American Airlines creditors want to talk merger

[usa1]

Jioni Palmer of the PBGC told KERA Radio:

It's disturbing that American Airlines is sitting on a pile of cash $4 billion high, and yet they have failed to make their January 15 pension payment. Our goal here is we want American reorganized in a way that doesn't hurt the retirement security of its workers and retirees. But the company doesn't even bother to pretend it's trying to preserve its pension plan. And that's very, very unfortunate.

The PBGC itself could be in danger if it's forced to take over the American Airlines pensions. It already faces a $23 billion deficit because companies don't want to fully fund it. The American pensions would add another $9 billion to the red ink.

Ultimately, the PBGC is likely to have to seek a federal bailout. This would mean that working people, who already pay more than their share of taxes, would pick up the bill for corporations that won't pay for workers' pensions.

American Airlines unions may find it very difficult to save their members' jobs, wages and pensions. They will need to exhaust all legal remedies and use all their political power. But sooner or later, they may have to turn to industrial action, such as a work to rule, sickout or even a strike.

http://www.star-telegram.com/2012/02/06/3715843/why-are-amr-pension-estimates.html

 

[AAviator]

http://www.star-telegram.com/2012/02/06/3715843/why-are-amr-pension-estimates.html

Yea, so?

Everyone else did, so why can't AA? Double standard? The only people who won't get all the money they're entitled to, as I understand it, are the people who were supposed to get more than the PBGC max.

AA has paid its premiums and is in full compliance with the law.

Where's the beef besides the PBGC crying about something the government allowed?

 

[bluebird]

From your article:

“When a company enters bankruptcy or fails, more workers tend to retire sooner. One reason is that nearly all pension plans include a subsidy for early retirement. For example, if a company's normal retirement age is 65, a plan might allow a 62-year-old with 20 years of service to get a full pension.

"It's a very significant factor," Kra said…”

From the 1995 contract: “…A FA with a minimum of five (5) equivalent full time service year of occupational seniority whose age plus seniority equal forty (40) may sever his/her employment…”

Now, it’s “…A FA may elect early retirement at or after age forty-five (45),…provided s/he has had at least twenty (20) years of…enority…”

They are negotiating the early-out’s now.

 

[CactUS4Ever]

Once again, you can STILL staple. The other side just has to agree to it. Likely , no. Possible, yes. Why do some people still not get that? Southwest was trying to do just that to Frontier. Frontier should have done it, look what happened to them since. Please use FACTS on here and not just hot air. Especially those "former" employees of a certain extinct airline. You know the one, that happens to work for pennies at an even more disfunctional work place.

Those pennies bought me an $80,000 car and 2 houses. That's why I'm still here and I Love US Air and hope to retire from here. The company treats us like a person not a number like some Arrogant Airlines.

 

[usa1]

Those pennies bought me an $80,000 car and 2 houses. That's why I'm still here and I Love US Air and hope to retire from here. The company treats us like a person not a number like some Arrogant Airlines.

What company do you work for? .... Last time I checked my US Airways pay stub they contributed around 3% to my 401K .... it's the 20% I put in out of my deflated post BK earnings that give me any hope of getting out of this screwed up industry with anything for old age? And the lack of retirement health-care benefits should take care of any spare change left over .... lol! I should have listen to my family and looked for work in the public sector years ago!

 

[usa1]

Yea, so?

Everyone else did, so why can't AA? Double standard? The only people who won't get all the money they're entitled to, as I understand it, are the people who were supposed to get more than the PBGC max.

AA has paid its premiums and is in full compliance with the law.

Where's the beef besides the PBGC crying about something the government allowed?

Yea, you just wait and see how their formulas work out ...it's shocking.

 

[Kittyhawk]

As I see it:

- Horton is saying no merger, if he can help it, prior to exiting bankrupsy. Post backrupsy merger is possible, Where by he can call the shots and maybe keep his job.

- Creditors are saying merger is still on the table. This would not fair well for Horton because of his anti merger status, which puts DP in a good spot to run it because of an already established vision for the combo.

- DAL has good reason to throw there hat in the ring for attempting to purchase AA or US. It is in there best interest to keep this merger between US/AA from happening, this new combo would put DL at a inferior position on the East Coast, the bread and butter cooridor.

- I've read in many posts that US has nothing to offer AA. Though DAL seems to fear such a combo.

I could be way off on my views. But this is how it all appears to me.

