I HAVE a boat I can throw in.. it needs as much work as the Ghia though...

 

LOL,

Cheers
George

 

No need to change my own tires lol but the Opel would make for a good grocery getter

 

Nice shorts T.

 

That would be great. I didn't get a warm and fuzzy reading the latest pre-AE note especially relative to the 4% Atlantic capacity pull down. But if we get some EASK love for the summer as well as no more 24 hour short call and all short call counting as duty, that could make some magic happen in the next (MOA?)AE.

 

No more 24 hour rsv and short call counting as duty. I'm sure the FAA will give the airlines a healthy 3-5 year phase in of the new rules...

 

T & 88, or 88 & T,

ESKM = Equivalent Seat Kilometers.

How we compare to our JV partners that operate in that silly metric system (Kilometers = KM) versus the nautical mile equation that we still use. (RPM = Revenue Passenger Miles)

This is supposedly what makes the A-380 hopping the pond such good business for us. (i.e. 500 seats on an A-380 = two (~245 seat) 763's crossing for Delta.)

That's my take anyway. Someone else jump in if I'm totally off my rocker.

Fly safe,

GJ

 

Ops stats (Credit Mike Boyd, Data Miner):

 

Bet ya you get a different sort of response out of him.

 

Here is some good info on the previously negotiated away D&S Plan.....



What follows is an extensive explanation of a benefit most of you NEVER KNEW we had. I wrote this piece in bankruptcy, (Spring 2006), just prior to the pre-merger Delta pilot's vote on Letter 51 concessions. YOU NEED TO READ THIS NOW, BEFORE YOU “SUBMIT” YOUR DALPA CONTRACT SURVEY FOR THE FINAL TIME. You have the option to change any answers previously submitted up until the Oct. 24th closing date.

To educate you on this, the MEC's “Delta & Northwest Pilot Contract Histories” contained ONE line on page 18, under “Key Results”. Survivorship plan replaced by $500,000 life insurance.

Question 111.
LIFE INSURANCE - Comparison page 58

A pilot's Company-paid term life insurance benefit is determined by a contractual formula (amount of life insurance coverage changes annually); the 2011 coverage amount is $542,675. The premium that Delta pays on each pilot's behalf for the amount above $50,000 is taxed as imputed income. Upon a pilot's retirement, the amount of Company-paid term life insurance in effect prior to retirement will be reduced to the lesser of the amount in effect immediately prior to his retirement or $250,000; and on each successive anniversary of his retirement, the amount will be further reduced by $50,000. The final reduction will be to $10,000, and the coverage amount will stay at $10,000 for the remainder of the retiree's lifetime.

Then there is question #111, where a pilot chooses from the following:

111. Regarding the Company-paid life insurance benefit, please rank the following in order of importance, with "1" being most important and "4" being least important.
Requiring that the Company reimburse the pilot for tax paid on imputed income
Increasing the benefit amount
Re-establishing a survivorship benefit
No change

Question: Would you be interested in providing your spouse a survivorship benefit in the form of an annuity that pays her each month she/he is alive after you die? What if the “cost” to Delta were minimal?

What if I told you that there is already $995 MILLION in a fund, designed to pay this, and that your union has the ability to negotiate a RESUMPTION of this survivor benefit, at minimal cost to Delta?

I have been blessed to meet and fly with a number of premerger Northwest pilots during the past year. In my cockpit and layover discussions, not a single premerger NWA pilot was aware IF they had a similar type survivorship benefit. But don't feel bad. I'm guessing 98% of the premerger Delta pilots are not aware of what we had either.

Therefore, almost all of you skipped past option #3 as an answer to Question 111.

Sadly, the MEC did nothing to educate you about what we HAD, prior to Delta's bankruptcy. Furthermore, most pilots do not attend a Retirement & Insurance Seminar until they get close to retirement. I do not wish to be insulting; but ignorance can be expensive! I believe the correct #1 choice to question 111 is option 3.

Read the following and see if you agree with me. At least, make an informed decision before casting your vote!

As you read thru this article, understand that the amount of insurance has risen from $500,000 to $542,675. But the net result, 5 years AFTER you retire, is that your heirs receive $10,000 in a life insurance benefit. They could have had 25% of your final average earnings for their life! And this is in addition to any choices you make from your frozen (NWA) defined benefit plan, or your PBGC payout (DAL).

