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Saturday, September 8, 2012
AMR CORP. | BANKRUPTCY CASE
AA pilots’ equity
linked to contract
Eagle seeks to
toss worker pacts
Union for mechanics,
dispatchers, instructors
calls move premature
By TERRY MAXON
Staff Writer
[email protected]
American Eagle management
asked a bankruptcy judge Friday
to let it void its contracts with its
mechanics and related employees,
dispatchers and ground school instructors.
Airline spokesman Bruce
Hicks said negotiations with the
Transport Workers Union, which
represents the three bargaining
units, “have not yet been successful” and “we must continue to move
this process forward” with the
three groups.
“We recognize that none of the
changes we have to make are easy
or welcome, but they are necessary
for American Eagle to compete effectively for American’s business as
well as with the many other regional carriers,” Hicks said.
A TWU spokesman criticized
File 2011/The Associated Press
American Eagle flight attendants approved their tentative agreement Friday.
the airline’s decision to seek the
contract rejections.
“We think this was premature
and unnecessary,” spokesman Jamie Horwitz said. “Constructive
negotiations were ongoing.”
American Eagle, parent AMR
Corp., American Airlines Inc. and
See EAGLE Page 2D
Union must approve a deal
soon in order to get a stake in
reorganized carrier, creditors say
By TERRY MAXON
Staff Writer
[email protected]
The unsecured creditors committee in
American Airlines’ bankruptcy case warned
Friday that its support for giving company
stock to pilots is contingent on their approval
of a new contract soon.
Unions at American Eagle also must ap-
prove new contracts soon if they want to keep
the committee’s support for their unsecured
claims in the bankruptcy case.
In a court filing Friday, the committee said
it “has agreed to support the equity stake negotiated” by those unions “in order to support
prompt, consensual agreements.”
“However, the committee’s support will
continue only to the extent that ratified consensual agreements are reached promptly.”
Pilots on Aug. 8 turned down a new contract that would have given them 13.5 perSee CREDITORS Page 2D
STATE FARM
ON THE FRONT PAGE
Job growth
weaker than
expected
Insurer
inks 2nd
big lease
Job growth slowed
noticeably in August,
increasing the political
pressure on the White
House and strengthening the argument
for new action by
Federal Reserve
policymakers to stimulate the economy.
Offices in Las Colinas
complex follow space
secured in Richardson
By STEVE BROWN
Real Estate Editor
[email protected]
New at
dallasnews.com
duce the income necessary for those
years,” said Noelle Fox, a practice leader
in the Retiree Services Division of Principal Financial Group.
The buckets enable you to arrange
investments according to risk levels.
Here’s how a typical bucket strategy
would be constructed:
Bucket 1 would be used to cover
expenses in the first five years of retire-
State Farm Insurance has
leased its second big block of
North Texas office space in a
month.
The insurance giant is renting
400,000 square feet in the former Citigroup complex in Las Colinas.
Just a few weeks ago, State
Farm leased 300,000 square feet
of Richardson office space.
Together with the new Las Colinas deal, the two office leases represent the largest such business
expansion in the Dallas area so far
in 2012.
State Farm’s Las Colinas office
will be at 3950 and 4000 Regent
Blvd., just south of LBJ Freeway.
The insurance company lease will
take almost two-thirds of the
three-building complex off the
market.
Citigroup still occupies a portion of the 52-acre project, which
was built in 2006 to house regional operations for the global
banking and finance firm. After
the recession and financial market crash, Citigroup significantly
downsized its operations there.
The properties were purchased in July by Brookfield Asset
Management of Canada, which
renamed the complex Regent
Commons.
At the time of the purchase,
the property was one of the largest empty office spaces in suburban Dallas.
State Farm did not disclose
how many of its employees will be
working in the new Las Colinas
location or where they are coming
from.
“Adding this facility helps
State Farm to gain efficiencies, be
more cost-effective and continue
to
provide
outstanding
See BUCKET Page 2D
See INSURER Page 2D
Get up-to-the-minute
Wall Street news all day
brought to you by The
Street. Find it under
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business
COMING SUNDAY
Penney CEO takes
setbacks in stride
Last year, Ron Johnson
left one of the most
celebrated posts in
business to accept one
of the hardest jobs in
retail. The brains behind
the boldly different
Apple store, Johnson left
Cupertino for Plano to
reinvent the struggling
J.C. Penney Co.
