@APFAunity tweets

[thnkppl]

Here are 5 tweets from @APFAunity from AA bankruptcy court from about noon central time.


@APFAunity: Rob Clayman, APFA's attorney is finished with his cross.
Now TWU's attorney Sharon (forgot her last name sorry)

@APFAunity: Sharon - are you aware that AA's fleet is the oldest in the industry right now and they're looking to upgrade?
Glass - yes.

@APFAunity: TWU/Sharon - And with newer A/C there will be a need for less maintenance because of newer planes?
Glass - yes.

@APFAunity: Sharon (TWU att'y) is asking about number of jobs lost and getting clarification from him.

@APFAunity: TWU is asking about US Airways negotiations during their bankruptcy and the value of their concessions.

@APFAunity: Sharon is finished crossing. AA asked for a 5" break to consider redirect testimony. granted.

Thanks Sharon!

You made it seem very clear that AA should lay off more mechanics.

Good job TWU!!

 

[rifbound]

https://twitter.com/#!/APFAUnity

 

[JustAStew]

I want to be clear about those tweets - they are not meant to be an exact record of what happened. I was typing as fast as I could but this was not all of what was said or even an exact quote. Your attorney, Sharon, is awesome. I was so impressed by her and also our attorney, Rob Clayman, who I've known for years.
Read the transcripts when they are made public because I didn't do that thread justice or her!
Sorry,
Leslie (apfa tweeter!)

 

[enough already]

Leslie, thank you for your time and efforts to provide us some semblance of communication from the BK court. For some reason the TWU won't do that.
Also, Reuter's Nick Brown tweeted that he'd be there today as well.

 

[enough already]

Duplicate

 

[jersey777]

This is not an excuse for the TWU, but the fact that the APFA is an in house union, the people running APFA are flight attendants themselves. There is a tremendous vested interest in everything that is going on during bankruptcy because at some point in time these same union officials will once again become line flight attendants and these hearings affect them directly.

 

[Mr Red]

This is not an excuse for the TWU, but the fact that the APFA is an in house union, the people running APFA are flight attendants themselves. There is a tremendous vested interest in everything that is going on during bankruptcy because at some point in time these same union officials will once again become line flight attendants and these hearings affect them directly.

Your right NO EXCUSE FOR TWU !

 

[737823]

This is not an excuse for the TWU, but the fact that the APFA is an in house union, the people running APFA are flight attendants themselves. There is a tremendous vested interest in everything that is going on during bankruptcy because at some point in time these same union officials will once again become line flight attendants and these hearings affect them directly.

What are Jim Little and Don Videtich doing now? Aside from a possible decertification or change of representation because they do such a sh!ty job representing you guys what are the implications for them? How many of the international officials are AMTs?

Josh

 

[chris perry]

What are Jim Little and Don Videtich doing now? Aside from a possible decertification or change of representation because they do such a sh!ty job representing you guys what are the implications for them? How many of the international officials are AMTs?

Josh

Josh
The sad part is there is nothing the membership can do Jim and Don are untouchable.

 

[Buck]

Josh
The sad part is there is nothing the membership can do Jim and Don are untouchable.

Remove the TWU

 

[enough already]

@NickPBrown: Gallagher on TWU: they're not in love w/ us and we're not in love w/ them, but we found a way to make a deal. #AMR

 

[paul1]

Nick Brown‏@NickPBrown
Gallagher: 20 pct cuts from labor are OK; labor unions are at or above market. only #AMR management is below market.

http://www.reuters.com/article/2012/05/25/amr-labor-idUSL1E8GPAKJ20120525?feedType=RSS&feedName=mergersNews&rpc=43

 

[Bob Owens]

What are Jim Little and Don Videtich doing now? Aside from a possible decertification or change of representation because they do such a sh!ty job representing you guys what are the implications for them? How many of the international officials are AMTs?

Josh

Don was there all week

 

[Bob Owens]

Here are my notes from today
Gallegher opened for the company;
;May 25
Judfge-Closing Arguements, the Company goes first

Gallagher-introduce exhibit
-17-09 AA evaluation for TWU proposal for Mechanics
-17-79 same for Stores
-Valuations assigned by the company
-
company-1778a, 1704 submitted as well, Delta BK case

The documents were confidential they did not go into detail what was on them. Could be that they admit that they screwed up on the valuations, It came up earlier that they were $40 million off with M&R and $2 million off on Stores. This may, pure speculation, have something to do with the ME Too clause. a way of sweetening ours without kicking in the Me Too.



