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jayunited
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UA Offers FA's $100,000 Dollar Buyout

Mon Sep 15, 2014 11:30 pm

http://www.bloomberg.com/news/2014-0...-flight-attendants.html?cmpid=yhoo

UA is looking for at least 2,100 FA's to take them up on their offer of a $100,000 dollar buyout. What is missing from the Bloomberg article but is posted on Flying Together is UA is looking for at least 1,000 sUA 1,000 sCO and 100 CMI FA's. I think will have no problem hitting their goal of 2,100 FA's especially since UA is finally offer a deal that will make it worth while especially to those FA's who are at or close to retirement age. On Flying Together UA states exits can begin as early as Nov 15,2014 but will be staggers based on operational needs.
 
AT
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RE: UA Offers FA's $100,000 Dollar Buyout

Mon Sep 15, 2014 11:41 pm

It is a good deal if you're already close to retirement--

will they lose pension / retirement benefits if they opt for the deal?
 
Prost
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RE: UA Offers FA's $100,000 Dollar Buyout

Mon Sep 15, 2014 11:47 pm

Far, far better than the deal offered to Delta FAs recently. I hope that those who are close to retirement will be able to take advantage of this largesse. And AT, usually these deals for buyout packages are over and above type deals, to incentivize people to leave.

All in all, I think this is one of the better packages that I've seen, and it sets the bar pretty high for future airline packages.
 
Prost
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RE: UA Offers FA's $100,000 Dollar Buyout

Mon Sep 15, 2014 11:51 pm

Well those junior new hired flight attendants will one day be high paid flight attendants as well. We all didn't start out at max pay.
 
SonomaFlyer
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RE: UA Offers FA's $100,000 Dollar Buyout

Mon Sep 15, 2014 11:56 pm

There is nothing mandatory about it. FAs can take the deal or not. I suspect for that kind of incentive, many at the top of the lists will take the early out.

I'm sure many still fly because they genuinely enjoy it but I'm also sure many fly because financially they have to continue to fly. For them, the extra 100k may make the decision to retire and relax/do something else easier.
 
Okie
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RE: UA Offers FA's $100,000 Dollar Buyout

Mon Sep 15, 2014 11:57 pm

Quoting AT (Reply 1):
It is a good deal if you're already close to retirement--

Only if you would be damn close to retirement.
I do not know if you would keep your insurance benefits but you would have to pay federal, state, and SS taxes on that 100K.
At roughly 50% right off the top in taxes. I am not going to guess the exact value of wages and benefits (insurance) for a senior F/A but that really does not sound to me like a large sum of money when all is considered.


Okie
 
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LAXintl
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RE: UA Offers FA's $100,000 Dollar Buyout

Mon Sep 15, 2014 11:58 pm

Its up to $100,000, not a flat $100,000.

Airline particularly on the sUA is severely over staffed.
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32andBelow
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RE: UA Offers FA's $100,000 Dollar Buyout

Tue Sep 16, 2014 12:01 am

Quoting okie (Reply 6):
At roughly 50% right off the top in taxes. I am not going to guess the exact value of wages and benefits (insurance) for a senior F/A but that really does not sound to me like a large sum of money when all is considered.

50%? I think that is a little high.
 
traindoc
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RE: UA Offers FA's $100,000 Dollar Buyout

Tue Sep 16, 2014 12:05 am

For those not in the know. Why is UA so overstaffed with pre merger FA?

Thanks.
 
Eagleboy
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RE: UA Offers FA's $100,000 Dollar Buyout

Tue Sep 16, 2014 12:05 am

Quoting Prost (Reply 4):
Well those junior new hired flight attendants will one day be high paid flight attendants as well. We all didn't start out at max pay.

Well it does depend on what sort of salary sales the new entrants are on. And with the changes to working conditions the longevity of the career may vanish.
 
Prost
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RE: UA Offers FA's $100,000 Dollar Buyout

Tue Sep 16, 2014 12:10 am

Are you implying that the flight attendant career is going away?
 
Okie
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RE: UA Offers FA's $100,000 Dollar Buyout

Tue Sep 16, 2014 12:17 am

Quoting 32andBelow (Reply 8):
50%? I think that is a little high.

100k is 28% Federal Bracket
100k is 13% State (California)
100k is 6.2% SS, Medicare, SID.
Ok then 47.2% that is roughly 50%

Okie
 
nomadd22
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RE: UA Offers FA's $100,000 Dollar Buyout

Tue Sep 16, 2014 12:24 am

Quoting okie (Reply 13):
Quoting 32andBelow (Reply 8):
50%? I think that is a little high.