THE MARKETS
Dow
13,306.64
+14.64
Nasdaq
3,136.42
+0.61
S&P
500
1,437.92
+5.80
10-year
Treasuries
+15.6 cents
Dan Page/Special Contributor
per $100 invested
1.66%
Stocks tread water,
post meager gains
D
Another bucket list
C
The stock market
followed one of its best
days of the year with a
rather dull one Friday. 4D
Crude
$96.42
+0.89
Gas
$3.680
-0.004
Near-term
futures,
per barrel
Dallas,
regular
unleaded
Strategy aims to keep your money flowing in retirement
T
he whole idea behind retirement
planning is to ensure that you
have enough money to sustain
yourself when you’re no longer drawing
a paycheck.
Simple enough, but how do you get
there?
One method financial advisers use is
the “bucket strategy.” This typically
involves carving out separate pots of
money for specific periods in a person’s
retirement, factoring in the saver’s risk
ENERGY WATCH
TERRY’S GARAGE
XTS is a highly
competent Caddy
D
PERSONAL FINANCE
Oddly tall and fairly long,
the Cadillac
XTS mixes
relatively
short front
fenders with
a fairly long
hood, and long rear
fenders with a short
trunk. Somehow, it all
works pretty well. 1G
Nation & World
Market Day
3
4-6
. . . . . . . .
tolerance and how long it will be before
the money is needed.
“Each bucket has a determined set of
years in retirement in which it will pro-
AUTOMOTIVE INDUSTRY
Austin leads way as GM brings tech jobs into fold
Texas site to ramp up
hiring; 3 more centers
are planned in U.S.
STAFF AND WIRE REPORTS
INSIDE
PAMELA YIP
[email protected]
DETROIT — General Motors, which is shifting computer
technology functions into the
company from outside firms,
plans to open four new information technology centers in
the U.S., each staffed by at least
500 people.
The first of the centers, in
Austin, is already open with a
handful of people, and hiring
will ramp up gradually as GM
finds the right workers to fill
the jobs, the company said Fri-
day.
It’s all part of a move to
bring 90 percent of GM’s information technology from outside companies in-house,
which GM believes will make
the company more nimble and
efficient. GM could add as
many as 10,000 people to do
the work globally in the next
three to five years, said Randy
Mott, the company’s new chief
information officer.
“We are changing the mix
very substantially to have a lot
more people doing development and innovation,” Mott
said on a morning conference
call.
The positions would have to
be self-supporting, an investment with a return that helps
GM cut information technology costs and bring changes that
would boost market share and
revenue, Mott said. The innovation centers would develop
software and change processes
See GM Page 2D
D1 09-08-2012 Set: 21:47:24
Sent by: [email protected] Business
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dallasnews.com
Saturday, September 8, 2012
The Dallas Morning News
Creditors link
pilot pact, equity Mi Cocina sues over
FOOD INDUSTRY
Continued from Page 1D
cent of parent AMR Corp.
shares after the Fort Worthbased company emerges
from bankruptcy. This week,
U.S. Bankruptcy Judge Sean
Lane approved American’s
motion to let the airline void
its contract with the pilots
and impose new terms.
Those terms do not include any AMR equity, and
Jack Butler, the attorney for
the unsecured creditors committee, said the group won’t
support giving equity to the
Allied Pilots Association for
much longer.
“The committee’s support
on an equity stake for the
APA, the 131⁄2 percent that
they bargained for in the consensual deal, is only going to
be available if consensual
deals are reached promptly,”
Butler said. “It’s incumbent
not just on the company but
the APA to move promptly if
they want to preserve that equity stake.”
As to the belief that pilots
can get a better deal than the
one they turned down, Butler
said the committee has made
“very clear” to both American
and the APA that “there’s no
additional economic value
beyond the current company
offers that can be provided to
the company’s labor organizations.”
On Tuesday, Butler had
been quite clear — American
must have a collective bargaining agreement with the
APA before the carrier exits
bankruptcy.
“Let there be no mistake:
For the AMR reorganization
to succeed, there has to be a
deal with the APA, period, full
stop,” Butler said during a
hearing in bankruptcy court.
“The committee is going to
require that as I think the
court will before there’s any
reorganization of this company. There has to be a deal.”
