APA: No lump sums for retiring American Airlines pilots now

[waveflyer]

APA: No lump sums for retiring American Airlines pilots now

By Terry Maxon/Reporter
[email protected] | Bio
6:42 PM on Wed., Nov. 30, 2011 | Permalink
American Airlines had an abnormally high number of pilots retire recently as the stock market declined and fears about an AMR/American bankruptcy rose.

Pilots worried that AMR would file for bankruptcy headed out the doors, and took their pension from Plan A, the defined-benefit plan, as a lump sum.

It appears they may have made a wise choice. With American's and AMR's filing of bankruptcy papers Tuesday, that option is now foreclosed. Here's what the Allied Pilots Association advised its members Tuesday evening:

"Please be aware that today's Chapter 11 bankruptcy filing by AMR will block the A Plan lump sum option for pilots retiring today or thereafter.
"If you have locked in a Benefit Commencement Date of Dec. 1 and would like to change to a later date, you must submit a new Pilot Election of Early Retirement Form or Revocation of Early Retirement Form no later than 3 p.m. Central tomorrow, Wednesday, Nov. 30.

"Otherwise, you will be retired effective Dec. 1 and will receive your A Plan benefit as an annuity. If the A Plan is subsequently terminated, the annuity would then become subject to Pension Benefit Guaranty Corporation limits."

Between Sept. 1 and Nov. 1, 2012, 308 pilots retired, or more than 100 a month. A lot of them took lump-sum distributions from the Plan A pension plan. By comparison, about 11 pilots on average retired each month in 2010.

 

[aa73]

We just had 13 retirements today, Dec 1. Bummer for them and for those who didn't pull the plug earlier....

Now the discussion is leaning towards freezing the A Fund or just terminating it and getting a payout (a la UAL/DAL.) Any words of wisdom on this for those of you who've been through it?

 

[Flopgut]

I'm a CAL pilot and we froze it. Bad idea. Terminate it and get whatever money is there. It's the kind of thing that either needs to be moving like it was designed, or shut down. Anybody who tells you different is really senior, near retirement, and has a lot of years in the plan.

 

[JumpersAway]

I thoughty AA had more pilots over the age of 60, than they did younger than 55. Sounds like a lot of people hung on beyond their ability to retire, only to have it bite them in the rear.

 

[rjacobs]

I heard that the guys that retired in the 90 days prior to the BK filing may or may not get their checks since it takes about 90 days to cut the lump sum checks. Is this true?

 

[bluefin]

Uh-oh, better change the retirement age to 70, need to make up for lost wages!~ What I was told prior to furlough!!!

 

[Fubijaakr]

Well, you've just gotten 8000 more votes for Age-70.

 

[ualdriver]

We just had 13 retirements today, Dec 1. Bummer for them and for those who didn't pull the plug earlier....

Now the discussion is leaning towards freezing the A Fund or just terminating it and getting a payout (a la UAL/DAL.) Any words of wisdom on this for those of you who've been through it?

APA's ability to have a choice in the matter of their pensions is probably done by now. If you guys can negotiate a deal to freeze the pensions, obviously that is the preferred route. The problem is that it has to be properly funded. What is the current shortfall and is the judge and the creditor's committee going to agree to bring it up to proper funding levels? A frozen pension still requires ongoing financial maintenance by the company when it exits bankruptcy. Do you think the company is going to agree to that? Maybe.

It is not even guaranteed that you would get a payout from the company like UAL then DAL did. That was a deal negotiated by ALPA in exchange for going along with the inevitable pension loss. Is the APA going to "play tough" and fight and fight every step of the way, even on issues they will likely lose anyway like many internet tough guys say you should do, or are you going to negotiate and play nice? That will determine, too, whether you get things like a bond worth 100's of millions or nothing.

 

[Flopgut]

APA's ability to have a choice in the matter of their pensions is probably done by now. If you guys can negotiate a deal to freeze the pensions, obviously that is the preferred route. The problem is that it has to be properly funded. What is the current shortfall and is the judge and the creditor's committee going to agree to bring it up to proper funding levels? A frozen pension still requires ongoing financial maintenance by the company when it exits bankruptcy. Do you think the company is going to agree to that?

The company will be delighted to continue to fund a frozen pension! No problem at all. The thing is, new hires won't be included, ever. It's like built in B scale. And, the company gets to use the funding obligations against the entire pilot group's contract at the negotiating table.

F-ing old guys love it too. They won't lift a finger for another pilot, but they sure as hell love it when the whole group has pull for them. Trust me, I'm in this situation. Terminate the plan! Do NOTHING special for the old guys. Everyone will be better off.

 

[Flopgut]

Well, you've just gotten 8000 more votes for Age-70.