100k is 28% Federal Bracket
100k is 13% State (California)
100k is 6.2% SS, Medicare, SID.
Ok then 47.2% that is roughly 50%

No. If they take the deal toward the end of the year, they'll hit the SS income tax limit and won't pay tax on the whole 100 grand. And most of them will be hit with 6 - 8% state tax. None for some of them. A good part of it will also be at a 25% federal rate for most.
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Okie
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RE: UA Offers FA's $100,000 Dollar Buyout

Tue Sep 16, 2014 12:45 am

Quoting nomadd22 (Reply 14):
No. If they take the deal toward the end of the year, they'll hit the SS income tax limit and won't pay tax on the whole 100 grand. And most of them will be hit with 6 - 8% state tax. None for some of them. A good part of it will also be at a 25% federal rate for most.

If you make only 100K per year then you will be at the 28% bracket which is 21% actual but as you indicated the 100k is stacked on at the end of the year which would most likely going to be near 28% total for the buyout.
SS is 117k for 2014, medicare no limit. If you lose your insurance then you would have to add that cost on as well.

There could be outside circumstances that would make that sound like a good offer but it does not sound like a good one to me if you enjoy the employment at UA.

Okie
 
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hhslax2
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RE: UA Offers FA's $100,000 Dollar Buyout

Tue Sep 16, 2014 1:06 am

Would the 100K be taxed at normal rates? I know my lump time off payment when I left my last job was taxed at a higher rate. I'm not a tax accountant, but I could see the US govt and some state govts taxing this lump sum at a higher rate than normal income.
 
Okie
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RE: UA Offers FA's $100,000 Dollar Buyout

Tue Sep 16, 2014 1:16 am

Quoting hhslax2 (Reply 16):
Would the 100K be taxed at normal rates? I know my lump time off payment when I left my last job was taxed at a higher rate

The withholding was probably at the higher rate but you should have recovered the overpayment when you filed your taxes.

Quoting jayunited (Thread starter):
Bloomberg article but is posted on Flying Together is UA is looking for at least 1,000 sUA 1,000 sCO and 100 CMI FA's

The part I find interesting is that there have been previous indications that the CO side was short FA's and the UA side union agreement was not allowing the UA side to move to the CO side even though they were on furlough.
However, the article indicates buyouts from both sides which I guess is to offer equal opportunity for both sides before combining.

Okie
 
ripcordd
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RE: UA Offers FA's $100,000 Dollar Buyout

Tue Sep 16, 2014 1:20 am

Either way a great deal and I'm sure they will get plenty more people that apply than they actual need....
 
etops1
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RE: UA Offers FA's $100,000 Dollar Buyout

Tue Sep 16, 2014 1:29 am

Here is the break down . Buy out begins at 15 yrs of service and is based on $4,000 a year based on years of sevice. Since it begins at 15 yrs . A 15 yr FA will get $60,000 . 15 times 4 equals 60 . And so on and so on . It goes upto $100,000. A FA with 25 yrs or more will get the $100,000. 25 times 4 equals 100. This is all of course before taxes ..
 
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seabosdca
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RE: UA Offers FA's $100,000 Dollar Buyout

Tue Sep 16, 2014 1:32 am

Quoting hhslax2 (Reply 16):
Would the 100K be taxed at normal rates?

It would be taxed at the applicable rate. Given that the $100k would substantially boost a F/A's income, that's almost certainly higher than the rate the F/A would pay normally, but it's still a normal income tax rate, not some special rate.

For instance, if a single F/A's regular pretax income is $60,000, and they take the standard deduction, they would pay the following taxes on their regular income:

0 * $6,250 (standard deduction) = $0
10% * $9,075 = $907.50
15% * $27,825 = $4,173.75
25% * $16,850 = $4,212.50

Total = $9.293.75, for an effective income tax rate of 15.5% on the regular $60,000 of income.

But since the $100k is income over and above the F/A's regular income, it kicks the F/A into a higher bracket, and ends up being taxed at higher rates. In this example, the $100k extra would be taxed like this:

25% * $35,600 = $8,900
28% * $64,400 = $18,032

Total = $26,932, for an effective income tax rate of 26.9% on the additional $100,000 of income. The effective tax rate on ALL of the F/A's income in this hypothetical year would be 22.6%.

