AMR Asks Permission to Pay Rothschild $15 Million Fee as Financial Adviser

[Buck]

You're all facing a bankruptcy judge for several reasons, including:

1. AMR's employee wages, salaries and benefits line item has been about $2 billion higher each year than it would have been if AA had filed for Ch 11 back in early 2003.

2. Management guessed (incorrectly) that the other airline employees would quickly demand (and get) pay raises to close the wage gap.

3. Management didn't see AMR spending $30 billion more for fuel since the concessions than AMR would have spent had fuel stayed at 2002 prices. Bankruptcy-level wages helped the other airlines survive the increase in fuel prices.

4. AA's competitors walked away from billions of dollars of pension obligations (and other debts and liabilities), making every airline a "low-cost-airline" compared to AA.

I beg to differ, you see the whole picture and I see mine. My part of the labor cost has never been over that of Americans competitors. There has always been someone making more than the mechanics at American. As for work rules all the company has to do is tell the TWU what they want and it will happen. I will not speak for labor as a whole. I am sure there are enough pilots, fleet service etc. to speak for themselves.

Not sure where you came up with $2 billion, the company publicly stated $800 million in labor cost difference.

 

[FWAAA]

UA's bankruptcy professional fees (millions of dollars):

2002.....$10
2003....$142
2004....$160
2005....$230
2006.....$47
_____________
Total....$589 million

And that bankruptcy began nine years before AMR's Ch 11 case; lawyers, investment bankers, consultants and accountants have raised their fees in those nine years. I don't see AA's case taking anywhere near as long, but hundreds of millions of dollars can easily be spent in two years.

I beg to differ, you see the whole picture and I see mine. My part of the labor cost has never been over that of Americans competitors. There has always been someone making more than the mechanics at American. As for work rules all the company has to do is tell the TWU what they want and it will happen. I will not speak for labor as a whole. I am sure there are enough pilots, fleet service etc. to speak for themselves.

I'm not talking about your wages or any individual's wages. Just talking about total labor expenses. In 2011, non-executive wages were about $4.8 billion and benefits cost AA another $2.2 billion.

Not sure where you came up with $2 billion, the company publicly stated $800 million in labor cost difference.

That $800 million is Horton's assertion of AA's wage disadvantage compared to the average contract of the competition. My estimate of $2 billion assumes that AA will outsource as much heavy airframe overhaul as possible, enabling a reduction of thousands of maintenance personnel (including bloated management in Tulsa and Fort Worth) and that AA won't settle for a wage structure that equals the average of the UA, DL and US employee costs. I assume that AA will shoot for US-equivalent costs. You can't merge with US unless you reduce costs to US levels. At US employee costs, AA would have spent about $2.2 billion less in 2011.

 

[dfw gen]

Before taking shots at these professionals, remember they are being tapped as advocates and partners in AMRs restructuring, and will offer expertise and facilitate the process for AMR to emerge as a stronger, leaner, and more viable industry player. It's not like one person is being handed a check for $200k/month, they likely have a team of people devoted to AMRs case they'll also need to consult attorneys and other specialists along with other expenses. Don't let the facts get in the way of your preconceived notions.

Josh

why is it that the pric*s that do nothing but give advice and rape a company for all its worth are "professionals" while people that built the company are just fodder and expenses to be run thru the mill? advocates of what? their own wallets? an advocate for employees? please. the fact is Josh that America is for sale and there is not much left for the Advocates and partners to sell for their own good! have any of these advocates or professionals ever built anything? i mean actually contributed anything but their professional advice? the a**hole advocates and partners couldn't change the oil in their own car no less do any type of manual labor to help them selves. no but they give good advice eat sh*t pal.

 

[dfw gen]

Before taking shots at these professionals, remember they are being tapped as advocates and partners in AMRs restructuring, and will offer expertise and facilitate the process for AMR to emerge as a stronger, leaner, and more viable industry player. It's not like one person is being handed a check for $200k/month, they likely have a team of people devoted to AMRs case they'll also need to consult attorneys and other specialists along with other expenses. Don't let the facts get in the way of your preconceived notions.

