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you'll recall that I have said for some time that the size of AA's debt load necessary to turn the company around would put them at a disadvantage to their peers - and now AA confirms that.it sounds a lotlike they may not be able to emerge as a stand a lone from they way the link above was describing. Im not saying a merger or anything like that, but AMR should have known that emerging from CH11 and having the debvt most likely due to its orders of Airbus andBoeing aircraft would not disappear but then again keep onoperating the MD-80 gas guzzzlers compared to Boeing andAirbus fuel efficient planes has to be taking a toll on them. The mgmt always says labor labor labor well what about mgmt taking their flippin pay down to $1.00 a day instead of labor labor labor
and, you'll recall that I've said all along that AA was mis-managed before ch. 11, now it's confirmed, they're mis-managed during the restructuring, and they will continue to mis-manage the place once they emerge. Again, nothing will change at AA except for my reduced pay, benefits, and retirement. Good job!you'll recall that I have said for some time that the size of AA's debt load necessary to turn the company around would put them at a disadvantage to their peers - and now AA confirms that.
So, yes, AA employees are being asked to fund the turnaround which isn't terribly uncommon in BK but what is different is that no other carrier has embarked on a spending spree the size of what AA is doing as part of their turnaround plan.
and, you'll recall that I've said all along that AA was mis-managed before ch. 11, now it's confirmed, they're mis-managed during the restructuring, and they will continue to mis-manage the place once they emerge. Again, nothing will change at AA except for my reduced pay, benefits, and retirement. Good job!
and, there's people still willing to jump thru hoops to save the airline! good for them....
here is the document referenced... it is always worth reading for yourself what the company is giving to the judge to read.
True, and hopefully they will include:In theory everything in these motions is factual, but there's plenty of presenting selected facts to make a case from all sides.
Jim
That's not what the court ruled. The only part of the opinion that mentions "never existed" is in this portion of the concurring opinion:
Neither the majority opinion nor the concurring opinion said that abrogation means the contract "never existed."
Nope. The court didn't claim that the NW AFA FA contract never existed.
Prior to 1113, bankrupt airlines had summarily rejected labor agreements under section 365. Generally, bankruptcy law permits debtors to reject all executory contracts (except certain railroad labor agreements). Congress enacted section 1113 in an attempt to make it slightly tougher to reject labor agreements. Under the holding of the NW AFA appellate opinion, abrogation is not a unilateral action - and employees are not free to exercise self-help. Although there's some appeal to the notion that abrogation should permit the employees to strike, that would make it difficult (if not impossible) for a bankrupt airline to reduce its labor costs. Of course, affected employee groups would obviously prefer that bankrupt employers not be able to abrogate labor agreements, but other creditors would obviously prefer that everybody (including employees) share in the cost reductions.
As well as remembering why the document was filed with the court. In this case, the purpose is to support the 1113 motions so it should be no surprise that it says AA will have difficulty restructuring if it doesn't get it's 1113 motions approved. In theory everything in these motions is factual, but there's plenty of presenting selected facts to make a case from all sides.
Jim
if we ever get there.Should be simple to prove at the hearing then...
Jim
My post is a discussion of the Court of Appeals decision, so the word "court" in that post above refers exclusively to the Court of Appeals.Depends on which "court" you are talking about.
You make it sound like NW went judge-shopping, but all they did was appeal Judge Gropper's denial of their injunction to the District Court, where Judge Marrero issued the injunction. Recall that the NW FAs also appealed the decision to abrogate to the District Court as well. Appeals from bankruptcy courts go to the District Court - so all NW did was appeal. The FAs then appealed that decision to the Court of Appeals.Gropper ruled that the AFA could strike because when he abrgoated the contract and NWA imposed new terms it amounted to "unilateral action in changing the status quo that in turn frees the employees to take jobs action", just as it did when Continental did the same thing in BK back in 1983. NWA didnt like the decision so they went to another court and got Judge Marrero to issue an injunction because he said that because they went through BK its as if the contract never existed so there is no Status quo to violate, the Appelate court disagreed with that reason for obvious reasons (and to save him embarrassment did not include details) but they decided to uphold the injunction on the strike by citing RLA and NLRA cases where injunctions were issued against strikes but none where a contract under the RLA was abrogated, new terms imposed and the workers enjoined from excercising self help.