Withholding formulas are often not kind to lump-sum payments, so the F/A would likely find that more than 26.9% had been withheld, but he/she would get the extra back at refund time.
 
avek00
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RE: UA Offers FA's $100,000 Dollar Buyout

Tue Sep 16, 2014 1:36 am

Quoting okie (Reply 15):
it does not sound like a good one to me if you enjoy the employment at UA.

This deal is not *really* intended for those who like their jobs at UA -- it's really meant to weed out the more senior legacy UA mamas and papas who have been disgruntled for the better part of 20 years, and won't leave until someone hands them a check that makes up some portion of the pension they lost in the bankruptcy.

Quoting okie (Reply 17):
However, the article indicates buyouts from both sides which I guess is to offer equal opportunity for both sides before combining.

It's offered to both sides largely for political reasons. The intent is to get as many legacy UA FAs out of the system as possible, then get the FAs merged in 2015 under terms more closely following the CO contract.

Quoting traindoc (Reply 9):
Why is UA so overstaffed with pre merger FA?
Quoting Prost (Reply 2):
it sets the bar pretty high for future airline packages.

I'll take these points together. United has been severely overstaffed with FAs ever since the fateful Tilton decision to quickly ground ~100 737s and other aircraft in 2008, on top of the massive fleet reductions in bankruptcy. Instead of offering buyouts or engaging in permanent headcount reductions, pre-merger UA management and the AFA preferred to concoct a scheme whereby a substantial portion of the FA workforce takes extended voluntary furloughs where they don't fly but get 100% free healthcare and other benefits (for a senior-heavy workforce, the health insurance costs can run over $10K/head). This package is intended to end the sh!tshow once and for all, and should not be deemed a benchmark for future packages in other circumstances.
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flyboynk
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RE: UA Offers FA's $100,000 Dollar Buyout

Tue Sep 16, 2014 1:39 am

It's not 100k each, it's up to 100k.... based on 4k for every year of service, so if 10 years then 40k, if 25 years of service then 100k before taxes...
Flyboynk
 
UA444
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RE: UA Offers FA's $100,000 Dollar Buyout

Tue Sep 16, 2014 1:57 am

Quoting avek00 (Reply 21):
This deal is not *really* intended for those who like their jobs at UA -- it's really meant to weed out the more senior legacy UA mamas and papas who have been disgruntled for the better part of 20 years, and won't leave until someone hands them a check that makes up some portion of the pension they lost in the bankruptcy

So then what of the disgruntled ex-CO FAs who are angry that "United ruined Continental" and all of the "we are ex-CONS for life, rah rah rah"? Or do they get to stay, because Jeffie won't hurt "his" side?

Quoting avek00 (Reply 21):

I'll take these points together. United has been severely overstaffed with FAs ever since the fateful Tilton decision to quickly ground ~100 737s and other aircraft in 2008, on top of the massive fleet reductions in bankruptcy. Instead of offering buyouts or engaging in permanent headcount reductions, pre-merger UA management and the AFA preferred to concoct a scheme whereby a substantial portion of the FA workforce takes extended voluntary furloughs where they don't fly but get 100% free healthcare and other benefits (for a senior-heavy workforce, the health insurance costs can run over $10K/head). This package is intended to end the sh!tshow once and for all, and should not be deemed a benchmark for future packages in other circumstances.

The problem has been exacerbated way beyond anything Tilton by Jeff and the gang retiring the 757 fleet gung ho at a break neck pace and using the FA contract to award a lot of the new 737s to ex-CO FAs on their contract. They are also not replacing the planes 1-1 which creates further excess FA's.

I will say the FA unions have not made life easy and definitely need to work together, but management has not made it a walk in the park either.

[Edited 2014-09-15 19:19:45]

[Edited 2014-09-15 19:21:21]
 
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LAXintl
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RE: UA Offers FA's $100,000 Dollar Buyout

Tue Sep 16, 2014 2:09 am

Part of this deal is all FA's out on leave are recalled.

So all those that essentially have been on endless voluntary leave will need to either come back, or quit for good.
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Okie
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RE: UA Offers FA's $100,000 Dollar Buyout

Tue Sep 16, 2014 2:15 am

Quoting avek00 (Reply 21):
Instead of offering buyouts or engaging in permanent headcount reductions, pre-merger UA management and the AFA preferred to concoct a scheme whereby a substantial portion of the FA workforce takes extended voluntary furloughs where they don't fly but get 100% free healthcare and other benefits (for a senior-heavy workforce, the health insurance costs can run over $10K/head).