Furthermore, I believe we should STOP funding the first $60 million of our own sick-leave benefits. That should be paid by Delta, not the pilot's D&S Trust fund. This 'may' have changed in the merger, but I am not aware of any changes to our paying the first $60 million in pilot sick leave, either positive or negative, since the merger.

Please notice that the “old” Delta MEC said this insurance “is actually a superior benefit due to the tax considerations “ in selling the concession to the pilots at the time. After the concession, so many pilots were angry at having to pay TAXES on the “imputed value” of the insurance, they demanded ALPA negotiate a change, allowing pilots to voluntarily REDUCE the amount of insurance. So a fully funded survivor annuity benefit was given up by our union, and then many pilots have voluntarily reduced the insurance that replaced it. This was NOT a SUPERIOR benefit in my opinion. Not by a long shot. That's why I wrote the following piece in the Spring of 2006.

Finally, think about money management. You & your spouse may feel totally comfortable managing your money right now. How well will you manage your money when you're 80 years old? How about when you're 90 or 100, if you're lucky to live that long? How will your spouse do in deciding whether or not to invest in corporate bonds versus CDs, versus stocks, when they are 80 or 90. What “if” you and/or your spouse get alzheimers later in life? The beauty of the survivorship benefit is that a check for 25% of your FAE shows up each month and requires ZERO management on your spouses part.

If you agree with me, talk to your local ALPA reps and push this issue. If you're intrigued, pass this along to as many of your fellow pilots and discuss it. Talk about it in the crew lounges.

There is almost $1 BILLION in money already available to resume this benefit for premerger Delta pilots. It shouldn't be that hard to negotiate a NEW similar benefit for our premerger NWA pilots as well.



+++++++++++++++++++
Friends:

Among the many concessions offered to the company in Letter 51, are “savings” of $60 million per year that come from changes to the Disability and Survivorship Plan. In my discussions with many pilots, in the cockpit, via phone and in crew lounges, I have come to believe that many, many pilots do NOT understand the nature of these concessions, and how much YOU are losing via the concession in the change to the survivorship plan. The following is an attempt to provide additional information to you on that subject. MEC discussion from the R&I FAQ is listed in Italics.
Just a note of caution – this letter discusses the changes in the Survivorship portion of our contract. The Retirement section has “survivor benefits” for the defined benefit (DB) & defined contribution (DC) plans that are different from the Survivorship Plan benefits. Do not confuse the two. I am only discussing Survivorship benefits from the D&S Plan. Also, while my 5 years on the MEC provided me a much greater knowledge and understanding of this section of the contract, I am not truly “an expert”. I have attempted to be as factually accurate as possible, commensurate with my understanding of these benefits.

First of all, WHY did the MEC make these changes to the D&S Plan?
Savings from reducing post-retirement survivor benefits prevented other concessions in the PWA.

And

Beginning in 2006, the D&S Trust will also be allowed to pay sick leave for pilots and other legally permissible benefits for pilots, up to a total of $60 million per year.

In my opinion, this is the real reason the MEC made all the changes. They wanted to avoid giving the company $60 million in annual concessions from other areas of the contract, such as pay and work rules. So they are taking $60 million a year from the D&S Plan Trust, and using it as $60 million of our $280 million in annual concessions Letter 51 grants the company. This represents 21.4% of our total Letter 51 concessions.

The first thing to remember in this discussion, is that the D&S Trust is FULLY FUNDED. Providing benefits has cost Delta NOTHING since 1991, and would likely cost Delta NOTHING for many years into the future, long after the company is “wildly profitable”! In the words of former CEO Leo Mullin, the trust was “self funding”, due to the investment performance of the assets in the trust.

From the R&I FAQ:

D&S Trust and Funding (PWA Section 26)
Q34. I understand that the D&S Trust has assets of $1.6 billion. Can these assets be used to pay for other benefits or expenses beyond disability and survivor benefits?

A34. Yes. Beginning in 2006, the D&S Trust will also be allowed to pay sick leave for pilots and other legally permissible benefits for pilots, up to a total of $60 million per year.

And

Our actuarial analysis shows that the D&S Trust will be adequately funded for many years even with these additional payments.

What we are being asked to give up.

One of the concessions we are giving the company is the elimination of Survivorship benefits to ANY pilot on the seniority list, who is not retired, beginning January 1, 2008 and all future pilots. How did the MEC explain these changes?

