I have posted this article and the APFA union hotline for Oct. 7 under it. Looks as though they are gearing up for concession talks and trying to talk the membership into believing it is for everyone's interest to give more.
Scary stuff.
Arpey wants help of labor
American chief says ongoing restructuring needs union support
12:00 AM CDT on Friday, October 7, 2005
By ERIC TORBENSON / The Dallas Morning News
American Airlines Inc.'s chief executive suggested Thursday that the carrier's unions would have to offer more concessions to help it stay solvent.
"We have been, in my mind, continuously restructuring the company for many years now, and we're going to have to continuously reconstruct the company going forward, and we need labor to be our partner in that process," chairman and CEO Gerard Arpey said. "We're going to work together to find our way out of this situation."
Mr. Arpey discussed the issue with reporters after a speech to the World Affairs Council of Greater Dallas at the Grand Hyatt hotel at Dallas/Fort Worth International Airport.
He didn't use the word concessions. But he signaled that the airline – the last major network carrier to avoid bankruptcy court – can't survive in its current state. American's 80,000 employees have given back $1.8 billion in annual wages and benefits since May 2003.
At least one union chief said he thinks Mr. Arpey is all but asking for work rule changes that will aid the Fort Worth-based carrier, which has lost $7 billion in the past four years.
Ralph Hunter, president of the Allied Pilots Association, told his board of directors late last month that Mr. Arpey has laid out the grim facts of the carrier's fast-deteriorating finances and expects pilots to conclude that they need to give something back.
"We have the ability to do this right," Mr. Hunter said in an interview last week. "The longer we wait, the less amount of luxury we'll have in making choices – we won't get to study this forever."
No concession talks are under way, Mr. Hunter noted, and it will ultimately fall to his board to start talks with the carrier. Any possible changes in the union's contract would explore pilot scheduling efficiency and not address wages or pensions, he said.
Mr. Hunter's opponents on the board are urging American's 12,000 pilots to change directors to protect pilot interests and not concede any more to the airline.
"The gap at the BOD table between the company advocates and those pilots who represent pilots is closing," said Hunter opponent Sam Mayer, a New York-based pilot and union board member in an e-mail to pilots.
"I'm sure the concessionaires recognize the threat and will attempt sooner rather then later to ram through a concessionary package before the membership has a chance to effect a change at the [board of directors] table."
Mr. Hunter said he cannot spend time fighting board dissidents but instead must put his energy into persuading the average pilot about the urgent situation facing American. Mr. Arpey said he was pleased with how all his labor leaders were working in the new cooperative process he installed 21/2 years ago designed to revolutionize airline-labor relations. He would not discuss whether he expects the unions to volunteer concessions.
Mr. Arpey's address dealt with threats to his airline and D/FW Airport that threaten both their abilities to compete in the globalized economy. Taxes, jet fuel and Southwest Airlines Co.'s campaign to end flight restrictions at Dallas Love Field – potentially forcing American to unravel its D/FW hub to compete at Love – all concern him.
"To purposefully weaken D/FW would be akin to unilaterally disarming in the fight to attract talent, jobs and capital to North Texas," Mr. Arpey said.
Shares of American parent company AMR Corp. rose 85 cents to $12.41.
E-mail [email protected]
Hello, this is APFA President Tommie Hutto-Blake with a hotline update for
Friday, October 7, 2005.
This week your APFA leadership including the Executive Committee, Base Chairs,
Vice Chairs and National Coordinators attended APFA’s annual constitutionally
mandated training in Scottsdale, Arizona.
The purpose of this year’s training was to bring all of our leaders together to
focus on the state of our industry, our Company and our Union, to both
strategize and prepare for all possible scenarios in the months ahead.
During this very intensive three-day training, facilitated by labor attorney and
strategist Mark Richard, we spent two days focused on internal union strategy
and one day reviewing the joint process called the Performance Leadership
Initiative (PLI). The Performance Leadership Initiative is an efficiency study
mandated by the Joint Leadership Team * the labor/management council made up of
senior officers of the TWU, APA, APFA and AA. The purpose of the PLI study is
to collect data and shine the “spot light†on any inefficiency “from the shop
floor to the sixth floorâ€.
The two days of internal union work allowed your APFA leadership to discuss
labor strategies openly with labor attorneys, a top aviation economist, as well
as one of the foremost bankruptcy professionals. This was solid work the best
interest of the AA Flight Attendants. In the months ahead we must be prepared
for any and all events.