So am I assuming that the buyouts will forfeit their insurance. At some point in time (as in shortly) the furloughed F/A's will lose their insurance if they do not accept a call back?

Quoting seabosdca (Reply 20):
Withholding formulas are often not kind to lump-sum payments, so the F/A would likely find that more than 26.9% had been withheld, but he/she would get the extra back at refund time.

You left off state, local and SS, Medicare,

Okie
 
codc10
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RE: UA Offers FA's $100,000 Dollar Buyout

Tue Sep 16, 2014 2:19 am

Quoting UA444 (Reply 23):
So then what of the disgruntled ex-CO FAs who are angry that "United ruined Continental" and all of the "we are ex-CONS for life, rah rah rah"? Or do they get to stay, because Jeffie won't hurt "his" side?


Management is basically saying that they can go too, if they wish, and be compensated for it. The airline will still benefit as those who cash out at the top end of the deal will simply be replaced by new-hires on the sCO side making substantially less money. Then, when the AFA sees dilution of the sUA ranks and the likelihood of that (rather anachronistic) contract surviving diminishes, maybe they'll come to the table ready to negotiate in good faith. To date, the joint representation by AFA has been marked by infighting and unwillingness to compromise. In the end, nobody wins.

Ultimately the anti-UA or anti-CO sentiment needs to slowly die off if the airline is to move past the integration stage...
 
SonomaFlyer
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RE: UA Offers FA's $100,000 Dollar Buyout

Tue Sep 16, 2014 2:35 am

The buy-out isn't in lieu of layoffs, UA is clearing out more senior folks if possible and recalling FAs on furlough status. Given they have two different work groups, they've been short staffed on the sCO side and too many on the sUA side. They are trying to get the mess sorted and decided to try to do this deal as part of it.
 
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compensateme
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RE: UA Offers FA's $100,000 Dollar Buyout

Tue Sep 16, 2014 2:49 am

Quoting okie (Reply 6):
At roughly 50% right off the top in taxes. I am not going to guess the exact value of wages and benefits (insurance) for a senior F/A but that really does not sound to me like a large sum of money when all is considered.

Effective tax rates are individual-specific and dependent on the level of deductions you receive. There are many taxpayers earning in excess of $1M with effective tax rate % in the high single digits. Some of these UA FA, especially those with home businesses within their households, would be among them.
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N104UA
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RE: UA Offers FA's $100,000 Dollar Buyout

Tue Sep 16, 2014 3:09 am

Quoting 32andBelow (Reply 8):
Quoting okie (Reply 13):
Quoting nomadd22 (Reply 14):

It will be taxed at supplemental rates which for FED are 25% flat (if the bonus is under $1M in which case it becomes 39.6%) then it will also have SS (6.2%) and Medicare (1.45%) plus state rates (0%-10.23% (CA))

For $100K in CA it is $42,880 in taxes but they should expect a big refund in Jan, would make sense for them to take it before the new year and get a nice return and get some SS back.
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compensateme
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RE: UA Offers FA's $100,000 Dollar Buyout

Tue Sep 16, 2014 3:32 am

Quoting N104UA (Reply 31):
It will be taxed at supplemental rates which for FED are 25% flat (if the bonus is under $1M in which case it becomes 39.6%) then it will also have SS (6.2%) and Medicare (1.45%) plus state rates (0%-10.23% (CA))

For $100K in CA it is $42,880 in taxes but they should expect a big refund in Jan, would make sense for them to take it before the new year and get a nice return and get some SS back.

Supplemental rates only apply to initial withholdings; your "true" (effective) rate is calculated only when you file your taxes.
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RWA380
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RE: UA Offers FA's $100,000 Dollar Buyout

Tue Sep 16, 2014 3:43 am

Quoting StuckInCA (Reply 27):
Why is offering a rich voluntary severance package a bad thing?

Has it been determined as to if these 2,100 employees will loose their retirement benefits entirely?

If they do loose all of that, is it worth it to a 25 year veteran to take the payout, or retire with their benefits in tact?
I am keeping in mind that retirement benefits can disappear in a bankruptcy.
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etops1
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RE: UA Offers FA's $100,000 Dollar Buyout

Tue Sep 16, 2014 3:48 am

The buy out is only eligible for FA's with 15 yrs or more of service .
 
avek00
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RE: UA Offers FA's $100,000 Dollar Buyout

Tue Sep 16, 2014 4:04 am

Quoting UA444 (Reply 23):
So then what of the disgruntled ex-CO FAs who are angry that "United ruined Continental" and all of the "we are ex-CONS for life, rah rah rah"?

