Full retro is a must, but everyday that goes by, the company is going to say they don't have the cash to provide a lump sum and will try to weasel out. They've painted themselves into a corner with retro, after all, a billion dollar lump sum payout is going to be hard to sell to shareholders and you can be sure they'll use every excuse not to pay.
That said, no way they should let off the hook, that's money they owe the pilots. When the contract became amendable, I don't think anyone considered giving these guys a free loan or worse, forgiving that debt.
In a recent conversation, the idea of amortizing retro came up that's interesting.
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Assumptions:
As an example, let's say pay increased by 20% in your fleet and seat. On the UAL side, amendable date was April 2009 and at as of today it's hard to imagine a ratified agreement before April 2012. So for easy math 36 months of retro. Also for easy math below I'm using guarantee of 75 hours, but obviously actual pay records for monthly credit would be used.
(Current Rate x 1.2) - Current Rate = Hourly Raise
(Hourly Raise x 75hr guarantee) x 36 Months = Retroactive pay
Let's say the contract was amendable in 48 months, then:
Retroactive pay/48 months = Monthly Retro Pay in the new contract addition to new pay rates.
Potential Benefits:
- The company would have a difficult argument trying to reduce of eliminate full retro as it avoids a lump sum payout.
- Could potentially reduce the tax burden to a pilot of a (single year) lump sum payout.
- Forces the company to pay benefits (B/C plan) on retro which it may try to avoid with a lump sum payout/signing bonus.
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This model is thrown out for the sake of discussion only, I realize that this is a horrible model for a pilot reaching 65 before the amendable date of the next contract. (in that case maybe a lump sum of the balance at retirement?)..