John S. Posted April 1, 2003 Share Posted April 1, 2003 Questions for someone like Financial Guy: (1) How are the assets of the Air Canada pension plan shown on the balance sheet when the plan is in a) an actuarial deficiency and solvency deficiency? In other words do the debt figures being reported include any such deficiencies? (2) At least one employee group enjoys pension enhancements that are not part of a normal pension plan, for example the pilot's 'Top Hat'. If these enhancements are funded by corporate general revenue are they in much danger with a possible CCRA restructuring? Link to comment Share on other sites More sharing options...
Guest WA777 Posted April 1, 2003 Share Posted April 1, 2003 "Top Hat" pension enhancement will be wiped out by CCAA...It'll be one of the first things to go....Time to look for another job... Link to comment Share on other sites More sharing options...
Guest GDR Posted April 1, 2003 Share Posted April 1, 2003 Somebody who is more knowledgeble than I am should comment, but I think you're wrong. The top hat is part of the contract and as such it will likely be part of a concessionary contract that will be imposed by the court. In other words, it is likely to be affected but I don't believe it will be wiped out. Link to comment Share on other sites More sharing options...
Guest WA777 Posted April 1, 2003 Share Posted April 1, 2003 As you are no doubt aware the "Top Hat" was funded from general revenue. Under CCAA the court will allow the company to stop funding, from general revenue any discretionary spending (especially pension enhancements). Unfortunately efforts to secure it over the last few years has resulted in only a small portion of it being protected....Meanwhile CCAA will allow the government and politicians to absolutely nail the pilots. It's the opportunity they have been waiting for....standby for your body blow.... Link to comment Share on other sites More sharing options...
dagger Posted April 1, 2003 Share Posted April 1, 2003 I dispute that. It's up to the union. If ACPA takes a proactive, let's-make-a-deal stance, it can shape its own outcome, just as the American Airlines unions did. If it takes a full-pay-till-the-last-day stance, it will probably lose either way: It will either be sandbagged by the government or lead its members to liquidation and EI. I can't read the current ACPA leadership. I hear different opinions both here on bulletin boards and elsewhere. You tell me. Are they up to being creative, proactive as well as shrewd negotiators (knowing when yo old 'em and when to fold 'em), or are they a bunch of horses' rears? Link to comment Share on other sites More sharing options...
Guest WA777 Posted April 1, 2003 Share Posted April 1, 2003 Common sense would suggest that no court in their right mind would order and AC would not consider funding pension "enhancements" while attempting to restructure. Yes perhaps ACPA could be proactive and negotiate relief but don't count on it, I think politicians are working against that....As for the unions' position on what to do...IMO it again seems to be a case of not understanding the severity of the problem until it's too late and control of the agenda has slipped away..... Link to comment Share on other sites More sharing options...
Idle Thrust Posted April 1, 2003 Share Posted April 1, 2003 Dagger, one can only hope but since its inception ACPA's leadership has been incredibly hard-line, intransigent and ... just plain stubborn. Maybe they will see the light now. IT. Link to comment Share on other sites More sharing options...
Guest propwash Posted April 1, 2003 Share Posted April 1, 2003 With pensions being hammered it's time to consider extending the retirement age of the pilots at Air Canada. Will save the company money and make the work force more efficient. Link to comment Share on other sites More sharing options...
Guest bianchiboy Posted April 1, 2003 Share Posted April 1, 2003 How would continuing to pay a senior pilot (most likely a captain on something heavy, making lots of $$$) beyond age 60 save the company money? Wouldn't it be cheaper for the company to let them retire and keep a younger, junior and more importantly lower paid, pilot employed? Don't forget that pilots over 60 cannot fly commercially in several countries, including (but not limited to) the US and France. This makes a pilot over 60 much less useful to the company since they can only do certain routes, and therefore makes having this pilot less efficient from a crewing standpoint as well. If anything, I think there should be some incentives (like retirement packages, though it's probably too late for that at AC, where's the money for it, unless the gov't comes up with something?) offered to the pilots who are close to retirement to go. This would leave positions available for the junior, lower paid pilots. It truly is unfortunate that the pensions are in jeopardy, and for that you have my sympathy, but I cannot see how what you propose could be of any benefit to the company whatsoever. Just my opinion, fire away... p.s. I'm no stranger to the volatlity of the industry, and I really do wish luck to everyone at Air Canada. I have many friends working with you guys, and I truly hope things get settled quickly, and with a minimum of pain for all involved. Link to comment Share on other sites More sharing options...