They can go, too, but as it is they're far less expensive to the airline than their sUA counterparts.

Quoting UA444 (Reply 23):
The problem has been exacerbated way beyond anything Tilton

Not really -- the not quite 1:1 replacement of 757s does exacerbate the problem a bit, but still pales in comparison to just grounding 100 jets within months with no replacements in sight.

Quoting RWA380 (Reply 33):
If they do loose all of that, is it worth it to a 25 year veteran to take the payout, or retire with their benefits in tact?
I am keeping in mind that retirement benefits can disappear in a bankruptcy.

Legacy United flight attendants had their pensions largely wiped out in UAL's bankruptcy a decade ago. As a result, many legacy UA FAs cannot or will retire unless they get money to make up some of that loss, and the buyout offers that. Legacy CO FAs will retain benefit eligibility as of their date of departure from the company (practically speaking, they're fine).
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RWA380
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RE: UA Offers FA's $100,000 Dollar Buyout

Tue Sep 16, 2014 4:30 am

Quoting avek00 (Reply 35):
Legacy United flight attendants had their pensions largely wiped out in UAL's bankruptcy a decade ago. As a result, many legacy UA FAs cannot or will retire unless they get money to make up some of that loss, and the buyout offers that.

That helps explain things, thanks! Then at least for the 1,000 UA F/As this is going to be a life saver in a storm.
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b747400erf
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RE: UA Offers FA's $100,000 Dollar Buyout

Tue Sep 16, 2014 9:26 am

Quoting okie (Reply 13):
Ok then 47.2% that is roughly 50%

I don't think you understand progressive taxation.
 
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Jamake1
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RE: UA Offers FA's $100,000 Dollar Buyout

Tue Sep 16, 2014 11:01 am

This is a watershed moment in negotiations between AFA and United. United AFA has new leadership and they are to be credited with helping break the bottleneck in joint contract negotiations. Legacy UA will have absolutely no problem getting 1,000 F/A's to take this offer. Anyone with less than 25 years seniority will likely not be able to have the seniority to take advantage of this lucrative offer. I believe this buy-out will also expedite joint contract negotiations between the company and AFA.

The last buy-out was a maximum of $60,000.

Quoting avek00 (Reply 21):
Instead of offering buyouts or engaging in permanent headcount reductions, pre-merger UA management and the AFA preferred to concoct a scheme whereby a substantial portion of the FA workforce takes extended voluntary furloughs where they don't fly but get 100% free healthcare and other benefits (for a senior-heavy workforce, the health insurance costs can run over $10K/head).

Your statement is not factually correct. There was no scheme that was concocted. The legacy-UA collective bargaining agreement dating back several years contained contract language that stipulated that if United were to announce a furlough situation, that a voluntary furlough would be offered prior to any UA F/A's on the system seniority list being involuntarily furloughed. As such, per the collective bargaining agreement, the company was required to offer a voluntary furlough that included seniority accrual, pass benefits, and medical insurance while on voluntary furlough. Furthermore, since United's bankruptcy court restructuring, all United F/A's, including those on voluntary furlough, have been required to pay a portion of their medical premiums. So no, since bankruptcy, there has not been !00% free healthcare. Every UA F/A. whether on Voluntary Furlough or active, pays a portion of their monthly medical insurance premiums.
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ozark1
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RE: UA Offers FA's $100,000 Dollar Buyout

Tue Sep 16, 2014 12:12 pm

I would sure love it if AA offered this in current contract negotiations. Unfortunately we don't have an overage. It's kind of odd. They are hiring continually, yet they asked for 500 people to take voluntary leaves for the months of SEP and OCT. I do hope there will be another buyout of some kind.
 
avek00
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RE: UA Offers FA's $100,000 Dollar Buyout

Tue Sep 16, 2014 1:52 pm

Quoting Jamake1 (Reply 38):
There was no scheme that was concocted.