Judge- UAL offered several pages, any objections?
C-No

APFA
Early out calculations

Judge- Debtors will Go first. Move up final submissions to June 4

C- Gallagher- 1779 , mechanics proposal cost out ,proffer admitted?

C-Gallegher (Kisses Judges ass) Stated that they proved their case (Surprise!!)

C-"The proposal the debtor makes must be based on the most complete information available at the time of the proposal"

The company went on to say that they cant be expected to base their six year "ask" on what wages across the industry have done recently or will do over the next six years -Delta Pilots 19% incresae and the recent M&R UAL agreement.

-Must be necessary for the reorganization

-Estimating what the debtor needs to reorganize in the future.

On the one hand he says that the proposal does not have to consider the future from the workers perspective but it does from the companys perspective.

-AA lost $10 billion over the last 10 years

-Has lost $80 million a month this year

-The parties have negotiated 4 years

(but the unions would not give the company what they want)

-Bankrupcies non labor costs were in line (because they did not outsource) but their labor costs were not.

This is one point that the TWU lawyer missed in an otherwise good arguement. Of course AA's non labor costs are "in line" with other legacies, the question is why arent their non-labor costs much much cheaper than competitors? With all the in house we have their non-labor costs should be much much less than their competition. Their non labor costs are onlu "in line", despite much less outsoucing, because they were pissing away money paying for facilities they didnt use, airplanes they didnt fly and other expenses that they should havebeen cleared off their balance sheets back in 2003, when they should have declared BK. I'm sure the banks that owned those properties were happy to keep collecting rents, plus now they get to act like injured parties after a nine year free ride.

-"Its undisputed that AA has a labor cost problems'

No its undisputed that AA pays more for labor, but they also pay much less for vendors who do M&R for them. Despite that their non-labor costs were only "in line".


-"AA unions admit that AA needs a reduction in labor costs"


Not true, AA Unions agreed to cuts under the treat of abrogation without the right to strike
-.Major issues in the terms of these contracts
Pilots scope clause
TWU Limitation on total flying by regional carriers, 6% cap
-Those two things bring us to this point.
We are the last major airline to go through Bankruptcies.

They agree that the changes the debtor sought are necessary for the reorganization.

Judge -Do I have to look at each union separately?

C-We believe in the setting of evaluating the business plan we need not look at each part, but it should be judged on the whole.

Judge- Business Judgement is deferential to the debtors?

Judge- How does business judgement standard come in?

C-Model was given to the unions.

Judge- Lets talk about model, unions were critical ,

C-Models were fully available to the Unions.
-Cant take $500 milion in labor costs out without impacting many other things

Judge- That I understand but I suspect that we are going to hear other things

C-BP addressed 5 points
-lack of profitability
-Lack of revenue

--Scope clause restriction

$990 million needed from the Unions

Judge- Are you saying i can only consider final agreements?

C-You are only supposed to consider the debtors proposal. None of the contracts come close to what is needed. Judge in Hostess case said that parties were very close and thats why he did not grant motion, we are not close, we are $500 million apart, we have the scope clause and the TWU ASM cap.
Do Unions proposal get us close or near where we can compete? "Under Unions proposals we simply cant compete".

Judge.Those number bear no resemblance to what happens. Is company thinking " If we shoot high we will get what everyone else got".

C-We are asking for the same EBITAR targets as everyone else, except amybe one other carrier.

-Every one of those airlines (who went BK) targeted above what they had achieved prior.(Concessions they got prior to filed)

-Our model takes into account the present

Judge- Other BKs predicted numbers that they never actually got.

(UAL actually earned higher profits than predicted.)

C-Reasonably necessary. We did not want to overreach, how low can we go and withstand exogenous events.
-Don't go piece by piece. We think its (ASK) reasonable.

Judge. Before we get to individual unions, the term sheets (USAIR) in your view speculative, in the union view concrete. Should I not look at the term sheets?

C-USIAIRWAYS is purely speculative, unions have not proved that cost cuts are not necessary.