Yeah, that's the answer. You ever get tired of acting like a fool?

If anything, this bk and pension debacle perfectly illustrates that being willing to retire has nothing to do with money or income, or what the exact age limit is. Last month these pilots had their retirements intact and were almost 4 years into a fresh retirement age increase. They chose not to leave and it cost them. At what point do you think old pilots ought to take some responsibility for their decisions?

 

[Megadeth]

These Morons have seen the writing on the wall for months but decided to stay and try to milk the cow a few more months. Well guess what Einstein, you just lost your ass. Welcome K-Mart shoppers.

 

[dicko]

They need to turn Arpeys retirement over to the PBGC. I would worship any Bankruptcy Judge that ordered it . I also live in a fantasy world filled with Unicorns and strippers.

 

[laker4284]

The options for the AA pension fund are limited. If the pension is abrogated the funds transfer to the PBGC to use in funding PBGC-backed payments. If that is the track taken, then the older guys will get more funds as the payments are based on present age up to age 65. An early 'retirement', even if involuntary, would pay out about $2000 monthly. For someone 63 that payment would be at or closer to the MAX payment of $4000. Those numbers are approximate but close.

If the union is to fight to keep the pension intact it's going to cost them in wages and benefits - big time. The airline is trying to get costs down and they aren't going to maintain the status quo in bankruptcy. That's just not going to happen.

 

[General Lee]

APA: No lump sums for retiring American Airlines pilots now

By Terry Maxon/Reporter
[email protected] | Bio
6:42 PM on Wed., Nov. 30, 2011 | Permalink
American Airlines had an abnormally high number of pilots retire recently as the stock market declined and fears about an AMR/American bankruptcy rose.

Pilots worried that AMR would file for bankruptcy headed out the doors, and took their pension from Plan A, the defined-benefit plan, as a lump sum.

It appears they may have made a wise choice. With American's and AMR's filing of bankruptcy papers Tuesday, that option is now foreclosed. Here's what the Allied Pilots Association advised its members Tuesday evening:

"Please be aware that today's Chapter 11 bankruptcy filing by AMR will block the A Plan lump sum option for pilots retiring today or thereafter.
"If you have locked in a Benefit Commencement Date of Dec. 1 and would like to change to a later date, you must submit a new Pilot Election of Early Retirement Form or Revocation of Early Retirement Form no later than 3 p.m. Central tomorrow, Wednesday, Nov. 30.

"Otherwise, you will be retired effective Dec. 1 and will receive your A Plan benefit as an annuity. If the A Plan is subsequently terminated, the annuity would then become subject to Pension Benefit Guaranty Corporation limits."

Between Sept. 1 and Nov. 1, 2012, 308 pilots retired, or more than 100 a month. A lot of them took lump-sum distributions from the Plan A pension plan. By comparison, about 11 pilots on average retired each month in 2010.

Here's how it was explained to me. Those pilots, especially over age 60 with 25 years or more with the company could have had a possible lump sum payout of let's say $1.7 million. That's cash in their hands, to do whatever they want. Now, they may still get a payout from the PBGC, maybe up to $80K a year, but as soon as they die, that stops. That also means their kids or 4th hot Brazilian wife don't get to have any left overs. Had they taken the $1.7 million, they could have given that to their kids and/or hot wife upon their death. NOT ANYMORE.

How could these guys NOT see what was happening? Now some will have to fly until 65, and lose money in the end for their loved ones. Oooooops.

One more month.......I love those Buenos Aires layovers......ONE MORE MONTH..... OOOOOPS.



Bye Bye---General Lee

 

[General Lee]

Well, you've just gotten 8000 more votes for Age-70.

As FOs, maybe. That's the way they do it in the UK. They can still work, and that preserves upgrades. Just not hiring.


Bye Bye---General Lee

 

[slaquer5]

Here's how it was explained to me. Those pilots, especially over age 60 with 25 years or more with the company could have had a possible lump sum payout of let's say $1.7 million. That's cash in their hands, to do whatever they want. Now, they may still get a payout from the PBGC, maybe up to $80K a year, but as soon as they die, that stops. That also means their kids or 4th hot Brazilian wife don't get to have any left overs. Had they taken the $1.7 million, they could have given that to their kids and/or hot wife upon their death. NOT ANYMORE.

How could these guys NOT see what was happening? Now some will have to fly until 65, and lose money in the end for their loved ones. Oooooops.

One more month.......I love those Buenos Aires layovers......ONE MORE MONTH..... OOOOOPS.



Bye Bye---General Lee

I know of several that have just got divorced . They are in there late 50s or early 60 s. Did there Ex get there share of the A fund at the signing of the divorce ?