Sure there was, and you just described it in detail -- the scheme, as written into the CBA, enabled over a thousand FAs to indefinitely get benefits without working, allowing both management and union to claim the airline had addressed its workforce problems without actually implementing a permanent headcount reduction resolution. It was one of the many ways legacy United played games to make itself look good for a merger partner.
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StuckInCA
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RE: UA Offers FA's $100,000 Dollar Buyout

Tue Sep 16, 2014 1:57 pm

Quoting SonomaFlyer (Reply 28):
The buy-out isn't in lieu of layoffs, UA is clearing out more senior folks if possible and recalling FAs on furlough status. Given they have two different work groups, they've been short staffed on the sCO side and too many on the sUA side. They are trying to get the mess sorted and decided to try to do this deal as part of it.

And in most industries they would just lay off as many as they wanted. They could even lay them off and rehire new ones if they wanted.
 
boilerla
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RE: UA Offers FA's $100,000 Dollar Buyout

Tue Sep 16, 2014 4:05 pm

Quoting StuckInCA (Reply 27):
Huh? Why is offering a rich voluntary severance package a bad thing? In most industries this would just be a layoff.

In most industries, they couldn't just lay off the oldest people in the work force, as it'd be very easy to make a case for age discrimination. It'd be like a mass layoff of all the pregnant moms.

Quoting StuckInCA (Reply 42):
And in most industries they would just lay off as many as they wanted. They could even lay them off and rehire new ones if they wanted.

If you lay off and then re-hire, your legal department is all over you. The people you just laid off now have a case for age discrimination if the people you hired are younger, gender discrimination if they are men, etc. Usually after a layoff you are asked to wait more than 6 months before backfilling. If you terminate with cause that's different.
 
StuckInCA
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RE: UA Offers FA's $100,000 Dollar Buyout

Tue Sep 16, 2014 4:30 pm

Quoting boilerla (Reply 43):
If you lay off and then re-hire, your legal department is all over you. The people you just laid off now have a case for age discrimination if the people you hired are younger, gender discrimination if they are men, etc. Usually after a layoff you are asked to wait more than 6 months before backfilling. If you terminate with cause that's different.

All true, but they could lay off some number - not necessarily the oldest. In the non-union world it would be the lowest performing. That said, I can't buy into the idea that offering up to $100k buyouts is some sort of evil behavior. Without all of the details it sounds reasonable.
 
milesrich
Posts: 1508
Joined: Sun Jul 06, 2003 2:46 am

RE: UA Offers FA's $100,000 Dollar Buyout

Tue Sep 16, 2014 5:02 pm

Quoting seabosdca (Reply 20):
Quoting hhslax2 (Reply 16):
Would the 100K be taxed at normal rates?

It would be taxed at the applicable rate. Given that the $100k would substantially boost a F/A's income, that's almost certainly higher than the rate the F/A would pay normally, but it's still a normal income tax rate, not some special rate.

For instance, if a single F/A's regular pretax income is $60,000, and they take the standard deduction, they would pay the following taxes on their regular income:

0 * $6,250 (standard deduction) = $0
10% * $9,075 = $907.50
15% * $27,825 = $4,173.75
25% * $16,850 = $4,212.50

Total = $9.293.75, for an effective income tax rate of 15.5% on the regular $60,000 of income.

But since the $100k is income over and above the F/A's regular income, it kicks the F/A into a higher bracket, and ends up being taxed at higher rates. In this example, the $100k extra would be taxed like this:

25% * $35,600 = $8,900
28% * $64,400 = $18,032

Total = $26,932, for an effective income tax rate of 26.9% on the additional $100,000 of income. The effective tax rate on ALL of the F/A's income in this hypothetical year would be 22.6%.

Withholding formulas are often not kind to lump-sum payments, so the F/A would likely find that more than 26.9% had been withheld, but he/she would get the extra back at refund time.

It is a pleasure to see someone post something that is factual, rather than repeat the nonsense they hear elsewhere. The only way this deal makes sense is if the severance is paid after January 1, 2015, which would lower the effective tax rate to about 18%.
 
AT
Posts: 905
Joined: Tue Jul 25, 2000 12:16 pm

RE: UA Offers FA's $100,000 Dollar Buyout

Tue Sep 16, 2014 5:19 pm

Quoting milesrich (Reply 45):

Quoting seabosdca (Reply 20):
Quoting hhslax2 (Reply 16):
Would the 100K be taxed at normal rates?

It would be taxed at the applicable rate. Given that the $100k would substantially boost a F/A's income, that's almost certainly higher than the rate the F/A would pay normally, but it's still a normal income tax rate, not some special rate.