-Delta and Nortwest developed in BK but did not complete it till they came out. AA does not need a -merger, it needs a competitive cost structure so it can compete. If it can do that, then some time in the distant future they can consider. We need to get out of BK. There is no question we need these changes for a successful reorganizations.
-These term sheets, they are an agreement to agree, they are contingent on the transaction, they are contingent on membership ratification.
-Pilots and FAs stopped negotiating after term sheets with USAIRWAYs.
-TWU did, they negotiated and bargained for a deal and brought it back to their members and 5 out of 7 agreed.

(Negotiated? there were no TAs they submitted to the gun held to their heads)

-Unions other argument that our plan was a place holder (till a merger or other BP) is not supported by the evidence.

-Last argument is that it Seeks too much. AA proposal generally placed them generally in the middle, not at the bottom. AA's proposal consistently placed. USAIR placed their workers at the bottom.

Judge-There have been discussions about company not moving off their ask. Unions told "You could change the items but not the overall value".

-Company said they were not going to ask more from labor by freezing thye pension. That changed the value

-We did not ask for too much because thats not the way this is done. We asked for what was necessary for the business plan.

-When they went to USAIRWAYs the unions used the company's evaluations so that proves that the company's valuations were good.

-Mercer , AA relied on Mercer, Mercer actuaries explained what they used to make their evaluations. (

(Mercer was convicted in NYSE evaluation for executive pay, the said whatever the person who hired them wanted them to say, Mercer is a company whose main purpose is to help companies screw over their workers for more read "Retirement Heist)

-Pilots reserves at AA not in line with competition

-On the question of asking for too much
-AA needs capital investment (Claiming that banks wont provide capital unless they have a 17+% EBITAR)
-AA needs liquidity
-Analystst say that a company with $25billion in revenue should maintain 20% liquidity.
-AA has no other place to cut costs.
-Profit sharing, the plan expects many millions of dollars. if we did seek too much the employees will share in the success.

He left out how much this time $360 million from $2.88 billion in profits.


-Jobs, employees who remain get industry average, they get pay increases, profit sharing. (guess he forgot how the company said that since we did not ratify iy we would not get those things.) The only groups that below industry standards is management and non-union employees. Wages and benefits do not have to be cut to the same degree. Company's proposals are market based and will save 6700 jobs.

(Hmm, mechanics and Stores at at the bottom in wagse, Holidays, Vacation, sick time and benefits, under the terms they wish to impose we would be at the bottom in everything, by far.)

-AA has 67 million members of Freq Flyer program
-We urge you grant our motion in order to permit our company to move forward etc etc for our employees and other stakeholders.

Judge asked question on RJs,AA wants unrestricted use of Regionals?

-Company says that its calculated

Judge asked about code sharing. Company claims industry standard not in line with code sharing,"do you agree that its unrestricted code sharing"?

-Northwest and United came out of BK with no restrictions on code sharing, beyond that unlimited code sharing partners, no restrictions.
-UAL and delta can accept greater code sharing limits today than AA because they are larger.

UCC rep, Jack
UCC found guidance in Judge lanes recommendation on Delphi decision.
Statute requires that the debtor exercise reasonable business judgement.
This is part of the process, every road here ends up back at the bargaining table. Congress has given the court a very narrow mandate whether the debtors can make their case that they have to have the changes, more right and wrong. We conclude that they are more right than they are wrong.
We recognize a level of frustration, good faith with a level of frustration. One union made a $500 million move in BK towards another contract. Restrictions on competition, have caused American to lose.
Company has no intention on paying off creditors in cash. They will get partial.
Competitors care about AAs success.
AA must change.
The court needs to look at those specific things. The court must decide whether existing CBAs will govern or the court will allow the debtor to impose new terms through negotiations.
Debtors failed to consider any other viable stand alone plans. Stand alone business plan is not a reorganization,
Congress suggests the court needs to consider Does the BP require the concessions and does the BP plan have a likeliness to succeed.
Are they more right than wrong, if they have then the court needs to grant the request.
have they exceeded the standards?
the evidence shows that the company never moved off their ask?
Company said they didn't know when was the time to move
Unlike Section 6 they are not supposed to start high
EBITAR Mr Yearlings testimony that 17point, excuse me.(OOPS 17% EBITAR Slips out again!!)
Debtors adopted an all or nothing approach, they had previously attributed values then later changed it to ZERO.
Case law and Congress instructs us to determine whether its reasonable or necessary .
Strategic alternatives.
USAIR
Term sheets
The fact they exist does not effect the determination of whether the labor organizations had good cause to reject.

One more point, Committee believes that the court should reject the contracts but not at that time.