I know CAL had something like this.

 

[Fubijaakr]

Geez, Flopgut, you are a humorless git. Guess you need a "sarcasm" tag every time.

 

[waveflyer]

RETIREMENT HEIST, Ellen Schultz


"'As far as I can determine there is only one solution [to the CEO's demand to save more money]', the HR representative wrote to her superiors. 'That would be the death of all existing retirees.'"

It's no secret that hundreds of companies have been slashing pensions and health coverage earned by millions of retirees. Employers blame an aging workforce, stock market losses, and spiraling costs- what they call "a perfect storm" of external forces that has forced them to take drastic measures.

But this so-called retirement crisis is no accident. Ellen E. Schultz, award-winning investigative reporter for the Wall Street Journal, reveals how large companies and the retirement industry-benefits consultants, insurance companies, and banks-have all played a huge and hidden role in the death spiral of American pensions and benefits.
A little over a decade ago, most companies had more than enough set aside to pay the benefits earned by two generations of workers, no matter how long they lived. But by exploiting loopholes, ambiguous regulations, and new accounting rules, companies essentially turned their pension plans into piggy banks, tax shelters, and profit centers.

Drawing on original analysis of company data, government filings, internal corporate documents, and confidential memos, Schultz uncovers decades of widespread deception during which employers have exaggerated their retiree burdens while lobbying for government handouts, secretly cutting pensions, tricking employees, and misleading shareholders. She reveals how companies:
* Siphon billions of dollars from their pension plans to finance downsizings and sell the assets in merger deals
* Overstate the burden of rank-and-file retiree obligations to justify benefits cuts while simultaneously using the savings to inflate executive pay and pensions
* Hide their growing executive pension liabilities, which at some companies now exceed the liabilities for the regular pension plans
* Purchase billions of dollars of life insurance on workers and use the policies as informal executive pension funds. When the insured workers and retirees die, the company collects tax-free death benefits
*Preemptively sue retirees after cutting retiree health benefits and use other legal strategies to erode their legal protections.

Though the focus is on large companies-which drive the legislative agenda-the same games are being played at smaller companies, non-profits, public pensions plans and retirement systems overseas. Nor is this a partisan issue: employees of all political persuasions and income levels-from managers to miners, pro- football players to pilots-have been slammed.

Retirement Heist is a scathing and urgent expose of one of the most critical and least understood crises of our time."

 

[whymeworry?]

I have sympathy for the guys who were too far from retirement to make the call. But for the guys who were 55-65 and already had a 7-figure nut in that plan, to NOT pull the trigger when your company fails to make money in the best of times AND the stock is down 90%, that's just plain stupid. Gambling is stupid. And that's what they did, gambled that all would be OK.

They could have taken the $1-2 million plus lump sum payment and gone overseas as a contract pilot making more money TAX-FREE than they've ever made at American... if working was so important to them. I talked to a few of these guys over the past 6 months. All tell me, "I'm not going overseas, fk that!" Well, fine, but you made your bed, now deal with it.

I love flying jets, but the rest sucks. Hotels, TSA, poor sleep schedules, surly and old FAs, a bought and paid-for FAA, management constantly breaking the rules, the list goes on. I wouldn't debate it even for a second if I could pull the trigger. Which is exactly why so many did.

They're laughing all the way to the bank. And good for them for doing so. They let common sense prevail over greed.

 

[Flopgut]

Guess you need a "sarcasm" tag every time.

Yes. About retirement age I do...

 

[zonker]

Yeah, that's the answer. You ever get tired of acting like a fool?

If anything, this bk and pension debacle perfectly illustrates that being willing to retire has nothing to do with money or income, or what the exact age limit is. Last month these pilots had their retirements intact and were almost 4 years into a fresh retirement age increase. They chose not to leave and it cost them. At what point do you think old pilots ought to take some responsibility for their decisions?

BRAVO!!!

and well said.

 

[ualdriver]

The company will be delighted to continue to fund a frozen pension! No problem at all. The thing is, new hires won't be included, ever. It's like built in B scale. And, the company gets to use the funding obligations against the entire pilot group's contract at the negotiating table.

F-ing old guys love it too. They won't lift a finger for another pilot, but they sure as hell love it when the whole group has pull for them. Trust me, I'm in this situation. Terminate the plan! Do NOTHING special for the old guys. Everyone will be better off.

I don't agree with that. The company would not be delighted with a frozen pension. If the pension is frozen, they will have to continue to keep it funded AND while in bankruptcy, they're going to have to bring it up to whatever minimum funding level is required by law. I don't know how much it is underfunded currently, but I thought I read somewhere that it was underfunded by a few hundred million. Maybe an AA guy knows. AMR went into the bankruptcy with quite a bit of cash. Maybe the APA guys will be able to cut a deal. We'll see.

