Aircraft maint issues

[topDawg]

COUNCIL ACTION: Approved on 6/20/2017
DATE: 6/20/2017 REFERENCE NO.: **L-16046 LOG NAME: 21AMFROLLSROYCE
CODE: L TYPE: CONSENT PUBLIC HEARING: NO
SUBJECT:
Authorize Execution of a Lease Agreement with Rolls Royce North America, Incorporated or an Affiliate for a Portion of the Alliance Fort Worth Maintenance Base Located at 2112 Eagle Parkway and Authorize Execution of a Brokerage Commission Agreement with Cushman & Wakefield, Incorporated at a Rate of 4.50 Percent of the Base Rent (COUNCIL DISTRICT 7)

RECOMMENDATION:
It is recommended that the City Council:

1. Authorize execution of a Lease Agreement with Rolls Royce North America, Incorporated or an affiliate to lease a portion of the Alliance Fort Worth Maintenance Base, to include the Turbine Engine Overhaul Building, the Test Cell and the Heat, Treat, Blast and Spray Shop, located at 2112 Eagle Parkway, Fort Worth, Texas 76177; and

2. Authorize the City Manager or his designee to execute a Brokerage Commission Agreement with Cushman & Wakefield, Incorporated at a rate of 4.50 percent of the base rent.


DISCUSSION:
On November 1, 2016, 444,000 square feet of space (Premises) at the Alliance Fort Worth Maintenance Base (AFWMB), previously under lease with Texas Aero Engine Services, LLC (TAESL), became available for a new tenant. In October 2016, Hillwood Properties, the City's leasing and management agent for the AFWMB, began negotiations with Rolls Royce North America and their representative to lease the majority of the space being vacated by TAESL. A proposed Lease Agreement has been negotiated with Rolls Royce North America, Incorporated for Engine Test Cell facility, Turbine Overhaul Building, and the Heat, Treat, Blast and Spray Building, and accompanying parking.

Below are the highlighted terms from the proposed Lease Agreement:

Primary Term of 10 years
Base Rent to be paid as follows:
Months 1 -12: No Rent
Months 13-60: $1.00 per square foot ($440,000.00 per year)
Months 61-120: $1.10 per square foot ($555,000.00 per year)

Two five-year renewal options at then current market rates
Rolls Royce assumes operating expenses for the premises during the term of the lease
During the entire term of the lease, the Alliance Maintenance Fund is estimated to increase by approximately $3,200,000.00 and the City saves approximately $250,000.00 per month in current subsidies for the existing operation of the Central Utility Plant at the AFWMB. Additionally, Rolls Royce intends to make approximately $9,000,000.00 in improvements to the Test Cell facility to accommodate their planned operations, which improvements will be the property of the City.

As outlined in the Leasing Agreement between the Alliance Airport Authority and Hillwood Properties, which was assigned to the City via M&C L-15748 on January 15, 2015, Hillwood brokerage commission fees due will be 2.25 percent of the base rent. The Leasing Agreement also stipulates that cooperating brokers in the transaction would be paid a separate commission fee of 4.5 percent of the base rent. Cushman & Wakefield, Inc., was the cooperating real estate broker assisting with the negotiations and upon approval of this M&C and the execution of the lease, the City will enter into a separate Commission Agreement with Cushman & Wakefield, Inc., for their commission fee.

This property is located in COUNCIL DISTRICT 7.


FISCAL INFORMATION/CERTIFICATION:
The Director of Finance certifies that the Property Management Department is responsible for the fiscal administration of this lease which includes the collection and deposit of lease revenue and the payment of lease commissions.

TO
Fund Department
ID Account Project
ID Program Activity Budget
Year Reference #
(Chartfield 2) Amount

FROM
Fund Department
ID Account Project
ID Program Activity Budget
Year Reference #
(Chartfield 2) Amount
2) 28009 0214020 5330201 $204,795.00
Submitted for City Manager's Office by:
Jay Chapa (5804)
Originating Department Head:
Steve Cooke (5134)
Additional Information Contact:
Jean Petr (8367)
Mark Brown (5197)


ATTACHMENTS
M and C map for RR 2100EagleParkway.pdf
Rolls Royce form 1295.pdf

Interesting. Gotta wonder what Rolls is going to do with it, considering they are opening the AMC with Delta for the 3 next generation motors in Atlanta.

and that the AFW base would need a new test cell for any of the new engines. Maybe bringing US Trent 800 work back from SAESL?

The one draw back, I doubt an engine shop is going to pay $47 an hour.

Read above, Rollers has no problem adding DTO to its list of approved maintenance centers for the Trent 1000, 7000, XWB and BR715 engines.

