WorldTraveler
Corn Field
- Dec 5, 2003
- 21,709
- 10,662
- Banned
- #106
AA also has to have costs on par with true low cost carriers, of which B6 is one, or it will be guaranteed that AA will simply dismantle most of what B6 already flies and gain few benefits other than holding a bunch of NYC slots that they can't profitably use - the situation they are in right now.
We still don't know if NW was required to settle its labor contracts in order to exit BK by law, by requirements of its creditors, or if it was close enough w/ the FAs that they decided it was worth not carrying the risk of unsettled labor contracts back outside of BK. NW was given approval by the BK court to emerge more than a week before the FAs ratified the contract.
http://www.startribune.com/business/11217186.html?refer=y
We don't know w/ certainty that AA is required to renegotiate permanent labor contracts or that it would before exiting.
Tom,
if AA's primary purpose in seeking BK was to cut labor costs, it is not going to decide at the last minute that they have to "do" a merger and will ditch their need to cut costs. If cutting costs is what they intended to do and believe they need long term to survive, they aren't going to change their mind at the last minute just to merge.... and where is B6 going if AA doesn't go after them?
Finally, AA's money is all borrowed and has been for years. It doesn't really matter how much they came into BK with; the only difference between them and other carriers is that AA borrowed it before it was apparent they would need to file BK and kept their cash reserves high enough that they didn't need debtor in possession financing - and can probably exit w/o obtaining exit financing. Those steps just make their BK process a little less complicated and might lower the cost of BK somewhat but the money would have been borrowed one way or the other.
We still don't know if NW was required to settle its labor contracts in order to exit BK by law, by requirements of its creditors, or if it was close enough w/ the FAs that they decided it was worth not carrying the risk of unsettled labor contracts back outside of BK. NW was given approval by the BK court to emerge more than a week before the FAs ratified the contract.
http://www.startribune.com/business/11217186.html?refer=y
We don't know w/ certainty that AA is required to renegotiate permanent labor contracts or that it would before exiting.
Tom,
if AA's primary purpose in seeking BK was to cut labor costs, it is not going to decide at the last minute that they have to "do" a merger and will ditch their need to cut costs. If cutting costs is what they intended to do and believe they need long term to survive, they aren't going to change their mind at the last minute just to merge.... and where is B6 going if AA doesn't go after them?
Finally, AA's money is all borrowed and has been for years. It doesn't really matter how much they came into BK with; the only difference between them and other carriers is that AA borrowed it before it was apparent they would need to file BK and kept their cash reserves high enough that they didn't need debtor in possession financing - and can probably exit w/o obtaining exit financing. Those steps just make their BK process a little less complicated and might lower the cost of BK somewhat but the money would have been borrowed one way or the other.