During the one day of joint work, your leaders reviewed the data collection from
the Joint PLI with leaders from APA, TWU, senior AA management and outside
consultants working for this labor/management project. Again, the purpose of
this work is to spotlight ways to reduce costs without impacting the labor
agreements. The three unions on AA’s property are focused foremost on finding
ways to reduce costs without impacting labor agreements. This will without a
doubt be a challenging journey but it must be the next step if we are to be
treated as real business partners.
While none of us knows exactly what the future holds we do know this: that when
times get tough we need to stick together. If we do just that we become a much
more formidable force.
Be assured that your Union leaders came away from this week’s training with a
realistic view of our current challenge. We have surrounded ourselves with top
labor counsel. We are preparing our union for whatever scenario we may face.
In the months ahead we will continue to fortify both paths in the best interest
of the AA Flight Attendants. The duel path and the APFA internal path. It is
important that you know that all three unions on our company’s property have
joined forces with AA on a number of critical issues that affect everyone of us.
As just one example of this hard work by all parties, we have already seen
progress on the Hill in pension reform legislation and you will hear more about
this from Leslie in her portion of tonight’s Hotline. You can stay informed on
these important joint issues in a newsletter entitled, “ON THE FLY.†It is
currently available in PDF format on all union websites.
The fact that we are attempting this very different labor/management business
model in the airline industry sets us apart from the others. It tells the
financial community and AA employees that we are serious about keeping our
company afloat and out of bankruptcy. Our collective goal is to remain in
control of our own destiny.
On that note, I am extremely pleased to report to you that during this 3 day
training your union leaders took a pledge to put all politics aside and focus on
the welfare of the membership. It is no secret that our industry, our Company
and the future of the Flight Attendant career is in serious trouble and we need
all hands on deck in order to survive the challenges that we currently face.
This is a time to be productive instead of destructive.
Tonight, I am asking each and every one of you to join your union leaders in
taking this pledge. Put your individual politics and personal preferences aside
as we focus together in doing everything in our power to protect and preserve
our career and our future. We can do this together!
Thank you and please stay on the line for the rest of tonight’s hotline,
Leslie...
This is Leslie Mayo, National Communications Coordinator, with the APFA Hotline
for Friday. October 7, 2005. We have 4,126 F/As on furlough, and 12 F/As serving
in the armed forces full time. Please keep them in your thoughts.
As Tommie mentioned, the Board of Directors’ annual training took place in
Scottsdale this past week. The primary topic of conversation was the state of
the industry and in particular, the escalating cost of fuel.
FACT: Airlines are expected to pay twice the amount they did in ’03 for fuel. AA
specifically expects to pay $1B more than in ‘04 for fuel. One of the terms we
became all too familiar with this week in our BOD training was the term: “Crack
Spread.†This is the price of refining crude oil into jet fuel. Crude is
unrefined and heavy. “Jet A†fuel is much lighter following the refining
process. Since AA is barely hedged on fuel prices, we are paying $60+ a barrel
and then another $60 or so more for the Crack Spread, which equals the highest
price ever paid for jet fuel. This is due in part to the damage done to
refineries in the South following the hurricanes. In August the Crack Spread was
$13. The Energy Dept. estimates that 15% of the US refining capacity may be on
the blink for weeks. 11 major refineries as of this week remain closed *
accounting for 18% of the nation’s total capacity. So for now, there is little
relief in sight.
On Thursday, October 6, 2005, the price of one barrel of crude oil closed at $61
* up 20% from the same time last year. The crack spread hit $67 a barrel on
Wednesday as opposed to $11 during the same time last year * up 600%. This means
that the total cost for a barrel of refined jet fuel today is more than $120 *
double the amount it was last year.
Where does that leave us? Bottom line: all three unions’ concessions in 2003
have gone to the oil companies instead of getting our own company back to
profitability. A 600% increase in refining crude to jet fuel is unsustainable
for any airline. That, coupled with competing with low-cost carriers and all but
one of the majors in Bankruptcy makes for an enormous challenge ahead. And time
is of the essence.
No airline * whether legacy, low cost or bankrupt * can blame labor costs for
its lack of profitability at this point. Fuel prices are outrageous and the oil
companies have never been more profitable.
Your union is preparing for every possibility that may come our way in the
coming weeks and months. As Tommie said, your Union leaders have put politics
aside in recognition of the struggle to remain out of bankruptcy. The company
has not indicated its intention to attempt to extract more concessions from its
union groups and other employees. At this point, with the cost of fuel, even if
we worked for free, it would not be sufficient to get us out of the red.
