Airline Biz Blog | Sep 01, 2011
An unusually high number of American airlines pilots retired early as of Sept. 1 -- 111 in all.
As the Allied Pilots Associations points out, 2010's average was 11 per month, with a high of 24 in August 2010. Some other factoids:
* 23 of the retiring pilots are check airmen -- the pilots who make sure other pilots are doing it right.
* 46 of the 111 were Boeing 777 captains, plus another three 777 first officers. About one in every four 777 captain based at D/FW Airport retired.
* The average age, by my calculations, was just under 61. The youngest was a Dallas-based pilot who turned 54 in August. Eight were 63. Less than 20 were under age 60. The bulk fell in the 60 to 62 bracket.
* The average seniority among the retirees, by my calculations, was 29 years. The list included three 777 captains -- one from D/FW, two from Chicago -- with 35 years' experience, and another that would have hit 35 years in October.
As American Airlines pilots know intimately, their B Plan has an interesting feature. A pilot can lock in the value of the B Plan shares backwards for 60 days. If the shares fall sharply, they can retire and still get the shares' value from 60 days before their retirement.
The B Plan shares this summer have dropped a lot, like the entire market, and quite a few pilots decided to take their retirements now rather than hope the B Plan shares recover in value in the near future.
As more than one pilot pointed out to me in the past few weeks, a long-time pilot with a lot of money in the B Plan could have seen the value of those shares drop $200,000 or $300,000 in the past two months. They would have to work a long time just to make up in salary the amount of the decrease in their B Plan accounts.
So why not go now?
That's the B Plan, a defined-contribution plan into which American Airlines contributes an amount equal to 11 percent of a pilot's pay.
Then there's the A Plan, the pilots' defined-benefit plan. There's been a lot of pilot communication back and forth about the possibility of American filing for bankruptcy protection at some point in the future, a step that would likely result in reduced pensions and an inability to withdraw a lump sum upon retirement.
Another reason for pilots to go now rather than wait to see what happens.
Of course, the stock market didn't have a good August, either. There could always be another large group of pilots who decide to retire Oct. 1 if the B Plan shares don't recover from the market's recent dip.
111 American Airlines pilots retire on Sept. 1 : The Airline Zone
It is my understanding that the lookback period may be 90 days rather than 60 per their contract. But, I don't know that for a fact. As an experienced deadzoner, all I can say is take the money and run.