For instance, if a single F/A's regular pretax income is $60,000, and they take the standard deduction, they would pay the following taxes on their regular income:

0 * $6,250 (standard deduction) = $0
10% * $9,075 = $907.50
15% * $27,825 = $4,173.75
25% * $16,850 = $4,212.50

Total = $9.293.75, for an effective income tax rate of 15.5% on the regular $60,000 of income.

But since the $100k is income over and above the F/A's regular income, it kicks the F/A into a higher bracket, and ends up being taxed at higher rates. In this example, the $100k extra would be taxed like this:

25% * $35,600 = $8,900
28% * $64,400 = $18,032

Total = $26,932, for an effective income tax rate of 26.9% on the additional $100,000 of income. The effective tax rate on ALL of the F/A's income in this hypothetical year would be 22.6%.

Withholding formulas are often not kind to lump-sum payments, so the F/A would likely find that more than 26.9% had been withheld, but he/she would get the extra back at refund time.

It is a pleasure to see someone post something that is factual, rather than repeat the nonsense they hear elsewhere. The only way this deal makes sense is if the severance is paid after January 1, 2015, which would lower the effective tax rate to about 18%.

I agree.

Do they have to get the full amount it in a single lump though? aren't there ways to stagger it over 2-3 number of years in order to reduce the tax burden?
 
slider
Posts: 7687
Joined: Wed Feb 25, 2004 11:42 pm

RE: UA Offers FA's $100,000 Dollar Buyout

Tue Sep 16, 2014 5:39 pm

Quoting traindoc (Reply 9):
Why is UA so overstaffed with pre merger FA?

There are a lot of vestigial reasons, to answer your question.

First, pre-merger, sCO had the IAM. They had, by most accounts, a very nice contract but one that was forged over time. It didn’t happen overnight. But it ultimately resulted in an agreement that balanced the needs of the company and that of members. This was done primarily by allowing FAs to work as much or little as they wanted, hours-wise. There was a minimum floor, if I recall correctly, in order to keep benefits, etc. But it allowed FAs to take month long leaves, work a LOT if they wanted to make dough, toss hours off if they wanted to, and so on. It enabled CO to flex up during peak seasonal flying periods and flex down without having to furlough and so on. Kind of the best of both worlds.

Conversely, however, on the sUA side, represented by AFA, they had a contract that had a hard cap of how many hours a FA could work. That meant that, on an ASM or seat weighted departure basis, UA was rather overstaffed (again, on SWD basis, which accounts for sUA having had more widebodies, to give an apples to apples comparison). In turn, that’s resulted in a very high number of FAs and that are far less productive than their sCO counterparts. Consequently, they’ve been overstaffed and that’s remained even after having furloughed (which CO didn’t have any FAs on furlough and has been hiring off the street because there is no joint contract yet).
 
windy95
Posts: 2785
Joined: Thu Dec 18, 2008 1:11 pm

RE: UA Offers FA's $100,000 Dollar Buyout

Tue Sep 16, 2014 5:51 pm

Quoting AT (Reply 46):
Do they have to get the full amount it in a single lump though? aren't there ways to stagger it over 2-3 number of years in order to reduce the tax burden?

It is a lump sum payed within 45 days of signing up.

Quoting milesrich (Reply 45):
The only way this deal makes sense is if the severance is paid after January 1, 2015, which would lower the effective tax rate to about 18%.

All payments will be in 2014.

Quoting RWA380 (Reply 33):
Has it been determined as to if these 2,100 employees will loose their retirement benefits entirely?

If they have the service and age then they will be eligible for the plan thye have. If not eligible then no they will be offered COBRA for a time period.

Quoting UA444 (Reply 23):
So then what of the disgruntled ex-CO FAs who are angry that "United ruined Continental" and all of the "we are ex-CONS for life, rah rah rah"? Or do they get to stay, because Jeffie won't hurt "his" side?

Try reading the article. About 1100 from each side..
 
Rdh3e
Posts: 3634
Joined: Wed Mar 30, 2011 2:09 pm

RE: UA Offers FA's $100,000 Dollar Buyout

Tue Sep 16, 2014 5:53 pm

Quoting Slider (Reply 47):
There are a lot of vestigial reasons, to answer your question.

In addition, sUA side has been retiring aircraft (until recently when the 739 deliveries started), and sCO has been receiving aircraft the whole time.
 
