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connies4ever
Topic Author
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AC Flight Attendants Reject Tentative Agreement

Sun Aug 28, 2011 5:44 pm

AC's flight attendants, members of CUPE (Canadian Union of Public Employees) have rejected a tentative labour agreement with the airline. 79% of members voted, and of those, 88% voted against the deal. Main sticking point seems to be going from a defined benefit to a defined contribution pension plan.

http://www.bloomberg.com/news/2011-0...eject-proposed-union-contract.html

http://business.financialpost.com/20...ght-attendants-reject-labour-deal/

A strike vote will be held Sept 4-13.

The pilots union (ACPA) also voted against their own tentative agreement, again largely over the pension plan. In fact, they voted out most of the union leadership, including the chairman.

The sales & service agents have a decision on pensions coming soon as well.

Times could get interesting again at AC real soon.
Nostalgia isn't what it used to be.
 
blueflyer
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RE: AC Flight Attendants Reject Tentative Agreement

Sun Aug 28, 2011 7:28 pm

They need to see the writing on the wall. Defined benefits retirement plans are going the way of the dinosaurs. They can try and negotiate a delay, or negotiate adequate compensation to switch to defined contribution plans, but there's no future for defined benefits.

Quoting connies4ever (Thread starter):
The pilots union (ACPA) also voted against their own tentative agreement, again largely over the pension plan.

I thought the main sticking point for the pilots was the new low-cost carrier management wanted to set up for VFR and leisure routes, with the retirement plan a secondary, but still sore, issue. Unlike flight attendants, pilots were offered a contract where current hires kept a defined benefits plan and new hires would receive a defined contributions plan, if I recall correctly.
 
TheCol
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RE: AC Flight Attendants Reject Tentative Agreement

Sun Aug 28, 2011 7:49 pm

Quoting connies4ever (Thread starter):
Times could get interesting again at AC real soon.

Not really, my bet is that the government will legislate the Flight Attendants back to work if a general strike takes place.
No matter how random things may appear, there's always a plan.
 
YXXMIKE
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RE: AC Flight Attendants Reject Tentative Agreement

Sun Aug 28, 2011 8:51 pm

Quoting blueflyer (Reply 1):
I thought the main sticking point for the pilots was the new low-cost carrier management wanted to set up for VFR and leisure routes, with the retirement plan a secondary, but still sore, issue. Unlike flight attendants, pilots were offered a contract where current hires kept a defined benefits plan and new hires would receive a defined contributions plan, if I recall correctly.

Yes, I believe this is what has happened with the pilots union. Their decision seemed a bit more common sense and practical. I hope that the FA's can come to a similar agreement with regards to their case. As long as the communication channels are still open on both sides then a strike won't happen, if they close for whatever reason then there could be a problem.
 
WestJet747
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RE: AC Flight Attendants Reject Tentative Agreement

Sun Aug 28, 2011 9:27 pm

Quoting TheCol (Reply 2):
my bet is that the government will legislate the Flight Attendants back to work if a general strike takes place.

Couldn't have said it better myself. There is too much a vested interest to allow a stoppage in operations to occur.
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par13del
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RE: AC Flight Attendants Reject Tentative Agreement

Sun Aug 28, 2011 10:06 pm

Quoting YXXMIKE (Reply 3):
Yes, I believe this is what has happened with the pilots union. Their decision seemed a bit more common sense and practical.

Probably due to the fact that if the pilots strike the odds are greater that things will come to a halt versus the F/A's which are more easily replaced.
 
fly2yyz
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RE: AC Flight Attendants Reject Tentative Agreement

Sun Aug 28, 2011 11:57 pm

Quoting blueflyer (Reply 1):
Defined benefits retirement plans are going the way of the dinosaurs.

Might be going the way of the dinosaurs but many of the FAs have been there for 10-15+ years and have been contributing to their retirements in this particular way and would want nothing but to retire with dignity. I guess the pilots may still have this means of saving plans and the FAs just want the same? Who knows....
 
idjim319
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RE: AC Flight Attendants Reject Tentative Agreement

Mon Aug 29, 2011 1:29 am

I believe I understood at one point recently that AC has more retired folks drawing a pension then active staff paying into the scheme. Correct me if I'm wrong on that.

I think any person is a fool to rely on a pension scheme for their retirement. The math just doesn't add up. If your company can't pay, you can't collect.

Until AC sorts out this pension situation one way or another, these labor issues will be around.
 
m11stephen
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RE: AC Flight Attendants Reject Tentative Agreement

Mon Aug 29, 2011 2:33 am

Quoting par13del (Reply 5):
Probably due to the fact that if the pilots strike the odds are greater that things will come to a halt versus the F/A's which are more easily replaced.