We believe the court should not tell the debtor what they can impose.

Talked about War Games, black box starts war based on perceived threats. Computer shuts down because it determines the only way to win is to not play.
Tic tack toe
We believe that the only way to win is not to play.

(Basically he was saying that they dont want this thing to blow up in eveyones face, yes they want to screw the Unions as much as the company but they realize that AA is asking for too much and has been too inflexible, sure they would love equity in a company that has a 17% EBITAR but the threory behind the business plan is about as sound as the theory behind a perpetual motion machine, it isnt going to work, neither will the BP, and for the same reason, FRICTION)


APA Closing arguements
P-Gallegher says we used company's numbers, we used our own numbers. -

-Proposal must contain only necessary changes

Judge Let me ask some specific terms, supposals, how do I consider that?

P-Good cause, good faith, the (could not hear him)

Judge, What am I supposed to make if there are only two things out of 10 in the Bucket?

P-Lets look at scope. most of its with the RJs. The company would not give us value. Its not just the $370 million but its the things they wont move on. things they wont monetize are huge. Domestic codeshare, Prebankruptcy we gave them value on the codesharing, now they want it unlimited. They went from 1 and 1 to 1 and unlimited.
-RJ we gave them almost the exact number in the BP,
they wanted 3 times that number 400% bigger than jet blue.
-Company wants three times whats in the business plan.

Judge- let me ask about codeshare, Company says others have no restrictions.

P-United codeshare actually has restrictions, none of them are completely unrestricted.

Judge-What should I look at what they have now or what they had coming out of BK?

(I thought they don't care about the past?)

P-There are actually three time periods, Before, post BK and now. The arbitaror would consider all three. The scope protection goes way beyond the plan. Furlough protection, they want to eliminate any furlough protection, they have Force Majeure, they used it after 9-11
-Pilots and the finances, if there is one group that cares about the success of the company its the pilots. ---Pilots usually dont like mergers because we dont fare well but AA needs to in order to succeed.

Judge, Chances of a merger transaction, 50%
Where do the terms fit in?

P-Is this term sheet necessary to reorganize. The company put on blinder for a stand alone

Judge How do I use this according to the statute?

Judge BK is not what the case is about. When people talk about alternatives they make comparisons. Does 1113 require this to be done?

P=Hard to say they have given the most complete and reliable info when they haven't done this. There is no way to undo this, they can come back with other 1113s, we cant. It makes a mockery of the statute. If we give too much we cant go back again.

Judge Becomes a question of degree.

P-The company put on blinders from late last year then 10 days before the hearing said they would consider consolidation.

P-1113 makes permanent cuts on one class of stakeholders but not others. Horton said on November 9 2011 they had an $800 billion labor cost disadvantage then in BK Bev Goulet says $1.25 billion.
AA EBITARis over the top of all competitors, including LCCs

-Labor ask is slowly driven by business plan.

J-What do i make of the fact that companies didnt meet objectives.

P-Now we have a more realistic view of where the EBITARs land.
They could not even model (could not hear)
When the Freeze occurred they changed numbers in their BP.

How do you determine necessity when they have 460 airplanes on order?
That is a huge driver of their financial difficulties, we didn't get that from Rothschild.

Judge, Number of RJ, 50% of mainline What is the number from your point of view?

P-The number we offered in bargaining they want 300%, it was unreasonable, the other issue is seat gauging, 88 seats, higher than other legacies.

-A 1% shaving off the EBITAR takes the pilots down to $270million which is exactly what we offered them.
-What changed dramatically in two months? fuel etc.
-Convergence, company said its not coming fast enough. Delta will be 40% higher than Aa pilots.
-If they proposed some sort of snap back, steady state we would have had a different type of bargaining.
-FAIR AND EQUITABLE 1113 has to be based on most complete info , company admits they never gave us empla model.
-USAIR workers are older.
-We have good cause for turning down this proposal, we say grant the denial temporary. You cant go intop BK with bliders, has to be their proposal, better look at whats going on in the industry. For us there is no going back, We are the only ones stuck with a permanent deal.

APFA

Passed out confidential material, previously entered into record

F-The term sheet is on trial, the substance. methodology and behavior is all on trial.
judge Rain said that 1113 is a higher standard than the rest of C-11.