Engines are still a very high margin business. Also, unlike airframes, airlines are less willing to send engines half way around the world for work because it generally requires them to invest in more engine spares. This is one of the key reasons United, Delta (and I assume American on the CF6/CFM56?) are able to be large MROs in the engine/component market.
not like airframe work where margins are razor thin, which causes the average MBA in the US to think they aren't worth it.

 

[bigjets]

For some it may not be all about the money anymore. I bet the more you make the more you spend?

Quality over quantity!

I agree, now you have 40/50 year olds, 4-8 guys sharing a 2 bedroom apartment, doing doubles hoping they get on the flight they're trying for. I usually see guys coming back a day early just because the flights are so full.

It's not like we are building up our retirement. I bet RR would love to bring back all that experience, especially without having to deal with a union.

 

[Deleted member 14439]

DFW area peeps. Mark July 26th on your calendars. Please set aside some time and join 567,591,513, pilots and flight attendants for picketing. Our families deserve our best effort in securing the industry leading contract we have been promised. i will post details as I get them. As always, I.A.W. and be safe out there!

 

[swamt]

HAD ENOUGH YET?

Had a feeling that one was coming. Thx Rogallo...

 

[Topcat187]

Jiminy Cricket I hope NO ONE is suggesting DFW people should get ANY GEO pay?????? That would be beyond totally and completely RIDICULOUS!!!! LMAO. Nuts.

DFW is cheaper than dirt to live in. DFW, LMAO.

If you wanted a fair Geo pay, you would have to set the base pay at the cheapest city staffed with AMTs and then any city above that in cost of living would have to be adjusted upward in proportion to cost.

Then if you really want to be fair, you would have annual evaluations to adjust up or down according to changes in cost. DFW realestate has actually gone up quite a bit over the last few years.

Also, if you commute would you still get the Geo pay? Or will it be based on your residence?

As long as the company can hire in higher cost areas, they will not give Geo pay. The only other way to get it, would be to essentially require all of the lower cost areas to donate it from their pay to off set the higher ones. Has the company ever offered the extra pay? Or are you saying everyone should give up money to support it?

 

[La Li Lu Le Lo]

1AA I do have a question just for my own curiosity..... How much GEO pay ($ per hour) do you think is appropriate for you DFW guys? Also what do you think is fair for the really high cost areas? Just wondering what you are thinking. I will tell you that I do support GEO pay and always have. I also would not vote against any TA that provided that for DFW. I am of the opinion if I wanted GEO pay I can bid to one of those areas. So it is the reverse of "If you don't like it move to Tulsa."

OldGuy@AA here is a consideration for you.

When calculating GEO pay how would the company calculate median income.

If they consider your top out as a median then any area with a lower cost of living would receive less money per hour right?

 

[swamt]

So when do you guys meet again for contract negotiations? Our next dates to meet are mid to late July. Really looks like the company wants to get it done huh? One meeting per month again not 2 or 3 per month when it should be 4 meetings per month. Company will always blame the mediators when in fact the company has turned down any and ALL added dates, requested dates, and even meetings with the union without the mediators which were blessed by the mediators as long as they were brought up to date by updates from both sides. It is so obvious that this company is in no hurry to come to terms as they keep saying "we will meet anywhere, anytime, work thru weekends etc... They do the exact opposite of what they say they will do. It is not AMFA it is SWA dragging their feet. The way SWA is nego now I see you guys done before us and I still don't see you guys done before 2018. Good luck, we all need it at this point.

 

[OldGuy@AA]

OldGuy@AA here is a consideration for you.

When calculating GEO pay how would the company calculate median income.

If they consider your top out as a median then any area with a lower cost of living would receive less money per hour right?

I honestly don't know how they would calculate it. I was just wondering what 1AA thought GEO pay should be for DFW.

 

[Deleted member 14439]

So when do you guys meet again for contract negotiations? Our next dates to meet are mid to late July. Really looks like the company wants to get it done huh? One meeting per month again not 2 or 3 per month when it should be 4 meetings per month. Company will always blame the mediators when in fact the company has turned down any and ALL added dates, requested dates, and even meetings with the union without the mediators which were blessed by the mediators as long as they were brought up to date by updates from both sides. It is so obvious that this company is in no hurry to come to terms as they keep saying "we will meet anywhere, anytime, work thru weekends etc... They do the exact opposite of what they say they will do. It is not AMFA it is SWA dragging their feet. The way SWA is nego now I see you guys done before us and I still don't see you guys done before 2018. Good luck, we all need it at this point.