Since then, however, Butler has taken pains — in an interview with The Dallas
Morning News after that
hearing and in the court filing
Friday — to stress that American doesn’t have to nail down
a deal with the union to wrap
up its reorganization, though
that’s what the committee expects.
“Look, as a legal matter,
the company is able to exit
Chapter 11 and to have a plan
of reorganization confirmed
by doing one of two things —
either reaching a consensual
deal or getting an abrogation
order like Judge Lane issued
today with respect to the
APA,” Butler said Tuesday.
“Either of those things provides the basis for American
to move forward. What you
heard us say in court today is
that the committee’s expectation is that these parties will
come together and do what’s
best for the reorganization —
and that’s to reach a deal,” he
said.
In the Friday filing, Butler
wrote that “it is the committee’s expectation” that American and American Eagle will
have consensual deals before
they and AMR offer a plan of
reorganization.
However, if they can’t get
unions to approve contracts,
“the debtors may propose and
prosecute a plan of reorganization while operating under
abrogated collective bargaining agreements and imposed
terms of employment,” the filing said.
One airline analyst, Hunter Keay of Wolfe Trahan, concluded that based on Butler’s
comments in court, the
chances for a merger between
US Airways Group Inc. and
AMR “just increased dramatically.”
“Assuming the UCC
doesn’t reverse course, it
would seem to hand control of
the process to pilots” and by
extension to US Airways,
which has conditional labor
agreements with AMR’s
unions, Keay said in a report
Friday.
American and US Airways
are talking about a possible
merger. Butler’s filing Friday
indicated that the committee
expects a decision on mergers
to be wrapped up by year’s
end.
The committee, which includes American’s three
unions, the Pension Benefit
Guaranty Corp. and five representatives representing major creditors, filed a statement
Friday supporting the collective bargaining agreements
approved last month by the
Transport Workers Union
and the Association of Professional Flight Attendants.
Those contracts go before
Lane for his blessing on
Wednesday.
Eagle seeks to ax
TWU contracts
Continued from Page 1D
other subsidiaries filed for
bankruptcy protection on
Nov. 29.
As American Eagle is seeking to do, American sought
and won bankruptcy court approval Tuesday to throw out
its contract with the Allied Pilots Association, whose members rejected a tentative
agreement Aug. 8.
Fort Worth-based American earlier reached consensual contracts with its seven
TWU bargaining units and
the Association of Professional Flight Attendants, with only the pilots turning down
their deal.
The American Eagle filing
came the same day that the
Association of Flight Attendants approved its tentative
agreement with the regional
carrier, with 87 percent voting
in favor.
In the union’s announcement of the flight attendant
vote, Robert Barrow, AFA
president at American Eagle,
said the deal “preserves our
work rules and actually includes wage hikes and other
improvements.”
“No one wanted to vote for
this agreement, but our mem-
bers recognized that doing so
was in our best long-term interest,” Barrow said. “AFA has
been dedicated to doing everything in our power to combat
management’s outrageous demands at the bargaining table.
After intense bankruptcy
talks, we attained the best possible agreement in the worst of
circumstances.”
Hicks called the AFA vote
“another important step forward as we continue to build
the new American Eagle and
create a successful future for
thousands of employees.”
“We understand this was
not an easy decision, but it was
an important one in helping to
increase productivity and
achieve our targeted cost savings, while addressing many of
the union’s interests,” he said.
American Eagle’s fleet service clerks, who are also represented by the TWU, approved their own deal with the
airline on Aug. 24. However,
TWU-represented mechanics
turned down a tentative agreement the same day.
The carrier’s management
and the Air Line Pilots Association have an agreement in
principle on a new deal, but
the proposal has not been sent
to pilots for a vote.
Garland eatery’s name
GM to
open 4
IT sites
Continued from Page 1D
By KAREN ROBINSON-JACOBS
Staff Writer
[email protected]
Mi Cocina Ltd., which operates a chain of
Tex-Mex restaurants mostly in North Texas,
filed suit Friday against a small Garland restaurant with a similar name.
The trademark infringement suit, filed in
U.S. District Court in Dallas, says the name
Mi Cocina Hondurena is “confusingly similar” to the name of the popular chain operated
by Irving-based M Crowd Restaurant Group.