I would bet money that if AMR has their way, they'll say they can't afford to fund it and then the PBGC will take it over. That is the worst case scenario for the AMR guys.

 

[ualdriver]

They need to turn Arpeys retirement over to the PBGC. I would worship any Bankruptcy Judge that ordered it . I also live in a fantasy world filled with Unicorns and strippers.

If the pensions are terminated, EVERYONE will lose their pensions, including management. If Arpey has a pension and it was not held outside of AMR, his is gone too. If it makes you feel better, when my airline went through its bankruptcy and the pensions were taken over by the PBGC, lots of management personnel got screwed, just like everyone else.

By the way, Arpey already has a new job with his buddy Bethune. He was unemployed for about a day. He probably will be completely unaffected personally whether he keeps his pension or not. It's nice being the King, huh?

 

[warbirdfinder]

Don't be too sure management would loose their pensions also. At Delta they protected the pensions of 34 upper management.
And don't believe you will get much from the PBGC.

 

[waveflyer]

If the pensions are terminated, EVERYONE will lose their pensions, including management. If Arpey has a pension and it was not held outside of AMR, his is gone too. If it makes you feel better, when my airline went through its bankruptcy and the pensions were taken over by the PBGC, lots of management personnel got screwed, just like everyone else.

By the way, Arpey already has a new job with his buddy Bethune. He was unemployed for about a day. He probably will be completely unaffected personally whether he keeps his pension or not. It's nice being the King, huh?

Yeah, but didn't the same mgmt team stay through bk? Then award themselves a 15% ownership of UAL? Not too worried about pensions with that type of power

 

[laker4284]

The General's source s wildly off base. Payouts from PBGC is nowhere close to 80 grand and a spousal survivor is NOT cut off from the bennies if a survivor annuity choice is chosen.

Max PBGC payout for 2012: age 65 - $4653/ survivor annuity $4188; age 55 $2094/ survivor annuity $1884.

This is what the AA guys and dolls are staring at and what the UAL and US Airways peeps have already suffered through.
Stick to the facts. It's all in the PBGC tables and readily available on line.

 

[laker4284]

Pension underfunding at AA is jot in the millions; it's in the BILLIONS for the 130,000 employees - somewhere between 5 and 10 billion according to Reuters and another source. I' ve got to split but will track down accurate numbers later today. BEWARE the rumor boards as they are full of misinformation!

 

[HA25]

We just had 13 retirements today, Dec 1. Bummer for them and for those who didn't pull the plug earlier....

Now the discussion is leaning towards freezing the A Fund or just terminating it and getting a payout (a la UAL/DAL.) Any words of wisdom on this for those of you who've been through it?

I have two close friends at AA.. one pushing 58 that's in the 1000's, and the other only 50 in the 300's.... the younger stuck it out cause it made sense to.. the older punched out 2 months ago and hated having to do it.... at least he did the right thing financially now and feels a bit better about giving away 6-7 years of flying/earning.

this is so Sad... I pray there is justice for APA pilots at the end of the tunnel.

 

[HA25]

Pension underfunding at AA is jot in the millions; it's in the BILLIONS for the 130,000 employees - somewhere between 5 and 10 billion according to Reuters and another source. I' ve got to split but will track down accurate numbers later today. BEWARE the rumor boards as they are full of misinformation!

and nothing against other work groups but this goes to a point I made earlier about one of the things broken about airlines today.... and yes, I know WN has all of this too, but WN has major cost advantages as well with their business model.

The fact that people spend 30 years working the ramp, or working the gate and get pensions is ludicrous. These are jobs, not careers.... people should do this work while going to school, maybe as a 2nd job/income or a wife returning to work after raising kids.. not as a primary career.. the massive costs that airlines have to bear just to operate the most basic and unskilled parts of their operation are unrealistic all while trying to properly compensate pilots and mechanics the true licensed and experienced professionals that need to be well compensated;.

 

[densoo]

I have sympathy for the guys who were too far from retirement to make the call. But for the guys who were 55-65 and already had a 7-figure nut in that plan, to NOT pull the trigger when your company fails to make money in the best of times AND the stock is down 90%, that's just plain stupid. Gambling is stupid. And that's what they did, gambled that all would be OK.

The problem is that very few think long term, but can only think short term. When most look at their monthly expenses they essentially say to themselves that they need to keep getting that monthly income, now. If you retire that monthly income stops and you've got to start managing a fixed pot of money that's got to last you and your family to the end. Very few are willing to face this even in the face of obvious signs that you are about to lose that lump sum that could have, ironically, secured your future. They want that next paycheck to pay bills.