We are scheduled late July and late August. It looks like neither company has any desire to negotiate in good faith. I was trying g to be optimistic here. However as time as gone by. The company has demonstrated that the new boss is the same as the old boss. Word is they are wanting to hold onto much of our concessionary bankruptcy language. I'm thinking easily mid 2018 best case scenario before we see a jcba. Anything brought back with the IAMNPF or concessionary bankruptcy language is DOA. Too bad SWA management has decided to throw out decent labor relations in favor of an adversarial relationship. Good luck over there.

 

[Buck]

If you wanted a fair Geo pay, you would have to set the base pay at the cheapest city staffed with AMTs and then any city above that in cost of living would have to be adjusted upward in proportion to cost.

Then if you really want to be fair, you would have annual evaluations to adjust up or down according to changes in cost. DFW realestate has actually gone up quite a bit over the last few years.

Also, if you commute would you still get the Geo pay? Or will it be based on your residence?

As long as the company can hire in higher cost areas, they will not give Geo pay. The only other way to get it, would be to essentially require all of the lower cost areas to donate it from their pay to off set the higher ones. Has the company ever offered the extra pay? Or are you saying everyone should give up money to support it?

The last GEO cities issue was quite long ago, don't remember when or which TWU contract, but Tulsa was zero gain city and from that point, the calculations were based on the cost of living, federally.

 

[swamt]

We are scheduled late July and late August. It looks like neither company has any desire to negotiate in good faith. I was trying g to be optimistic here. However as time as gone by. The company has demonstrated that the new boss is the same as the old boss. Word is they are wanting to hold onto much of our concessionary bankruptcy language. I'm thinking easily mid 2018 best case scenario before we see a jcba. Anything brought back with the IAMNPF or concessionary bankruptcy language is DOA. Too bad SWA management has decided to throw out decent labor relations in favor of an adversarial relationship. Good luck over there.

Much appreciated dvlhog. It has been very sad to watch SWA change as much as they have ever since Herb and Colleen left. It is also why a lot of others have left voluntarily especially our VP of maint. Sokol left and went to be President of TIMCO in North Carolina. I have spoke to Jim personally and he didn't want any part of the "new changes" coming, he saw the writing on the wall.
When Parker was working well with labor at AA it really did appear that AA and SWA flipped flopped on how they treated their labor groups. Use to be SWA was always in the media about how quickly they always came to terms with the labor groups. And AA was in the media about the turmoil with labor groups. Now, it's opposite, SWA is in total turmoil with all the labor groups, for their first contracts from the old SWA to the new SWA (huge difference). And AA at first was getting labor groups done until they hit this asso. road block. Not totally blaming the asso. just for it being the asso. but partly due to the complete differences in the 2 unions way of doing things will be part to blame but not as much as blame needs to be put on the company just like ours. Heck, Kelly and Parker are probably golfing together just LTAO at us. Kelly did say he needs the 5 year pay freeze and he will have that on the 16th of August 2017. Just wondering if we will see a mass increase of meetings and the company wanting to get this done after that date, we will see.
I beg to differ about the bosses. In our case, the new boss is NOT the same as the old boss. Not even close and that is fact. We all miss the old boss. Best of luck to you guys too. Maybe, just maybe we both will see something some time in 2018...

 

[La Li Lu Le Lo]

I honestly don't know how they would calculate it. I was just wondering what 1AA thought GEO pay should be for DFW.

I had an agenda when I presented that question to you.

The reason GEO pay does not exist is because of DFW. I don't think the UNION wants to open that Pandora's Box as it could cost them money.

I wanted you to come to that conclusion yourself.

People ask why American Airlines does not have GEO pay..... that's why, DFW.

 

[dfw gen]

Chief I don't know where you that dfw at fault for the geo. Look your not at aa anymore go rant else where.

 

[Topcat187]

I had an agenda when I presented that question to you.

The reason GEO pay does not exist is because of DFW. I don't think the UNION wants to open that Pandora's Box as it could cost them money.

I wanted you to come to that conclusion yourself.

People ask why American Airlines does not have GEO pay..... that's why, DFW.

DFW is stopping all of the airlines from having Geo pay? Who is currently offering it?

 

[La Li Lu Le Lo]

Chief I don't know where you that dfw at fault for the geo. Look your not at aa anymore go rant else where.

Says the dfw gen.

My wife IS at AA. If the company were to calculate the median at top out pay and people in Tulsa were to take a pay cut that would very much affect my household income.

Look I am not presenting that as fact but I do have a very strong opinion about it and to me it makes logical sense that DFW is the prime reason TWU has not and never will seek GEO pay. I am not saying the employees working at DFW mind you, I am saying DFW as a business decision and income source for the Association.

DFW is stopping all of the airlines from having Geo pay? Who is currently offering it?

Nobody, and nobody will. That was my point.