February 4, 2020
What to Know About the Early Out Offer at American Airlines
Sisters and Brothers,
The Company has informed the Association that they are planning to offer an Early Out to Association Members at some point and time under terms and conditions established by the Company.
Why is this not part of the Agreement in Principle:
- As part of the negotiation process over the past several years, the Company has discussed offering an Early Out to Association Members. The Association informed the Company that if we were to agree to an Early Out as part of the contract it would have to be offered by Seniority to any Member in the system who applied. The Company stated they could not agree to such application.
- In the last session, prior to reaching an Agreement in Principle on the terms and conditions of open items that the Association had proposed, the Company indicated that the cost of offering an Early Out during the JCBA was going to cost millions of dollars. The Association did not agree to any cost for an Early Out since it is a program the Company will unilaterally offer and is not part of the collective bargaining agreement. In fact, the carrier could have made the offer at any time, since it was never a part of our negotiations.
- So, an Early Out could be offered by the Company, but since the Company does not agree to offer such Early Out by Seniority as the Association discussed, the terms and conditions of the Early Out will be solely established by the Company.
Many of you have sacrificed much over the years and may have the opportunity to participate in an Early Out, but the Association could not agree to allow the Company to circumvent a Member’s Seniority or allow millions of dollars to be held over our heads in negotiations.
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Changes are focused on benefit subsidies, not retirees.
The IAM National Pension Fund is one of the largest and best-funded retirement plans in the US, with total assets that exceed 18 billion dollars.
This week, beneficiaries received some concerning news as the Plan’s Board of Trustees voluntarily chose to move the IAMNPF into “Red Zone” status. The Fund is projected to remain in that classification for at least one of the next five years, according to a mailing sent out this week.
For the 292 thousand plan participants, the news isn’t exactly as bad as it may sound. For example, the decision will not impact current retirees or any accruals that have already been earned. Instead, most of the changes are related to the way that the Fund collects subsidies from employers.
According to Ryk Tierney, Executive Director at the IAM National Pension Fund, the decision will have limited impact for most participants.
In a video statement released last Friday, Tierney explained that the Board’s decision to downgrade the Fund was voluntary, and was executed as a way to free the program to make reforms that would not have been permitted otherwise.
“Voluntarily declaring Red Zone while the fund remains well-funded at 89% allows the Trustees to implement a plan to strengthen the fund’s financial future,” Tierney said.
According to Tierney, the move “will not affect any accruals that have been earned in the past, nor does it impact the benefit currently being received by retirees or beneficiaries.”
Instead, the major changes expected at the fund are happening at the employer level. The change in status allows the Fund to require employers to commit to subsidies that are slightly larger than in previous years, when the plan was classified in green and yellow zones.
Federal law requires employers to pay a surcharge geared towards improving the Fund’s status following a Red Zone certification.
Beneficiaries are also protected by Federal law that requires the plan to enact a “Rehabilitation Plan.” This will reduce some variable benefits, such as some death benefits, payout time frames and accruals. However, none of these reductions will impact basic benefits collected at normal retirement.
[gdlr_video url=”https://www.youtube.com/watch?v=4bIsO0J_0vI&feature=youtu.be” ]
More information is available at IAMBFO.org.
The IAMAW and IAM District 141 are separate entities than the IAM National Pension Plan (NPP), even though both bear the “IAM” acronym. For those DL 141 IAM represented employees in the NPP, a letter was sent to your homes by the NPP. If you haven’t already received the letter, you will soon. The letter outlines changes that the NPP’s Board of Trustees have decided are necessary to maintain the long term stability of the NPP. IAM District 141 received the information contained in the letter on Friday, April 26, 2019.
Unfortunately, United Airlines attempted to blame District 141 today for the NPP dropping the ball in communicating these changes and stated: “we [United Airlines] were not informed by the IAM in advance.” The NPP, of which United Airlines management has a representative on the NPP Board of Trustees, David Lieb, failed to inform United Airlines in advance. The NPP also failed to inform the IAM’s largest district, IAM District 141, a district with the most active NPP participants, in advance. United’s weak attempt to shift blame and the NPP’s botched rollout of the modifications to our pension plan are BOTH completely unacceptable.
While the NPP remains well funded at 89%, in 2019, it has been certified in the Yellow Zone. The major reason for this is that the liabilities of the plan outweigh the assets, in the long term, and the NPP’s Board of Trustees decided changes are needed to fix this unsustainable condition. Because of this, the Board of Trustees have voluntarily reclassified the plan to be in the Red Zone, so that the Trustees can make changes to ensure the long term stability of the plan, per federal law.
It is not IAM District 141’s responsibility to notify United Airlines of modifications to the NPP. That responsibility falls squarely on the NPP, and more specifically United’s Board of Trustees representative, David Lieb. After all, Mr. Lieb had to approve of the changes to the NPP.
You can be assured that District 141 will do everything in its power to make sure all IAM represented NPP participants receive all the information there is pertaining this matter.
There is a lot of complex information included in the NPP mailings. There is a toll free telephone number 1-866-232-1296 and a website www.IAMBFO.org set up to give everyone more information.
Michael G. Klemm
President and Directing General Chairman
I.A.M.A.W. District Lodge 141
[gdlr_stunning_text background_color=”#f3f3f3″ button=”Download PDF” button_link=”https://iam141.org/wp-content/uploads/2019/04/PDGC-of-IAM-District-141-Michael-Klemm-Response-to-NPP-United.pdf” button_background=”#184ab9″ button_text_color=”#ffffff” button_border_color=”#0d2a6b” title=”PDGC of IAM District 141 Michael Klemm Response to NPP & United” title_color=”#184ab9″ caption_color=”#a0a0a0″]Please Post on Bulletin Boards[/gdlr_stunning_text]