From the Letter 51 TA FAQ:

In the area of survivorship, we shifted our pre-retirement survivor benefit from an annuity to a life insurance product which not only provides a more secure benefit to our survivors, but is actually a superior benefit due to the tax considerations and adverse pension offsets in the current annuity. In exchange, we substantially reduced our post retirement survivor benefit, though the new benefit will still be industry leading.

And

All others will remain covered by the D&S Plan’s old provisions. Under those provisions, if a pilot dies before retirement, his eligible survivors receive survivor annuity benefits of 25-35% of FAE, depending on the number of eligible survivors, plus $50,000 in basic life insurance, and if he dies after retirement, his eligible survivors receive similar survivor annuity benefits plus reduced life insurance benefits.

Most pilots have NOT done the math. Let me set forth some examples for you to consider. The survivor annuity being eliminated would have provided your spouse ANNUAL income for as long as she or he lives, once you die. How much does this amount to?

For my first example, the “average” pilot is a male married to a female 3-5 years younger. A mortality table will tell you that females will live 2-3 years longer than the “average” male, all things being equal. Therefore, the “average” pilot’s spouse will “survive” for 3-8 years after he dies. I am assuming there are no children under age 18 still living at home.

The following represents 25% of a pilots FAE, with different FAE’s listed for various years the spouse might survive the pilot. There are also pilots married to women 10 or more years younger than the pilot. I have provided examples of the spouse surviving for 3-15 years after the pilot dies, to cover a variety of scenarios. Obviously, our female pilots will want to adjust the examples for their specific situation. Remember, the FAE is a pilot retiring at age 60, at the end of his career, at 767, a 767-400, or a 777 Captain wages. Depending on a pilot’s age, the FAE could be “current” bankruptcy wages, or wages 20+ years from now. I would hope pilots would have several “up” contracts, with 787’s and other “new” aircraft on the property paying higher wages in the future.

Lost 25% Survivor Benefit (SB) if you die after retiring
Years spouse survives pilot
Pilot FAE $160,000 SB= $40,000/yr.
Pilot FAE $200,000 SB= $50,000/yr.
Pilot FAE $240,000 SB= $60,000/yr.
Pilot FAE $280,000 SB= $70,000/yr.
3 years
$120,000
$150,000
$180,000
$210,000
6 years
$240,000
$300,000
$360,000
$420,000
9 years
$360,000
$450,000
$540,000
$630,000
12 years
$480,000
$600,000
$720,000
$840,000
15 years
$600,000
$750,000
$900,000
$1,050,000


Think about your “likely” situation. You retire at age 60 (perhaps a few years later if the law changes). You no longer have a “defined benefit” pension, providing an annuity payment to you (while alive), or your spouse after you die. You do not have a Lump Sum that you received at retirement and invested as a “nest egg” for your security.

You do have social security. For PBGC category PC-4 pilots, you have a PBGC monthly payment coming in, any where from $0 to perhaps a maximum of $3,500 IF the Akaka amendment to pension reform is signed into law. You will most likely have spent “some” of the nest egg you have been able to save on your own, during the years you were alive after retiring from Delta. How much will be left to provide for your surviving spouse? What kind of monthly income will your nest egg provide? What kind of monthly income will social security and the survivor benefit from the PBGC provide? Remember, you’ll be getting Medicare, but likely buying supplemental health insurance, which will drain monthly cash flow.

If this concession were NOT in Letter 51, you could have had a monthly annuity paying an annual amount of $40,000 to $70,000 (or more due to possible future raises) to provide for your spouse! This would have come from a D&S Trust Fund that is currently fully funded. Providing this benefit would cost Delta nothing in the near term and a small amount in the long run when the company is “wildly profitable” after emerging from bankruptcy.

But you need to consider the “other” side of what has been given up. Remember -- this is a “survivor” benefit. What happens “if” you die while employed as an active pilot for Delta? The TA provides your surviving spouse and children (or other named beneficiary) with a $500,000 “tax free” life insurance benefit. But what are you giving up?

In the following two tables, I provide examples of pilots with, and without, young children, and various FAEs. Note the FAEs are lower, because for this example, we are working under Letter 51 wages, the pilot is younger & earlier in his/her career and there have been no “future” raises.