Oh yes... In the event of a looming F/A strike airlines can send their Customer Service Agents, Ramp Agents, Mechanics, Reservation Agents, etc. to a two week "express" flight attendant training course and get them qualified to work flights. You really can't do the same with a pilot strike...
My opinions, statements, etc. are my own and do not have any association with those of any employer.
 
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longhauler
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RE: AC Flight Attendants Reject Tentative Agreement

Mon Aug 29, 2011 2:36 am

Quoting idjim319 (Reply 7):
I believe I understood at one point recently that AC has more retired folks drawing a pension then active staff paying into the scheme. Correct me if I'm wrong on that.

You are wrong.

It doesn't matter how many are drawing on their pension plans, and how many are still working. The two are not even remotely related. One common misconception is that current workers paying into a pension plan are paying the pensions of retired employees ... not so.

The biggest problem with pension plans is that while employees are paying their contractually obliged share, large corporations are allowed to take "pension payment breaks" during good times, but during bad times, (like right now) they are crying poor. If they had been paying their share all along, then these bad times would be irrelevant, as the plan is fully funded.

With regard to pensions, the Flight Attendants only want the pension they have been paying for all their career.

But the rejection of the tentative agreement by the Flight Attendants was due to far far more than pensions.

Quoting par13del (Reply 5):
Probably due to the fact that if the pilots strike the odds are greater that things will come to a halt versus the F/A's which are more easily replaced.

Unfortunately, that is one of the drawbacks when being unionized, but basically unlicensed labour. It takes only a week to replace a Flight Attendant ... a little more than that to replace a pilot.
Just because I stopped arguing, doesn't mean I think you are right. It just means I gave up!
 
SafeFlyer
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RE: AC Flight Attendants Reject Tentative Agreement

Mon Aug 29, 2011 6:10 am

Quoting longhauler (Reply 9):
But the rejection of the tentative agreement by the Flight Attendants was due to far far more than pensions.

I would second longhauler on that one. What has come out in the media is only part of the iceberg.

Quoting m11stephen (Reply 8):
Oh yes... In the event of a looming F/A strike airlines can send their Customer Service Agents, Ramp Agents, Mechanics, Reservation Agents, etc. to a two week "express" flight attendant training course and get them qualified to work flights. You really can't do the same with a pilot strike...

Not going to happen. These are all unionized groups at AC and their respective unions would never allow them to go to training or work temporarily as a FA without loosing protection. If they did it, it would be at their own risk.

'Safe
 
connies4ever
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RE: AC Flight Attendants Reject Tentative Agreement

Mon Aug 29, 2011 1:48 pm

Quoting longhauler (Reply 9):
It doesn't matter how many are drawing on their pension plans, and how many are still working. The two are not even remotely related. One common misconception is that current workers paying into a pension plan are paying the pensions of retired employees ... not so.

The biggest problem with pension plans is that while employees are paying their contractually obliged share, large corporations are allowed to take "pension payment breaks" during good times, but during bad times, (like right now) they are crying poor. If they had been paying their share all along, then these bad times would be irrelevant, as the plan is fully funded.

Fully agree on the latter paragraph. Whatever form of pension plan, DBP or DCP, the company should be required to maintain contributions -- if they cannot, they are essentially insolvent. Then in Canada, you'd be looking at CCAA I suppose, or Chapter 11 in the US.

Quoting longhauler (Reply 9):
But the rejection of the tentative agreement by the Flight Attendants was due to far far more than pensions.

Could you amplify on that ? I have read on the AvCanada site that the LCC FA's would start the first 2 years on the same basis as the legacy FA's, but then salary progression would be severely limited. And, of course, only paid for flight hours, i.e., brake release to 15 mins after touchdown. That's if I remember it correctly, of course.

Quoting SafeFlyer (Reply 10):
I would second longhauler on that one. What has come out in the media is only part of the iceberg.

Agree. The media like to point to a single issue the 'the reason', becuase it makes for atidy story, but life is a lot messier than that.
Nostalgia isn't what it used to be.
 
Skywatcher
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RE: AC Flight Attendants Reject Tentative Agreement

Mon Aug 29, 2011 4:58 pm

Quoting longhauler (Reply 9):
It doesn't matter how many are drawing on their pension plans, and how many are still working. The two are not even remotely related. One common misconception is that current workers paying into a pension plan are paying the pensions of retired employees ... not so.

The biggest problem with pension plans is that while employees are paying their contractually obliged share, large corporations are allowed to take "pension payment breaks" during good times, but during bad times, (like right now) they are crying poor. If they had been paying their share all along, then these bad times would be irrelevant, as the plan is fully funded.

I would like to expand on this assertion a bit.