-Why the terms sheet failed
-Six years of concessions from FAs
-Predicated on arbitaritly selected EBITAR target
-Concession sought are not

-Necessary, Necessary to what? Aa say stand alone plan. Conceded may not be necessary to merger alternatives.

-Company contends that merger is entirely irrelevant. AA misrepresents the likelihood of consolidation. ----Horton believes consolidation is something that has to occur.
-Ms Goulet said I believe thats an accurate of what MR Horton believes.
-Its not a question of if, but when.
-UCC said merger alternatives will be vetted though the UCC.
-AA right extends to Sept 28 of this year.
-Assertion that strategic alternative are irrelevant is false.

-Why would AFA sign away its right to bargain for 6 years? Merger transaction could substantially improve conditions at AA.
-NWA established that there is no mechanism to revisit 1113, it cant be undone.
-Laura Gladding testified they want a viable business plan. The plan did not hold up.
Presented confidential Akins chart on projected growth over 6 year period.
-AA size will remain unchanged among its peers . AA stands still. how is standing still better.
-Many creative solutions that APFA offered AA refused to consider.
-Term sheet based arbitrarily selected EBITAR Target.Rothschild developed wide range of EBITAR targets. Rothschild didn't recommend any particular target.
how was it selected? that remains unknown. AA ended up in middle if the pack
Company's burden to explain why a particular Target was chosen

range was not reasonable,
-Proper comparator is other network carriers. Even successful network carrier would not expect to meet LCC costs.

Hostess established EBITAR standard.

$25 billion, a 1% reduction in EBITAR is $250 million

Market based
Top down approach, based on EBITAR.
AA should have done a bottom up, based on market rates. If the debtor determines that it can not operate profitably with market raters on labor then it points to other problems in the BP
Market based approach reflects an attainable standard, market based for all groups is undoubtably Fair and equitable.

In other words the company said to themselves "Rothchilds gave us BPs from A% to X% EBITAR, lets pick w% not based on thats what other earn but simply because we want to, then lets see how much labor will have to give us because BK allows us to do whatever we want"

APFA is not the only party, AA thinks its irrelevant.

page given to AA Board in November of 2011.
Company was projecting that FA labor cost gap would be eliminated by 2014

Gallegher remarked that on such a motion there are no winners
If the motion is granted both will lose, if denied there is a sound prospect for all the parties. thats the road we should have been on.

TWU
Sharon Levine
The targets were the men and women who come to work
assumption that abrogation is not that big of a deal because we just go back to bargaining table,
Relief being asked from M&R and stores is 40% of the workforce. Once gone we cant go back.
Debtor asked for $212 from M&R.
when we came to the table we were and are the lowest paid in the industry, Glass cherry picks, does not mention M&R wages. Health care most expensive. decisions in 2003 make these concessions more difficult.
We took the FEB 1 offer and put forth the MAR 21 offer, we proposed 2100 jobs, we offered 15% ASM cap, we have met the debtors relief. We've tried to work within the parameters without eliminating 40% and leaving us at the bottom of the barrel.
No snap back, no steady state, asked for permanent concessions.
Once a station is closed that job is permanently gone. Mar22 was identical to the Feb 1. When never walked away.
Since 2003 union has been communicating, actually resulted in insourcing.
Two things are happening, we are negotiating, we are being asked fopr things are not necessary.
Added burdens that are encased in 1113. Cut labor below market rates then negotiate better deal with other stake holders. Company is not saying this is the final business plan, in other carriers it was.

Saw the pension go from terminating to Freeze. PBGC said they dont want to be the biggest creditor, Creditors did not want their settlements diluted, and unions did not want pensions frozen.

We should not be used as the bait. That is not the standard of 1113.

Revenues exceed your costs.
That does not mean you get to pay your workers below market rates.
3000 additional jobs at risk with new aircraft.

Thats another 3000 jobs gone, that they could dump since there would no longer be system protection much like 2003, we lost 5000. That would bring total job losses for maintence since 2003 around 13000. We wouuld have around 3000 left if they were able to find places to outsource the work.


On (Unions proposed) outsourcing alone we met the debtors needs.

TWU has conducted itself throughout the process, terminating would do nothing to get an agreement

Company requested another rebuttal

Company-Smart strategy for unions for unions to drag this out forever.

continued whining, at that point we left





Sent from my iPad

 

[Buck]

Bob,

AA claims to have the highest Labor CASM, yet we are the lowest compensated of the legacy carriers.
How can this be, apples to apples?