The current contract provides survivor benefits of 25%, (no children), 30% (1 child), and 35% (2 or more children). In the “with children” columns, I assume that 2 children remain at home for 10 years, and therefore the survivor benefit is 35% for the first 10 years, and then the survivor benefit is reduced to 25% thereafter. The FAE could be higher, depending on various situations & scenarios. Also remember that the length of time a surviving spouse will survive will depend on many different, individual, scenarios. If the pilot dies at age 35 and the spouse is 3 years younger, then it is conceivable that the spouse could live for 50-60 years, possibly longer. If the pilot is 50, then the spouse might only live for 30-40 years. If the pilot dies at 59, then a 15-30 year time frame is more realistic.

Lost 25% Survivor Benefit (SB) if you die before retiring – NO kids
Years spouse survives pilot
Pilot FAE $80,000 SB= $20,000/yr.
Pilot FAE $100,000 SB= $25,000/yr.
Pilot FAE $120,000 SB= $30,000/yr.
Pilot FAE $140,000 SB= $35,000/yr.
Pilot FAE $160,000 SB= $40,000/yr.
10 years
$200,000
$250,000
$300,000
$350,000
$400,000
20 years
$400,000
$500,000
$600,000
$700,000
$800,000
30 years
$600,000
$750,000
$900,000
$1,050,000
$1,200,000
40 years
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
50 years
$1,000,000
$1,250,000
$1,500,000
$1,750,000
$2,000,000
60 years
$1,200,000
$1,500,000
$1,800,000
$2,100,000
$2,400,000
70 years
$1,400,000
$1,750,000
$2,100,000
$2,450,000
$2,800,000

And what if you had children at home when you died? The example assumes children remain at home for 10 years, (survivor benefit 35% for 10 years) and then reduces to 25% for the remainder of the spouse’s life. Obviously I could run numerous scenarios, but this demonstrates the additional income the spouse would receive for the FIRST “X” number of years while the children are at home and are “dependents”.

Lost 35%/25% Survivor Benefit if you die before retiring with 2 dependent kids
Years spouse survives pilot
Pilot FAE $80,000 SB= $28k & $20k/yr
Pilot FAE $100,000 SB= $35k & $25k/yr
Pilot FAE $120,000 SB= $42k & $30k/yr
Pilot FAE $140,000 SB= $49K & $35k/yr
Pilot FAE $160,000 SB= $56K & $40k/yr
10 years
$280,000
$350,000
$420,000
$490,000
$560,000
20 years
$480,000
$600,000
$720,000
$840,000
$960,000
30 years
$680,000
$850,000
$1,020,000
$1,190,000
$1,360,000
40 years
$880,000
$1,100,000
$1,320,000
$1,540,000
$1,760,000
50 years
$1,080,000
$1,350,000
$1,620,000
$1,890,000
$2,160,000
60 years
$1,280,000
$1,600,000
$1,920,000
$2,240,000
$2,560,000
70 years
$1,480,000
$1,850,000
$2,220,000
$2,590,000
$2,960,000

So what did pilots get in exchange for giving up this lifetime survivor benefit? The carrot being offered in Letter 51 is $500,000 in life insurance. From the Letter 51 R&I FAQ:

All pilots will initially have $500,000 of group term life insurance while on the seniority list or while receiving disability benefits. Each year, based on future pay rates, this amount could increase. The insurance amount will be the greater of $500,000 or 2,500 times the 12-year captain hourly rate on the highest paying aircraft type outlined in the PWA in effect on January 1 of each year.

And

Upon retirement, the insurance amount will decrease to $250,000 for the first year and then “stair step” down in $50,000 decrements until reaching a floor of $10,000 for the remainder of the pilot’s life.

So how does that compare with our current contract?

Current contract

Letter 51 TA

$50,000 term life insurance until age 60
$500,000 term life insurance until age 60
$ Amount decreases from age 60 to age 65
$ Amount decreases from age 60 to age 65
Age 65 life insurance: $10,000*
Age 65 life insurance: $10,000
Death benefit at age 65 = $0 - $10,000 (MPP offsets)*
Death benefit at age 65 = $10,000
Net difference once you reach age 65: $0 - $10,000 to your spouse/heirs depending on MPP balance. *(Death benefit of $10,000 is reduced by Money Purchase Plan balance in current contract).

Let’s explore what those benefits are that the Letter 51 TA eliminates. Here’s a hypothetical example.

