APA: No lump sums for retiring American Airlines pilots now

[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.

 

[densoo]

If the pensions are terminated, EVERYONE will lose their pensions, including management.

Somehow I think that management has pension money not technically called "pension" which will be well protected no matter what. They know how to take of themselves.

 

[ualdriver]

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!

True. But the estimates that are in the BILLIONS are probably from the PBGC because they are looking at plan assets now in present dollars vs. what AMR would need "tomorrow" in future dollars to pay promised benefits and subtracting those two numbers. That number will be in the billions. That doesn't mean that AMR would need billions TODAY to bring the pensions up to minimum funding levels. The plans have assets that would grow (hopefully!) over the years and decades to cover those billions of dollars with AMR contributing the difference needed. It isn't going to take AMR billions of dollars TODAY to bring the needed present value of the pensions up to minimum funding levels.

 

[ualdriver]

Somehow I think that management has pension money not technically called "pension" which will be well protected no matter what. They know how to take of themselves.

I don't know what the AMR management guys have going for them, but the UA guys lost theirs just like us. True, they're going to get a piece of the reorganized AMR in the form of newly issued stock- but so will the pilots. They'll probably have one of the biggest claims against the company. Key management personnel will also get "retention" bonuses/salary whatever so that they don't leave in the middle of bankruptcy. That's sucky too because they'll get a nice little package and labor won't. Management knows airline labor isn't portable and therefore won't leave so labor doesn't need enticement to stay.

 

[ualdriver]

duplicate

 

[HA25]

I don't know what the AMR management dudes have going for them, but the UAL management guys lost theirs just like we did. Also, an airline has llots of management. Only a few are executive suite types with fat salaries. Many are just like us who made an investment in their careers and are just trying to make a living. I feel bad for those guys as they're in the same situation as labor.

usually when an airline pilot talks about management he's talking about the CEO, and the executive suite.... not the Director of Ops, Chief Pilot, or Ramp manager.... those people are about as much management as a Captain is in effect... they're part of the chain of command at an airline.... but COMMAND central is management.. In many cases the Board of Directors also.

 

[densoo]

I don't know what the AMR management dudes have going for them, but the UAL management guys lost theirs just like we did. Also, an airline has llots of management. Only a few are executive suite types with fat salaries. Many are just like us who made an investment in their careers and are just trying to make a living. I feel bad for those guys as they're in the same situation as labor.

You're right and I was overly broad in my use of "management." I've heard that life for the mid-level folks at UAL are brutal right now with the do-more-with-less management style. Long hours and no safety net. Lots quitting or getting let go. I suspect this is coming to AMR soon. And while unionized labor will take it in the shorts at least they've got advocates in the union and the lawyers they hire to get some protections.

 

[densoo]

usually when an airline pilot talks about management he's talking about the CEO, and the executive suite...

Yup. Thanks.

 

[laker4284]

A few more factoids -

The company,while in bankruptcy proceedings, may pick and choose which employee pensions it terminates. The record shows the pilots at other companies in bankruptcy taking it up the rump while other groups are untouched. Why? Because there are far more $ at stake in the pilot pensions, dollars that the airline would dearly like to take off the books.

American says their plans (4, with the pilots being the biggest) are $5 billion underfunded. The PBGC says the underfunding is $10.2 billion. The funds are presently funded to the tune of $8.3 billion, with obligations of $18.5 billion.

Any way you cut it, it's ugly and it will take a miracle for the pilots to protect their pension; or if not a miracle, then a drastic cough up of wages and benefits.

 

[Andy]

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

Assuming your $1.7million lump is correct (I have no reason to doubt your number) and a pilot chose to work until 65 at $250K/yr, that pilot paid/is paying $450K or $90K/yr for the privelege to work beyond age 60.
Revenge is a dish best served cold. That was delicious.

For those under age 60, I'm sorry for the loss of your pension. For those over 60 who chose to stay, I offer you this youtube link: http://www.youtube.com/watch?v=X6xSDBd4XfQ

 

[LHRCrewDog]

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."

Hey Waveflyer,

Have you read this book yet? I am in the middle of it. I remember a USAirways pilot talking about this when Siegel, I think, was trying to dump the pensions. Management screwed everything up, took the money they wanted and blamed it all on overpaid employees with pensions. Pretty bad...