1) The recent low interest rate returns on bonds and flaky stock markets have more to do with underfunding of pensions than anything else. It is this uncontrollable factor that AC (and other legacy corporations) are trying to distance themselves from. Defined contribution plans shift the risk of bad market conditions to employees from corporations.

2) Where would the cash for extra AC corporate contributions to the pension plan come from? AC is already leveraged to the max (their stock market capitalization is pitiful as a result) while profits are poor to non-existant. To mitigate matters further, the minimal profits that do exist will be eaten up by the new contract wage demands.

3) When these defined benefit plans were initiated (in the fifties?) lifespans and retirement terms were much shorter than now. Employee and corporate contribution levels have not kept pace which also contributes to plan underfunding. Basically the ponsi scheme like structure has vastly favoured the people who retired years ago to the detriment of those who are yet to retire.

Ultimately it is only lower fuel costs or higher fares that can fund higher corporate pension payments. I don't see either happening over the long term but hopefully AC will be able to increase contributions as part of a more complex set of changes..

If the defined pension plan is to be maintained the only way to fix the underfunding will be a combination of all or some of the following;

-increase the retirement age.
-increase employee contributions.
-reduce retirement payout rates.
-increase corporate contributions.
-increase pension returns by increasing the risk exposure of the plan assets.

I am not judging which side is right or wrong, these are just the hard facts about defined pension plans.
 
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longhauler
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RE: AC Flight Attendants Reject Tentative Agreement

Mon Aug 29, 2011 5:52 pm

Quoting Skywatcher (Reply 12):
I am not judging which side is right or wrong, these are just the hard facts about defined pension plans.

Thanks. That was very well stated. I have heard long winded versions and that was far easier to read.

Quoting Skywatcher (Reply 12):
-increase the retirement age.

This is something that I think may work. The pilot pension plan, (which for the record is separate from the rest of AC's employees) is also underfunded. But ... it has been shown that simply changing the retirement age from 60 to 62 would return it to "health".

But, that seems to be a hot issue right now, that most don't want to entertain.

One thing that does occur at AC, is the mistrust of management. During the negotiations for all employee groups over the last 6 months, it was apparent that AC wanted all new hire employees on a DC pension plan from a DB pension plan. I certainly understand the reasoning, however ... it also takes more than a decade to realize the savings of such a change. So, when management calls it a "quick" fix ... one tends to be a little suspicious.

It looks more like they are using the current low interest rates, and market volatility, as an excuse to do something that they have wanted to for years. If that is so, then call it so ... don't hide it.

Optics are very poor as well. During these negotiations, management all received bonuses, up to the $5.0M given to the CEO himself. As well as awarding all management pension plans a 15% INCREASE to their DB plans!!! It almost looked like they were trying to make the negotiations fail.
Just because I stopped arguing, doesn't mean I think you are right. It just means I gave up!
 
blueflyer
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RE: AC Flight Attendants Reject Tentative Agreement

Mon Aug 29, 2011 5:53 pm

Quoting fly2yyz (Reply 6):
Might be going the way of the dinosaurs but many of the FAs have been there for 10-15 years and have been contributing to their retirements in this particular way and would want nothing but to retire with dignity.

I can certainly understand and sympathize with that position. They signed up with a specific expectation of their retirement benefits and planned their life(style) accordingly, but for all the reasons outlined above by Skywatcher and then some (thinning of profit margins if any, surge of competitors without the "burden" of benefits, etc...), it is increasingly difficult for companies such as Air Canada to offer defined benefits plans and remain competitive.

The best that the F/As can negotiate, in my opinion, is either a longer phase-in period or a two-tier system whereby current employees are still under a (modified) defined benefits plan and new ones join a defined contributions plan, an approach the pilots refused because they didn't want to be accused of selling out their future colleagues.

In the medium term, I see defined benefits retirement plans reserved only for the wealthiest, most profitable of corporations that aren't run by a management team focused solely on the next quarterly profits report (if they even exist) and for government-run pension-schemes. All other companies will either try and shed their retirement plans altogether or offer only defined contributions plans.

Quoting connies4ever (Reply 11):
the company should be required to maintain contributions -- if they cannot, they are essentially insolvent.

In theory, it makes a lot of sense, but it is a much harder decision in the real world. If a company is forced to go bankrupt because it cannot meet its retirement obligations, employees go unpaid and may even lose their promised retirement (depending on how it is structured and the company is bankrupted). Might it not be better to forgo contribution for a certain period, hope (however futile) for a better tomorrow when the company can make up the difference and not go bankrupt?
If you want to guarantee that companies meet their retirement obligations, I can see only two ways:
a) Make shareholders liable for the payment of retirement funds (and watch investors flee Canada);
b) Nationalize pensions so that every company is obligated to pay a proportional share into a public fund from whence all pensions are paid (some companies will love it, others will hate it).

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