A pilot currently retired, age 62, with a spouse age 55, with FAE of $240,000, can anticipate the following benefits under the current contract and under the Letter 51 TA. If he dies at age 70, his spouse (age 63 at the time of his death) would receive 25% of the pilots FAE for the rest of her life. Assuming she lives until age 85, she would receive payments of $60,000 per year for 22 years, for a TOTAL benefit paid from the D&S plan of $1,320,000. She would receive no life insurance payment of $10,000, assuming the retired pilot had an MPP balance of at least $10,000 at retirement. Total survivor benefit: $1.32 million.

For the active pilot (working post-Letter 51 TA); assume the pilot has a FAE of $200,000, but he is 58 and his spouse is 51. The pilot will enjoy an increased life insurance benefit of $500,000 for TWO years. Assume the pilot retires at age 60, and then dies at age 70. Assuming the spouse lives until she is age 85, what will she receive to live off for the 22 remaining years of her life? The $10,000 tax-free life insurance benefit. Total benefit: $10,000.

It would be up to the pilot to provide ALL the income to support his spouse for the 22 years she lives after he dies. This TA has given away the $50,000 annual income his spouse would have received, pre Letter 51 TA. The net loss: over $1 million dollars!

From the R&I FAQ:
• Previously, survivor benefits were payable only to a pilot’s surviving spouse and/or surviving dependent children and thus, had no value to pilots without a surviving spouse or children. Under the new life insurance, you may name any person and/or any trust as your beneficiary.
• Unlike monthly survivor benefits, life insurance proceeds are not taxable to your beneficiary.

So one needs to compare the new life insurance benefit, with the LOST survivor annuity. The following table shows how long the tax-free $500,000 life insurance death benefit would last while paying various incomes, in place of the lost annuity. It is assumed the $500,000 is invested in a conservative bond fund in order to avoid risk, paying 5% interest. (Currently 10-year T bills are paying 2% & a 30-year T-bill yields 3%.) The initial $500,000 balance, if untouched, would provide $25,000 per year in interest at the end of the first and each subsequent year.

How long would $500,000 last paying the Survivor Benefit annuity amount?

Pilot FAE $80,000 SB= $20,000/yr.
Pilot FAE $100,000 SB= $25,000/yr.
Pilot FAE $120,000 SB= $30,000/yr.
Pilot FAE $160,000 SB= $40,000/yr.
Pilot FAE $200,000 SB= $50,000/yr.
Pilot FAE $240,000 SB= $60,000/yr.
# of years insurance would last
Indefinite

Almost indefinite
32 years
18 years
13 years
10 years

You can see that the TA’s insurance policy would benefit the spouse & family of a pilot, with a low FAE, when the pilot dies. BUT the pilot’s spouse & family (or named beneficiary) only receives the $500,000 IF the pilot dies BEFORE RETIRING. Once the pilot retires at age 60, the benefit drops in stages to $10,000 at age 65.

What will the “average” pilot’s spouse receive in survivorship benefits under the Letter 51 TA?

$10,000. Period.

The $60 million concession is really $400 million

I want to discuss one other aspect of the TA. The amount of the Survivorship concession. Did you do the math? The R&I FAQ states:

the D&S Trust has assets of $1.6 billion

And

If the D&S Trust balance is below $1.2 billion as of any December 31, beginning with December 31, 2010, then on the following April 15, the Company will make a cash payment to the D&S Trust equal to the lesser of 4% of free cash flow or $60 million.

The company will be allowed to take $400 million from the D&S Trust, and NEVER repay it -- $1.6 Billion current funding, declining to $1.2 billion in the future. That is 25% of the assets that have been “self funding” for 15 years!

Let’s do some math. The FAQ says the MEC agreed to this concession in order to AVOID giving $60 million concessions in other areas. The TA will allow the company to pay up to $60 million in pilot sick leave from the D&S Trust fund. Letter 51 has a duration of 3 ½ years. Therefore, $60 million times 3.5 equals a $210 million concession. However if the D&S Trust fund, which currently has $1.6 Billion in assets, and currently pays ALL benefits without depleting the assets, is allowed to go down to $1.2 Billion, then it really is a $400 Million concession; $1.6 billion minus $1.2 billion.

The union is allowing the removal of 25% of the assets in the D&S Trust fund in order to avoid giving $60 million concessions in other areas for 3 ½ years. At the end of the 3 ½ years, the company resumes making up to $60 million payments to the fund, but only if it’s asset balance drops below $1.2 billion.