 

[AAviator]

Yea, you just wait and see how their formulas work out ...it's shocking.

Your point?

Doug Parker is going to gallop in on a white horse wearing shiny armor to shower the employees with Delta pay rates and a DB retirement plan?

Hellooooooo!

 

[eolesen]

Creditors are going to consider all available options. What too many people here (as well as the media) keep ignoring is that the creditors have limited ability to do anything about it until late June 2013...

 

[WorldTraveler]

Creditors are going to consider all available options. What too many people here (as well as the media) keep ignoring is that the creditors have limited ability to do anything about it until late June 2013...

the initial period of exclusivity is over in only a few months. The judge does not have to continue to grant exclusivity to the company with respect to its POR - and it is precisely because there is the possibility that others could present a plan that is more favorable to creditors, including employees, that others are speaking.
I would not be surprised if even a subset of creditors are already having informal discusssions with some of the interested parties.

Kittyhawk,
your points are valid other than to say that any company is not going to sit by idly and allow changes to take place in its industry where they could turn them in their favor. Delta has the potential to gain enormous strategic benefits from an AA acquisition, principally in Latin America and LHR but also in the US southwest where DL gave up its own DFW hub to build NYC - and now stands at a disadvantage because both UA and AA have large global Texas hubs... in addition, of the big 4 (including WN) DL is the only one that doesn't have a hub in Chicago.
Mistaking the strategic value that an AA acquisition could provide for DL would be a mistake.
.
The primary difference between DL and US in an AA merger contest would be that DL has a far better track record of integrating other industry assets and in generating shareholder value through mergers and on its own. Those factors will be enormously impactful to the creditors in whatever decision they must make - and AA mgmt DOES NOT have the ability to continue to turn a deaf ear to proposals from the outside.

 

[damajagua]

the initial period of exclusivity is over in only a few months. The judge does not have to continue to grant exclusivity to the company with respect to its POR - and it is precisely because there is the possibility that others could present a plan that is more favorable to creditors, including employees, that others are speaking.
I would not be surprised if even a subset of creditors are already having informal discusssions with some of the interested parties.

Kittyhawk,
your points are valid other than to say that any company is not going to sit by idly and allow changes to take place in its industry where they could turn them in their favor. Delta has the potential to gain enormous strategic benefits from an AA acquisition, principally in Latin America and LHR but also in the US southwest where DL gave up its own DFW hub to build NYC - and now stands at a disadvantage because both UA and AA have large global Texas hubs... in addition, of the big 4 (including WN) DL is the only one that doesn't have a hub in Chicago.
Mistaking the strategic value that an AA acquisition could provide for DL would be a mistake.
.
The primary difference between DL and US in an AA merger contest would be that DL has a far better track record of integrating other industry assets and in generating shareholder value through mergers and on its own. Those factors will be enormously impactful to the creditors in whatever decision they must make - and AA mgmt DOES NOT have the ability to continue to turn a deaf ear to proposals from the outside.

WT
Any idea which name would survive in Delta-AA transaction?

 

[CactUS4Ever]

What company do you work for? .... Last time I checked my US Airways pay stub they contributed around 3% to my 401K .... it's the 20% I put in out of my deflated post BK earnings that give me any hope of getting out of this screwed up industry with anything for old age? And the lack of retirement health-care benefits should take care of any spare change left over .... lol! I should have listen to my family and looked for work in the public sector years ago!

I don't know what department you work in but IAM did very well on the maintenance contract and there in talks for the next one and we are progressing.

 

[etops1]

In a DL -AA transaction the DL name will survive since DL would break up AA. Not good for AA employees at all .

 

[WorldTraveler]

WT
Any idea which name would survive in Delta-AA transaction?

I may invite lots of controversy but I am not even going to touch that question with a 10 foot pole, esp. since there is no certainty that anything would happen.
.
There is no necessity that AA would need to be broken up in an AA-DL combination anymore than with any other network carrier, all of whom have some degree of overlap that could create antitrust issues.
.
The primary objective for AA in its BK proceedings over the next couple months is to implement the employee-related changes it wants - and how well those occur - with the subsequent response by labor - will say alot about how well the restructuring overall will work.

 

[AANOTOK]

The primary objective for AA in its BK proceedings over the next couple months is to implement the employee-related changes it wants - and how well those occur - with the subsequent response by labor...

Stay tuned....