User avatar
par13del
Posts: 10612
Joined: Sun Dec 18, 2005 9:14 pm

RE: UA Offers FA's $100,000 Dollar Buyout

Tue Sep 16, 2014 5:56 pm

Quoting Slider (Reply 47):
Consequently, they’ve been overstaffed and that’s remained even after having furloughed (which CO didn’t have any FAs on furlough and has been hiring off the street because there is no joint contract yet).

So we have a merged airline which cannot merge it's workforce years later to achieve gains, so one side (there are still sides) is hiring while the other lays off?
 
User avatar
seabosdca
Posts: 6607
Joined: Sat Sep 01, 2007 8:33 am

RE: UA Offers FA's $100,000 Dollar Buyout

Tue Sep 16, 2014 5:59 pm

Quoting okie (Reply 25):
You left off state, local and SS, Medicare,

State and local vary widely. Where I live there is no state or local income tax.

Add 1.45% for Medicare, and 6.2% of the first $117,000 for SS. In my example above that brings the effective federal tax rate, including payroll taxes, to 28.6% on the entire $160,000 of income.

[Edited 2014-09-16 11:02:32]
 
AT
Posts: 905
Joined: Tue Jul 25, 2000 12:16 pm

RE: UA Offers FA's $100,000 Dollar Buyout

Tue Sep 16, 2014 6:05 pm

Quoting windy95 (Reply 48):
It is a lump sum payed within 45 days of signing up.

Yes, but it doesn't have to be. Several alternatives exist. For instance, UA can contribute the funds directly into their retirement accounts, then it wouldn't be taxed at all at the present time, but rather (and at the presumably lower rate) as it is withdrawn over time.


Otherwise, I agree with the posters above, getting a 100K installment above and beyond the full salary would put them into a very high tax bracket and take away a significant chunk of the money.
 
cle757
Posts: 832
Joined: Wed Apr 06, 2005 8:28 am

RE: UA Offers FA's $100,000 Dollar Buyout

Tue Sep 16, 2014 6:15 pm

It's a shame they don't offer this to the ground employees, because a lot of people would take the money and run. Instead Jeffy and his gang like to cut full-time to part-time and make people move across country to a station that will probably be outsourced soon.
Cleveland the best location in the Nation
 
FlyHossD
Posts: 2162
Joined: Mon Nov 02, 2009 3:45 pm

RE: UA Offers FA's $100,000 Dollar Buyout

Tue Sep 16, 2014 6:39 pm

Quoting StuckInCA (Reply 42):
And in most industries they would just lay off as many as they wanted. They could even lay them off and rehire new ones if they wanted.

Since airline employees are governed by the Railway Labor Act and the affected group here (flight attendants) is unionized, the company is required to deal with the union, so the contract applies. In other words, your comment isn't relevant here.

Quoting StuckInCA (Reply 42):
In most industries, they couldn't just lay off the oldest people in the work force, as it'd be very easy to make a case for age discrimination.

This isn't "most industries" - it's an airline governed by the Railway Labor Act with plenty of negatives for the employees (like the huge restrictions that nearly always prevent a strike).

Quoting StuckInCA (Reply 44):
In the non-union world it would be the lowest performing.

In my experience, such non-airline layoffs are sometimes from the highest compensated employees.

Quoting Slider (Reply 47):
Conversely, however, on the sUA side, represented by AFA, they had a contract that had a hard cap of how many hours a FA could work. That meant that, on an ASM or seat weighted departure basis, UA was rather overstaffed (again, on SWD basis, which accounts for sUA having had more widebodies, to give an apples to apples comparison). In turn, that’s resulted in a very high number of FAs and that are far less productive than their sCO counterparts. Consequently, they’ve been overstaffed and that’s remained even after having furloughed (which CO didn’t have any FAs on furlough and has been hiring off the street because there is no joint contract yet).

That's a good summary, but you failed to mention that the greatest flight attendant over-staffing cause was the grounding of the 100 sUA 737s that were replaced with RJs.

Quoting RDH3E (Reply 49):
In addition, sUA side has been retiring aircraft (until recently when the 739 deliveries started), and sCO has been receiving aircraft the whole time.

+1

Quoting par13del (Reply 50):
So we have a merged airline which cannot merge it's workforce years later to achieve gains, so one side (there are still sides) is hiring while the other lays off?

Yes. Nearly 4 and 1/2 years into the merger, there are still separate work groups (so much for the promised synergies).
My statements do not represent my former employer or my current employer and are my opinions only.

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