Mico Preston Forest Ltd., a predecessor
company to Mi Cocina Ltd., began using the
service name Mi Cocina in 1991, the lawsuit
said. In 2000, the name was registered with
the U.S. Patent Office.
Mi cocina means “my kitchen” in Spanish.
Martin Solis-Martinez, operator of Mi Cocina Hondurena, was asked to change the
name of his restaurant but “has not responded to that request,” the suit said.
He said Friday he speaks little English and
declined to comment further. Mi Cocina operates about 20 restaurants. Mi Cocina Hondurena gets high marks among consumers
online for serving authentic Honduran food.
Staff writer Dianne Solís contributed to this
report.
Follow Karen Robinson-Jacobs on Twitter at
@krobijake.
Insurer
inks 2nd
big lease
File
Continued from Page 1D
customer service,” spokeswoman Patti Kelly said Friday. “We are continuing to
make decisions on the number of employees that will occupy these facilities and do
not have final numbers at this
time.”
In August, State Farm
rented almost 300,000
State Farm Insurance is leasing space in Las Colinas in
the former Citigroup complex south of LBJ Freeway.
square feet — an entire building — in Richardson’s Telecom Corridor for a new customer service center.
State Farm already had offices in Irving — as well as a
big operations center on
Preston Road in Far North
Dallas.
In June, the Bloomington,
Ill., company opened a
400,000-square-foot customer service center in Atlanta that will employ about 500
workers.
Follow Steve Brown on
Twitter at @SteveBrownDMN.
PAMELA YIP
Bucket strategy keeps
retirement money flowing
Continued from Page 1D
Comparing methods
ment. It would hold cash and cash equivalents, such as U.S. Treasury bills, bank certificates of deposit and money market investments, including corporate commercial
paper.
Bucket 2 would be aimed at meeting your
spending needs in years 6 to 15.
“It contains mostly fixed-income securities, which are likely to experience greater
volatility than cash, but because they are in
the second bucket, the retiree has a longer
time period to ride out market swings,” Fox
said.
Bucket 3, for longer-term needs, would
hold mostly stocks, which are more volatile
but have the potential for greater returns.
“It is intended to meet expenses in the
years beyond the 15th year of retirement,
again providing opportunity to ride out
swings with the intention of reaping the
potential rewards,” Fox said.
Of course, you could have more than three
buckets; it just depends on your financial
situation.
“Each bucket will have an objective of
when it would produce income,” Fox said.
“That would generally link to some ideal
product.”
The bucket strategy is aimed at giving
people peace of mind, said Mark McClanahan, certified financial planner at Robertson,
Griege & Thoele Financial Advisors in Dallas.
“The buckets are really just breaking down
the portfolio for our client so that they can
understand it,” he said. “Buckets give comfort
to people because they know they have a
number of months or years of cash/safe money that will allow them to pay their bills.”
McClanahan has a different bucket strategy, one that isn’t linked to specific time periods. Rather, it’s intended to assure investors
that they have enough low-risk investments
to rely on.
One way to do that is to rebalance the
buckets when they stray from how much you
want in each bucket.
For example, say you have $1 million in
assets.
“Forty percent is put into a capital preservation bucket of cash and high-quality bonds,
40 percent in a growth bucket of U.S. and
foreign stocks, and 20 percent is in real assets,” McClanahan said.
“A potential strategy would be to take
retirement income from the capital preservation bucket and then trim or rebalance all of
the buckets when they move from the stated
allocation,” he said.
If, say, the growth bucket grows to 50
percent of your portfolio, you’d want to sell
some assets to bring it back into balance.
“Ten percent of the growth bucket would
be sold and rebalanced to the capital preservation portfolio, thus forcing you to sell high
and buy low,” McClanahan said.
The bucket strategy differs from the systematic withdrawal method, in which you
withdraw funds from a retirement account at
a specific, constant rate.
Which method is better? The answer isn’t
clear-cut.
“The systematic withdrawal would be
much simpler, especially if it was an investor
working on their own,” Fox said. “You just
would assess your risk tolerance and you’d
spend down from that large portfolio.”
On the other hand, she said, with the
bucket strategy, “you do gain from psychological benefits because you’re linking buckets of
money directly to goals — those goals being
the years of income they need to produce.”
But the buckets do need to be maintained.
“Each year, you have to evaluate if each
bucket is meeting its objective,” Fox said.