AA's labor agreements are analogous to a long-term agreement by AA to pay $4.50/gal for fuel when they're pretty sure the market price is more like $3.50/gal. Assume that AA then files a notice of rejection to that $4.50/gal long-term contract and the court approves the contract rejection. Is the now-mad fuel supplier permitted to picket AA's operations in an attempt to prevent AA from acquiring any fuel (can the fuel company attempt to disrupt AA's flights)? Of course not. The pissed-off fuel suppler is free to sell fuel to AA at the "abrogated" price of $3.50/gal or it is free to sell its fuel to someone else. But it won't be permitted to disrupt AA's operations just because it's pissed that it can no longer get $4.50/gal.What you failed to mention in your comment on creditors is that other than Labor no other creditor is forced to continue to provide their product under terms they did not agree to. If AA were to argue that their business plan, the one thats necissary for it to successfully reorganize, required that oil companies give them fuel at $2/gallon or that JFK only charge them $400 to land a 777 at JFK could the courts force them to continue to do business with AA under AA's terms? Sure your response may be that the workers can quit, however the Union is a collective of workers organized as one just as a corporation is a collective of investors acting as one, just as workers can quit if they dont like the court imposed terms shareholders of those corporations could sell the shares if they didnt like the imposed terms.
My post is a discussion of the Court of Appeals decision, so the word "court" in that post above refers exclusively to the Court of Appeals.
You make it sound like NW went judge-shopping, but all they did was appeal Judge Gropper's denial of their injunction to the District Court, where Judge Marrero issued the injunction. Recall that the NW FAs also appealed the decision to abrogate to the District Court as well. Appeals from bankruptcy courts go to the District Court - so all NW did was appeal. The FAs then appealed that decision to the Court of Appeals.
AA's labor agreements are analogous to a long-term agreement by AA to pay $4.50/gal for fuel when they're pretty sure the market price is more like $3.50/gal. Assume that AA then files a notice of rejection to that $4.50/gal long-term contract and the court approves the contract rejection. Is the now-mad fuel supplier permitted to picket AA's operations in an attempt to prevent AA from acquiring any fuel (can the fuel company attempt to disrupt AA's flights)? Of course not. The pissed-off fuel suppler is free to sell fuel to AA at the "abrogated" price of $3.50/gal or it is free to sell its fuel to someone else. But it won't be permitted to disrupt AA's operations just because it's pissed that it can no longer get $4.50/gal.
Sadly, AA's labor agreements are that $4.50/gal contract (except for M&R - I realize that the mechanics are the odd exception to AA's near industry-leading wages). So if the court abrogates the contracts, AA is free to impose its terms, which is the last offer made by AA to the unions. The court abrogates the contracts if the court finds the requirements of 1113 are met, which are essentially "either the labor costs are cut or the company would liquidate." I realize that you frequently advocate liquidation, but in bankruptcy, that decision is made by the debtor and the court, along with the unsecured creditors committee, not just the union representing mechanics. And yes, just like the fuel supplier, the pissed off mechanics are free to sell their labor to anyone they want. The only thing they can't do is exercise self-help in an attempt to force AA to meet their demands.
Let's be honest here. AA may be cruel, may be greedy, may be evil. But AA ain't stupid. AA knows that the wages and benefits under the term sheets are still high enough to get most of the employees to keep showing up for work. By definition, the market prices for the employees' labor. It's not in AA's interest to propose terms (or impose terms in 1113) that are beneath the minimum necessary to get enough workers to show up for work. Bottom line: Whether or not the contracts are abrogated, no employee is required to show up for work against their will. All remain free to pursue better opportunities. I realize that doesn't please you, but look at it this way: bankrupt companies can force their vendors to continue doing business under agreements very favorable to the debtor bankrupt company (imagine a long-term contract to supply airplanes at a very favorable price, like AA's Boeing prices). Boeing can't do anything about that favorable contract even though it might like to raise the price. Your M&R contract is favorable to AA, right? Don't you say that AA's getting a good deal on its maintenance? Be glad that AA can't physically force you to provide maintenance at your previously agreed-upon rates. You remain free to tell them "No" and sell your services to Southwest or UPS or FedEx. Boeing is stuck - it has to keep selling AA planes at cheap prices.
rk are two completely different things.
To say I "advocate liquidation" is yet another one of your spins. I've made it clear that if AAs position is that it needs us to agree to a payscale that that is considerably lower than Market rates, in addition to outsourcing more than UAL, 4 sick days a year, less vacation, less holidays, the most costly medical and most deficient pension in order to not liquidate then we are better off to let them liquidate. Past experiences have shown that if a carrier is so weak that the only way they can compete is for their workers to subsidize them by accepoting less than Market rates that all workers, even those from the company the company that liquidates, fare better in the long run to allow liquidation rather than subsidize the failing operation and the sooner the better. Other companies expand their operations and pick up the assetts, as well as the workers and in less time than the proposed terms we would be at top rates at the other company.
Since Pan Am was carved up in pieces over a period of years, would you like to share with us how many employees UA hired from Pan Am since UA bought the Pacific operations and then a few years later the Latin America network as well?Oh like Delta buying PANAM! Yea PanAM workers did well with that move...