Be kind to your American Airlines flight attendant. This is what they are worred about this week.

Discussion in 'American Airlines | AAdvantage' started by ceieoc, Dec 3, 2011.  |  Print Topic

  1. ceieoc

    ceieoc Silver Member

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    If you were one of 18,000 American Airlines flight attendants, listed below is a bulletin sent out to their members of the Association of Professional Flight Attendants today. For more information, visit

    This is APFA Communications Coordinator Jeff Pharr with the hotline update for Saturday December 3, 2011. APFA President Laura Glading is preparing for Monday’s meeting with the US Trustee where she will petition for a seat on the Creditors Committee.

    The question currently circulating is – ‘Will our travel benefits be taken away? During Chapter 11, everything is subject to reorganizing. While we will not know the outcome until the court approves the final business plan, no other airline has removed their travel benefits through bankruptcy.

    As mentioned in yesterday’s update, we expect speculation as to American’s future from a variety of sources throughout this process, and we will continue to share with you all of the information we have available.

    Questions concerning pensions and retirement continue to be the most frequent inquiries coming in to APFA. A set of Pension questions and answers has been posted on For today’s Hotline, rather than linking to the document, we’ll include the most current pension information within this Hotline.

    Please continue to check the Bankruptcy Section of for the latest information.


    1. What happens to the Pension Plan now that American has filed for bankruptcy?
    Any filing typically does not have an immediate effect on a defined benefit pension plan. Active employees will not lose currently vested pension benefits as a result of bankruptcy and retirees receiving a benefit will continue to do so. As a part of a restructuring under bankruptcy, American could attempt to terminate the pension plan. APFA would vigorously oppose any such action. Even if this happened, the plan would still be obligated to pay all vested and funded benefits for current and future retirees. If the plan did not have sufficient assets to pay for the vested benefits (a “distress termination”), the Pension Benefit Guarantee Corporation would guarantee payment of vested pension benefits, subject to certain regulations and maximums. The Defined Contribution Plan (the 401(k)) is not affected by a bankruptcy filing.

    2. What is the funding status of the Pension Plan?
    The funding level of the Pension Plan is based on the investments of the plan assets. As the market goes up and down, so does the funding level of the Plan. In its most recent filing with the Department of Labor AMR stated that the Flight Attendant Pension Plan was funded at 97%.

    3. Can the Retirement Plan be terminated?
    Under the Collective Bargaining Agreement, the Company may terminate the Retirement Plan only with APFA’s consent. However, if the Company is in reorganization in bankruptcy and meets certain stringent conditions specified in the Bankruptcy Code, including in Section 1113, a bankruptcy court could allow abrogation of the Collective Bargaining Agreement in this respect and permit the company to terminate the Retirement Plan without APFA’s consent. Even if a termination instituted by the company (a so-called “voluntary termination”) is permissible under the foregoing, it may not occur unless it also meets the requirements for either a “standard termination” or a “distress termination,” which are discussed in the following questions.

    In addition, the Pension Benefit Guaranty Corporation (PBGC), the federal government agency that administers and guarantees certain pension benefits, could act on its own to terminate the Retirement Plan (a so-called “involuntary termination”), if it determines that the plan has not met applicable minimum funding standards or will be unable to pay benefits when due, or determines that its possible long-run loss in providing guaranteed benefits under the plan will increase unreasonably if the plan is not terminated.

    The Employee Retirement Income Security Act of 1974, as amended (ERISA), requires that the plan administrator provide 60-day advance written notice to all affected parties of its intent to terminate a plan. If the PBGC is advised that the proposed plan termination violates a Collective Bargaining Agreement and that the termination is being challenged under procedures specified in the Collective Bargaining Agreement, the PBGC will suspend the termination proceeding until resolution of the challenge. However, the PBGC still has the authority to proceed with an involuntary termination, if the requirements of an involuntary termination are met.

    4. What are the requirements for a “standard termination,” and how are plan assets allocated in that event?
    If a pension plan’s assets exceed its liabilities, it may be terminated in a “standard termination.” In a “standard termination,” plan assets are used to purchase insurance company annuities designed to cover all liabilities of the plan (for all active, retired and terminated participants and survivors). The Retirement Plan provides that any assets remaining after such a fully funded termination would revert to the company.

    5. What are the requirements for a “distress termination”?
    If a pension plan’s liabilities exceed its assets, the Retirement Plan may be terminated only in a “distress termination.” A “distress termination” may occur only if the PBGC determines that the entity sponsoring the plan (i.e., the company), as well as each entity in the sponsor’s controlled group of entities, satisfies one of four alternate criteria for a distress termination, pursuant to Section 4041(c) of ERSIA, as follows:

    • The entity is in liquidation in bankruptcy, or the entity is in reorganization in bankruptcy, and the bankruptcy court determines that unless the plan is terminated the entity will not be able to pay its debts pursuant to a plan of reorganization and will be unable to continue in business outside the reorganization process, and the court approves the plan termination, or
    • The PBGC determines that termination is required to enable the entity to pay its debts and continue in business, or
    • The PBGC determines that termination is required for the entity to avoid pension plan costs that have become unreasonably burdensome solely as a result of a decline in the entity’s workforce covered by all of the entity’s pension plans.