“The key thing is checking in and making any
changes necessary. This isn’t a set-it-andforget-it type of strategy.”
to help GM bring new vehicles
to market faster, he said. “Every
area of our company is in the
midst of transforming,” Mott
said.
Most of GM’s information
technology is now contracted
out to other companies,
spokeswoman Julie HustonRough said. The work now
done in-house focuses on keeping the company running rather than new technology, she
said.
The planned IT facility in
Austin will not affect any of the
activity at GM’s assembly plant
in Arlington, which employs
about 2,500 people.
The Arlington plant is in the
midst of a $330 million expansion and retooling that will allow it to build GM’s next generation of full-size SUVs, and is
getting a $200 million stamping facility that will provide
metal body parts for the plant’s
vehicles.
GM is talking with other cities about the remaining three
U.S. sites, and it would not reveal which areas are candidates. Government tax incentives were not part of the decision to locate in Austin, but it’s
something GM continues to
look at as it opens the centers,
Mott said.
The automaker said Friday
that it is hiring software developers, project managers, database experts and business analysts in Austin, which was
picked because it has a ready
workforce with the skills GM is
looking for. The Austin metropolitan area is home to a growing technology community that
includes the University of Texas
at Austin and computer maker
Dell Inc.
GM says its information
technology innovation centers
will help to get breakthrough
ideas into the company’s cars
and trucks. It’s also intended to
improve GM’s business processes and drive down costs.
Huston-Rough says the new
technology centers are separate
from a GM plan now under way
to consolidate its 23 global data
centers into two in an effort to
cut costs and increase speed
and efficiency.
GM shares rose 92 cents, or
4.1 percent, Friday to close at
$23.37. In July the carmaker’s
stock hit $18.72, its lowest level
since selling for $33 in an initial public offering almost two
years ago. But the shares have
risen recently.
The Associated Press,
staff writer Terry Box
Both can work
“There is no one-size-fits-all approach to
retirement income,” said Lloyd Lowe Sr.,
owner of LD Lowe Wealth Advisory in Dallas. “Used properly, both the bucket and
systematic withdrawal strategies can work.”
He uses the systematic withdrawal method because clients have more flexibility to
adjust their withdrawals when necessary.
“The key to being successful in making
your retirement income last is adjusting your
withdrawal rates down when the market
returns are down,” Lowe said.
“If investors forgo an annual inflation
raise for three years following a bear market,
their chance of successfully making their
income last 30 years improves from 29 percent to 69 percent,” he said. “If investors
reduce their withdrawals by 25 percent for
three years after a bear market, their chance
of success increases to 84 percent.”
No matter which strategy you choose,
your time horizon is critical.
“Many people underestimate their own
longevity and how long their retirement will
last, so it’s really important that you have
plans in place with the bucket strategy to
make sure your funds will last,” Fox said.
The key question investors must ask is
whether a strategy gives them peace of mind,
McClanahan said.
“People need to create a portfolio where
they can live with the risk that they’re taking,”
he said. “People focus on return. What they
should focus on is the amount of risk they’re
taking in the portfolio.
“The end game here is that people need to
be in a portfolio that they can maintain
through good times and bad times.”
Follow Pamela Yip on Twitter at @pamelayip.
COMPANIES
IN THE NEWS
This index lists companies in
The Dallas Morning News’ Business
section today. Not covered are
companies mentioned in passing
and those listed only in financial
tables.
A-K
American Airlines ...............................1D
American Eagle ...................................1D
AMR.........................................................1D
General Motors ....................................1D
Intel ........................................................3D
Kmart ....................................................3D
Kroger...................................................3D
M-W
Mi Cocina..............................................2D
Mi Cocina Hondurena.......................2D
Sears Holdings ...................................3D
State Farm Insurance ........................1D
Toys R Us ..............................................3D
Wal-Mart ..............................................3D
Business
dallasnews.com
© 2012, The Dallas Morning News
Business Editor........................Dennis Fulton
Deputy Business Editor...........Janie Paleschic
CONTACT US
Phone: 214-977-8429
Fax: 214-977-8776
E-mail:
[email protected]
Mail:
P.O. Box 655237
Dallas, TX 75265
To advertise in this
section,
call 214-977-8427
D2 09-08-2012 Set: 21:12:09
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