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Thread: Too many AA pilots will retire....

  1. #1
    Registered User NoOtPilot's Avatar
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    Too many AA pilots will retire....


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    American Airlines filed a motion Friday in U.S. Bankruptcy Court to take away a pilot?s option to collect his or her pension as a lump sum rather than in monthly payments.

    In its memorandum of law in support of the motion, American said that option would be too attractive for pilots once they can again exercise that option. They can?t while American is in bankruptcy, but they could do so when American emerges (probably in 2013).

    American said if the pilots can take their pensions as a lump sum, ?it would fuel a massive wave of pilot retirements. These retirements would create a pilot shortage which, in turn, would result in an operational crisis involving the wholesale cancellation of flights and the grounding of airplanes, with a corresponding devastating reduction in revenue and profitability.

    ?In short, if American cannot eliminate the principal motivation for this wave of retirements and preserve its ability to meet its business plan by enacting the Amendment, it will have no choice but to terminate the Pilot Plan,? American said in the memo.

    The motion is part of a complex set of interrelated maneuverings designed to avoid having to terminate the pension plan and dump it on the Pension Benefit Guaranty Corp.

    Last February, American proposed terminating the plan because of the lump-sum option, since federal law doesn?t allow a company to change a pension plan to take back a promised benefit like that option.

    But American and the PBGC agreed to seek some legal changes needed so that American could freeze the plan, meaning that pilots would keep their pensions earned to that point, but wouldn?t accumulate any more benefits. And it would mean that the PBGC wouldn?t have to take over the plan.

    The airline and agency worked with U.S. Treasury officials to come up with revised regulations to allow the elimination of such a benefit. The exemption would apply in cases where the pension is underfunded, the plan sponsor is in bankruptcy and the retention of the benefit would threaten the plan.

    The pension plan?s actuary has certified that the plan is underfunded, and American asked the PBGC on Nov. 10 to attest that the lump-sum option meets the new regulations requirement. The last step is to get U.S. Bankruptcy Court approval.

    In the filing, American spelled out the difference between having the lump-sum option, as was available before the Nov. 29, 2011, bankruptcy filing, and afterward:

    ?In 2011, retirement of active pilots prior to the filing of American?s chapter 11 case averaged about 33 retirements per month, and 99 percent of the retirees chose the lump sum option,? the filing said. ?Since American commenced these chapter 11 cases and lump sums have been unavailable under the Pilot Plan, the retirement rate has fallen by half, to about 16 per month.?

    Furthermore, ?Considering that nearly all retiring pilots select the lump sum option, the decline in retirements during the pendency of American?s chapter 11 cases logically is based, in large part, on the unavailability of that option. Accordingly, when American emerges from chapter 11, in the absence of the Amendment, those pilots who delayed retirement hoping for reinstatement of the lump sum option will retire promptly.?

    American further hypothesized that other pilots would perceive that the lump-sum may go away ? because the plan fell below a certain funding level or otherwise had the option taken away ? and would decide to retire before that happened.

    ?In short, if the lump sum benefits were available upon emergence, it is only reasonable to conclude that many retirement-eligible pilots would decide that ?a bird in the hand is worth two in the bush.? Indeed, given the perceived risk of future benefit losses, American would expect many pilots to view their choice as between two birds in the hand and one in the bush.

    ?Many undoubtedly would seek the certainty associated with securing a lump sum benefit promptly rather than deferring retirement and relying on continued monthly payments a plan that would be subject to the risks attendant to the vagaries of the airline business and the economy in general.?

  2. #2
    Site Owner Mr.Lucky's Avatar
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    0 Not allowed! Not allowed!
    I am surprised they didn't hold this request until the TA was voted on, and then file the motion.

  3. #3
    Registered User Flugschlafen's Avatar
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    Hello? AA? Yes, I just wanted to remind you of the ****load of AE pilots who have been waiting the better part of the decade to flow. Crisis averted. You're welcome.

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    Registered User ardvark's Avatar
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    like they dont know that, but does not suit there need
    to cancell the lump sum pay out. if all take the lump
    sump payout, the A fund will be underfunded by 60%
    (my guess) minimum and the goverment does not want
    the AA A fund on there books.

  5. #5
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    Too many former eagle pilots will degrade/pollute the "World's Greatest Pilots!"

  6. #6
    Registered User Divine Wind's Avatar
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    Quote Originally Posted by SlowHand View Post
    Too many former eagle pilots will degrade/pollute the "World's Greatest Pilots!"
    Which is why, after the numbered flowthroughs and furloughees have been called, classes will be 50% newhires from other regionals.

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