    6. If the PBGC does take over the pensions, how is my pension calculated?
    If there have been no improvements to the plan in the last five years, your pension is calculated using the formula in our contract up to the PBGC maximum.

    7. What is the PBGC maximum?
    It varies based upon your age when the PBGC starts paying you. The amount goes up with inflation. For 2011, if you are 65 or older, your PBGC maximum is $4,500 a month, $54,000 a year. If your pension is less than this PBGC maximum, they will cover this amount If you are age 55 when the PBGC starts paying you, your PBGC maximum is $2,025 a month, $24,300 a year. Check out

    8. Will the impact of a bankruptcy on our pensions be different for different age groups in our workforce?
    If you are not yet retired, when the pension is turned over to the PBGC, your pension stops growing. This has a very different impact based upon what you have vested by that date and your expectations for retirement. If you have 40 years of service, your pension is going to be much closer to what you anticipated than if you only have 10 years. In either case, what is vested up to the date of the bankruptcy is not lost, subject to the PBGC Maximum.

    9. I pulled a pension estimate projecting my pension if I retire in two years. Is that dollar amount insured if the pension goes to the PBGC? No. If the pension is turned over to the PBGC, your pension will stop growing on the day AA files for bankruptcy, so your estimate that assumes you will continue to accrue credited service for two more years, is too high.

    10. We currently have several different options when selecting how we want to receive our pension, such as Level Income Option, Period Certain, etc. Will these all still be available options if the PBGC takes over the plan?
    No. Generally, PBGC does not guarantee any monthly pension amount that is greater than the monthly benefit your plan would have provided if you had retired at your normal retirement age. This means that the level income options would no longer be available or severely restricted.

    11. Are the only choices for the court in bankruptcy to turn the pension over to the PBGC (termination) or to keep it as is?
    No, the union and the company can negotiate a wide range of changes. For instance, the company could keep the pension, but we agree to “freeze” the accrual of credit. Your pension stays with AA and all of our current rules, but you will receive your pension based upon what you have accrued only to today, or some date certain, instead of your actual retirement date.

    12. What happens to American’s stock in bankruptcy?
    The shares probably will become worthless or even more diluted in bankruptcy.


    1. What happens to our retirement health and life insurance benefits under Chapter 11 bankruptcy?
    Section 1114 covers Union and non-Union retiree health and life insurance benefits. The procedures are similar to Section 1113.

    2. How are retiree medical benefits affected by a bankruptcy?
    A filing does not have an immediate impact on retiree medical benefits. They are not guaranteed by a governmental agency. However, they are part of the Flight Attendant Collective Bargaining Agreement. A Company may not modify benefits unless APFA agrees to such modification or unless the court specifically authorizes modification. Similar to the requirements that must be met to modify any Collective Bargaining Agreements, the bankruptcy code sets certain procedures to obtain permanent modifications to these benefits.

    Additional questions regarding Retirement should be sent to

    Jeff Pharr
    APFA Communications Coordinator
    817.540.0180 x8308
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  2. John777

    John777 Silver Member

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    Thanks for this. Important to keep in mind that they are going through a rough time.
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  3. garyst16
    Original Member

    garyst16 Silver Member

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    Appreciate this information. I will be flying LHR to LAX on 12/6 and will be extra aware of their situation
  4. NYBanker
    Original Member

    NYBanker Gold Member

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    I always try to be thoughtful to line workers. FAs, and ground crew alike.

    In the spirit of cooperation, maybe the FA union can do their part and will withdraw their Presidential Grievance related to the added work of setting up duvets in longhaul F. It is this kind of long term, repeated behavior on the part of labor that put AA in the place that it's in. AA weathered 9/11, the SARS slowdown, the '08 other network carrier did...but even AA was eventually forced to succumb to labor.

    While no one likes to see loss of wages or benefits, it is b/s stuff like this from their staff that is indicative of the cause of the trouble that AA is in.


    This week American announced their new ‘Turn Down’ service on international flights. When briefed by the company APFA cautioned them that more research needed to be done to ensure this was not going to cause an unreasonable workload for the Flight Attendants, and not in violation of the 777 agreement. The company has chosen to move forward. Therefore, we will be filing a Presidential Grievance and compiling information from the field concerning this service.

    Your feedback will be essential. APFA has created a survey for those Flight Attendants working flights with this service. The form is posted on the Vice President’s page of and is also available by clicking here.

    Although we welcome an opportunity to offer more amenities to our passengers, we must ensure we have adequate time and staffing to perform the service.

    Please be advised that specific issues concerning safety or service procedures should be addressed to your base Chairperson/Vice Chairperson along with the Company, but we ask the you copy any correspondence to Contact information for your Local Leadership can be found on the ‘Base Pages’ section of

    Please continue to read the Hotline for the latest information regarding this issue.

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