that us pilots "stole" you money some how.

GMAFB

 

[eolesen]

Maybe I'm wrong, but I still don't think the math works too much their favor, Fluf... I hope these guys checked it out with a retirement counselor before jumping...

Then there is the A-fund, which would be almost completely lost in a BANKRUPTCY.

Absolute rubbish.

The A-fund is the qualifying plan (normal defined benefit). The only risk there is having the defined benefit reduced to $54K per month. Just how much is a normal monthly A-fund payout at age 65 worth? If your union left it at a level that put it at risk during bankruptcy, shame on your union. The whole point of having the A-fund and the B-fund was to protect the qualifying plan and the non-qualifying portion.

I haven't seen a pension table for AA in a while, but in the MAS plan, there are reductions for drawing their pension between ages 55 and 64. IIRC, drawing at 55 cuts the benefit about in half. I'm presuming that the standard monthly draw is similarly reduced for pilots retiring early.

Likewise, if the plan terminates, the max they can draw on that is driven by their age at the time the plan terminates and is handed over to the PBGC.


So.... besides the loss in salary (which is still maxing out in the $200K range, no?), purposely reducing their A-fund draws and risking drawing a lower guarantee if the plan is turned over to the PBGC just doesn't make sense to me.

Even if the company goes CH.11 and the plan is distress terminated, the only upside they're going to see is the difference between the ~$54,000 and whatever they were drawing from the A-fund prior to plan termination. Unless pilots are drawing $100K annually from their A fund, I don't see how that difference is going to be anywhere near enough to offset the corresponding loss in salary, or the higher value they'd be drawing with another year or two of credited service.

So what you are saying is that when the B-fund was highest, hardly anyone retired because nobody would be interested in cashing out when the B-fund unit value maxes out. Now that the B-fund has dropped precipitously, there is a surge in retirements so that the pilots can "protect their nest egg" by capturing that low unit value.

Perhaps nobody retired when the fund was on a high because nobody thought it was going to drop by 6% over a three month period. And apparently there are enough people worried about it dropping into the double digits that they're making a run on the bank.

The same thing has been happening with 401K funds everywhere --- our company put out several pleas of caution when the market started to crash after the federal credit rating downgrade, and the same thing happened in 2008....

You display an abysmal lack of knowledge in both the retirement fund issue as well as the reason for the mass exodus.

I'm fairly certain I understand how retirement plans work. Those of us close enough to be of retirement age tend to keep track of those things, Fluf....

I'm not so sure you do, though.

 

[will fix for food]

It helps if they want to get rid of the Embraers

We have been told to replace the registrations that say "owned by American Eagle Holdings" with the "owned by American Airlines" certs as fast as we can. I don't know what that is about, the divestiture isn't even official yet.

 

[Super FLUF]

Perhaps nobody retired when the fund was on a high because nobody thought it was going to drop by 6% over a three month period. And apparently there are enough people worried about it dropping into the double digits that they're making a run on the bank.

You are grasping.

These guys are bailing because of the threat of bankruptcy and the haircut they will take on their retirement account if BK happens, and everyone knows it. The contract administration team at APA has been inundated over the past couple of months with calls and emails from gummers wanting information on what will happen to the A-plan in bankruptcy. Base chiefs have also been barraged with questions about BK and more guys are expected to go (those that foolishly were not locked in) Oct. 1st than did yesterday.

The company is now grossly understaffed for 777 Captains. I'm sure they will be asking for "relief" in short order. I'll bet we will be happy to grant relief after all they have done for us.

 

[WorldTraveler]

I'm not sure about the other airlines, but the sole reason why DL terminated the pilot pension plan but not the others was because it contained a lump sum provision that allowed pilots to take out up to 50% (I believe) of their benefits at retirement.... because of this there were enormous numbers of DL pilots who left early, the pension liability because of the lump sum benefit could not have been overcome, and many of the DL pilots who took the lump sum payout founded out that the lump sum benefit would be all they were getting because it was in excess of what they would have been allowed under the plan after it was turned over tot the PBGC it they had not taken the lump sum.
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There will be some who will continue to believe that AA operates differently than the rest of the industry but we have seen a spike in retirements at every other airline as bankruptcy looms. Whether the pension benefits themselves are secured is not near as relevant as that the company could and likely will change other terms of the pilot contract - and every other employee group's as well - that may make bankruptcy a lot less attractive.
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There is no rational person that would stick w/ a company through bankruptcy and the cuts that are bound to happen if they can get out now.
Lots of those pilots undoubtedly have been doing the math for a long time and as negotiations have deteriorated and the threat of BK has become more real decided they are likely to lose less if they go now than if they wait and "chance" what might come after BK. It is a lose-less proposition. And the calculcations are going to be different for every person.
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And yes Fluf the operation will suffer as large numbers of personnel adjustments take place... it happens every time and is part of the BK effect on revenue. The benefit is that BKs usually happen in the fall, likely will here, and are and will be followed by cuts in flying that otherwise would have been needed.
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The media hasn't had a major airline BK to dwell on for several years now so the noise will be deafening. Be prepared for it and it will be painful to hear; they will turn every operational issue into a sign that the wheels are falling off the wagon; the fact that AA will be the only major airline in BK will make it all the more difficult.
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ALL AA people should be sharpening their pencils and refining a budget that contains cuts in salary and benefits well into the double digits.... 2003 wasn't that long ago and I believe there were stats then that the number or personal bankruptcies in the DFW area soared. Many of those people are still scraping to get by; a 2nd round of cuts could be devastating to a lot of people. Being as prepared as possible is the only course of action at this point.