Josh

why is it that the pric*s that do nothing but give advice and rape a company for all its worth are "professionals" while people that built the company are just fodder and expenses to be run thru the mill? advocates of what? their own wallets? an advocate for employees? please. the fact is Josh that America is for sale and there is not much left for the Advocates and partners to sell for their own good! have any of these advocates or professionals ever built anything? i mean actually contributed anything but their professional advice? the a**hole advocates and partners couldn't change the oil in their own car no less do any type of manual labor to help them selves. no but they give good advice eat sh*t pal.

 

[TWU informer]

I have no problem understanding that after the other airlines went through Rape C11, that our pensions and total labor cost became higher than those rivals. That is if your estimated calculations only inlcude bean counter head vs head wage/benefit comparisons. But what about the rest of the cost story? What about even in Bankruptcy proceedings/filings requesting permission to pay millions in job functions that already have employees on the payroll to accomplish?

I still would like an understanding, regardless of what others have done, why AA pays employees to do a job function, but then has to have someone else be paid to do that job also.

This company has a culture of doing that I guess from the top to the bottom.

Because I see that same thing happening daily in Machinist, Welders, AMT's, Crew Chiefs, Planners, Stafff Assistants, Supervisors, and Managers, even TWU Union Officers are paid daily by AA payroll, and yet someone else has to do their required production everyday, because once they are elected, that means they never show up to their job function, and instead AA pays them to wonder around aimlessly unaccountable to any confirmation they are performing some meaningful function.

There is no requirement to actually demonstrate you can do the job before you get it, and once the warm body/relative is put into place, there is never any accountability system to determine if you can or cannot do your job. It appears more like a money losing circus that an operation trying to compete in an industry. Even HR was outsourced, those employees just moved and hid away in other jobs that most of them cannot effectively do even today. Recently two level 5's were paid for over 60 days to do nothing more than work on the Salvation Army Angel Tree program. Sound cost effective to any of you readers?

AA can make all the employees give up more concessions, but as long as the top to the bottom cannot do their jobs, or at minimum AA pays two to do one, then AA will never be able to compete. Just beause the bean counter says the pay/salary matches or competes in sum, with the competition, that is all on paper, in reality one has to actually has to be able to adequately do the job for the competetive price, not just earn the pay. Bean counters never calculate that into the equation, because that data only shows up in numbers of heads, which they do look at while,scratching their heads wondering why AA has so many more. And that my friends is AA's biggest cost disadvantage in my opinion.

Given the requirement to hire professionals, to do the already paid professionals job function, just proves that even those areas I do not witness daily have the same problem/culture that we see at the bottom on a daily basis.

And you want us to subsidize this ignorance with more cuts/concessions/give backs and do with less while this huge problem continues? Why?

If you want to know WHY AA has more employees per aircraft than any other rival carrier, look no further than this issue as a start.

Think about this, for every 12-14 of those employees that connot do their jobs or worse are not made to do their jobs, it is close to $1 million in pay/benefits/penions per year. From what I see, we could all work for $5 per hour and AA would still be at a cost disadvantage if they are going to manage this way. This is why the answer on the surface of a bean counter's report out, appears to be to outsource maintenance just as they are now outsourcing management functions, when it fact, profits from third party maintenace work COULD be had if this were not the case and each employee did their job and someone other emploee was not having to complete someone else's job and their own on a daily basis.

I believe Delta Tech Ops brought in $1 Billion in maintenance revenue last year, how many you figure they are paying that cannot or will not do their jobs? In contrast AA Management in Tulsa has only talked about doing FAR 145 Third Party work and the reason why that never really happens is the logistics issue that stems from this rediclulous inherent problem that is not even on the table to be addressed as far as I can tell.

When my job gets outsourced, do I get to remain employed and make a 6 figure salary too??

It seems that when a Union Worker's job is outsourced, they are laid-off, when a high level management employee's job gets outsourced, they remain on the payroll and that gets justified by claiming the competition does that too! :-(