Financial Guy Posted April 1, 2003 Share Posted April 1, 2003 John, I may be completely wrong with the following answers, but here goes. From what I understand, AC's pension plan is scheduled to undergo an actuarial audit in January 2004. At that time the true amount of any deficiencies will be known. Anything indicated before then would simply be a rough estimate on the part of the company. I could be wrong, but I don't think the current debt figures would show any pension deficiency. As for your second question, anything can happen, as nothing is safe, particularly amounts coming out of general revenues. However, I would agree with someone below who indicated that the pilot's union could save at least a portion of the "Top Hat" if they wanted to. However, if the "Top Hat" is lost, then ACPA will have to try and negotiate it back slowly when AC is back on it's feet again, and out of CCAA. I don't imagine it would end up being like it is currently. Again, anything can happen under the current restructuring. The rest is all speculation. Link to comment Share on other sites More sharing options...
Guest propwash Posted April 2, 2003 Share Posted April 2, 2003 Unfortunately that’s not the way it works. When a 747 captain retires it creates a ripple effect down through the Captain ranks, then the F/O’s, then through the Relief pilot ranks and possibly the hiring of the next new hire. Each pilot affected moves up and assumes the pay and working conditions of the upper position. Basically that one retirement results in approximately 15 pilots pulled off the line for 2 months transition training. Twenty years ago the pilots looked at a more stable and efficient model for pay but the airlines refused to change. Keeping the most highly qualified pilots in position for a few more years would save the airlines millions. The age 60 rule is artificial. It’s time it was changed. Link to comment Share on other sites More sharing options...
Guest bianchiboy Posted April 2, 2003 Share Posted April 2, 2003 With respect, your scenario has some holes in it. I do not exactly know how the pay scale works at Air Canada, so correct me if I am way off base, but I assume that years of service factors into it somehow. There MAY be a ripple effect as severe as you describe (in SOME cases) if someone leaves AND a position is empty, AND the planets are aligned correctly with the seniority and equipment lists, but I seriously doubt that every single person moving up will assume the exact pay and working conditions of the person they may replace. This is simply because it's highly unlikely that the "replacements" (if they are even required; I'll get to that later) are in the next lower payscale/position. If you did a specific analysis of the effect of the 100 pilots at AC closest to retirement leaving, I'm betting you would find that it would be cheaper to let the pilot retire in the majority of the cases, if not all. That is even assuming that there needs to be a new hire to replace the retirement; which brings me to my next point... You are also assuming that there are enough positions for the current number of pilots, and retirements will have to be replaced one for one with new hires. I keep reading here how it's unlikely that AC pilots will be laid off, or if they are, it won't be for long, simply due to the fact that with attrition through retirements, there will be positions available for all the pilots on the list soon. If we assume that with the restructuring of Air Canada, there will be a requirement for less pilots (which unfortunately looks to be the case), what is more cost effective, letting a $200,000ish pilot retire, or laying off a $50,000ish new-hire? Also, you failed to address the issue of over-60s not being able to operate to many foreign countries. This alone makes the pilot less efficient to the company, imho. Link to comment Share on other sites More sharing options...
Guest propwash Posted April 2, 2003 Share Posted April 2, 2003 Well, you’ll just have to take my word that the system operates exactly as I said. The next pilot up assume exactly the pay of the person he/she replaces. The max pay rates are realized at 14 ‘years of service’. However, the difference between a ‘two years of service’ 747 Captain (an impossible situation) and 14 ‘years of service’ is minimal. The vast majority of pilots at Air Canada (which includes the older Canadi>n guys) have way more than 15 years of service. Think about it. One day you have a fully qualified, medically fit 747 Captain with 40 years of flying experience (which is irreplaceable). The next day he’s gone. Unless the airline is getting rid of that specific airplane he has to be replaced. The cost is unbelievable: minimum of 2 to 4 months off the line which includes: ground school, 10 four hour sessions in simulator, Mot license ride, several weeks of line indoctrination flying, final check rides, hotels, meals, and ground school / simulator / check pilots’ pay etc, etc. This to replace one retirement. In a perfect world, one ‘retirement’ would eventually lead to a ‘new hire’. Not today! The most important aspect of our economic situation should be - make the senior guys work their buts off? My question is - Why isn’t Air Canada doing this?? Link to comment Share on other sites More sharing options...
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