Today, it is imperative that every single Flight Attendant get informed on the
state of the airline industry. Join the InfoRep program (it’s as simple as
sending an email to [email protected]), read Skyword, call or read the Hotline,
visit apfa.org, call your Chairs, Vice Chairs or APFA Headquarters with
questions or rumors you might have; attend local base meetings and most
importantly: spread factual information to your coworkers and all employees of
AA. Denise Pointer, DFW InfoRep, will be visiting all bases throughout October
and November to recruit new InfoReps along with our Legislative Representative
Rick Musica. October 11th they will be visiting Chicago Ops and October 12th,
they will be in St. Louis Ops. Knowledge is power * misinformation is poison.
On a more positive note, this last week resulted in an amendment to the Pension
Reform Bill in the Senate that allows AA and CO to qualify for the airline
provision without freezing their plans. Your emails and letters to U.S. Senators
helped make this happen. But our fight is far from over. Until the Pension
Reform Bill comes up for a vote, it is crucial that we continue contacting our
Representatives via Capwiz on the APFA website to ensure that AA isn’t punished
within the Pension Reform Bill language for actually PAYING THEIR BILLS and
staying out of bankruptcy. Next on the agenda: The House of Representatives!
In regular APFA news, Mexico and Canada are imposing a deadline of December 31,
2006, for entry - without a passport - into their countries. Flight Service
began processing the reimbursement of all passports for domestic F/As this week.
Reimbursement procedures can be found on aaflightservice.com. All questions
should be directed to your FSM or the APFA Contract Department.
This week, New York City raised the terror threat level after receiving what
they called credible information that an attack to their subway system was
possible. Please continue to remain vigilant on the aircraft, and when traveling
to and from work, especially via public transportation.
In rumor control this week: Several Flight Attendants have written asking
whether the company has opened its books to the pilots’ union. Also, has the
company asked us for concessions or let us know if bankruptcy is inevitable?
Were the leaders of our union in Phoenix to discuss concessions?
So, let me break it into separate pieces:
First, during the 2003 RPA, AA committed to all three unions to keep an open
line of communication regarding its finances. All three unions continue to
participate in monthly meetings with senior management on several issues,
including financial updates and “open books†with CFO James Beer. Second, as I
mentioned, the Company has not come to APFA asking for concessions. All three
unions and the company have been trying to find ways to save money outside of
our bargained agreements and we will continue to do just that. One reporter
misinterpreted Arpey’s request for more ways to save money within our company by
working together to identify waste, with the call for concessions. Arpey was
quoted as stating: "We have been, in my mind, continuously restructuring the
company for many years now, and we're going to have to continuously reconstruct
the company going forward, and we need labor to be our partner in that process.â€
He went on to say, "We're going to work together to find our way out of this
situation." So the answer to what APFA was doing in PHX is “No * our Union was
NOT in PHX to discuss concessions and the company has NOT asked us for any.â€
And finally, regarding Bankruptcy as being inevitable, the ever-rising cost of
fuel will answer that question.
BANKRUPTCY UPDATE: Citigroup and JP Morgan provided $3B in financing United has
been waiting for to finalize their exit strategy. Their plans are to leave
bankruptcy in February ’06 after more than three years of protection. Part of
UAL’s proposal for exiting bankruptcy includes unrealistic fuel prices that are
much lower than today’s cost of crude, including the crack spread. The
Citigroup/JP Morgan deal is pending approval by the Bankruptcy Court on October
21, 2005.
Northwest Airlines is expected to ask the Bankruptcy Judge overseeing its
reorganization to abrogate the contracts between the company and all of its
unions within days and impose new ones that will include hefty cuts in pay, work
rules and most probably pensions. This action is always anticipated once a
company enters the protection of bankruptcy since the unions are now considered
creditors. NW will still be required to attempt to reach an agreement between
its unions, however, the likelihood of this happening doesn’t look so great
considering NW’s proposals in the past few months have been blatant deal
breakers. Proposals such as laying off more than 50% of its mechanics, or
halting the payment clock upon first impact in the event of a crash for Flight
Attendants will be nearly impossible to get ratified by union members. So far,
NW has secured $35m in cuts from management and salaried employees in the past
three years, and $250m from its pilots. It is also saving $205m under the recent
contract it imposed on the NW mechanics. On a side note, it appears that the
hiring of scab mechanics at NW isn’t paying off: the FAA reports training
problems and staffing shortfalls within the mechanic workgroup at NW Airlines
since the Strike began.
Delta Airlines is looking at just under $1B in paycuts from its employees
including 1/3 of that from the pilots alone.
That’s it for this week. Thank you for calling the APFA Hotline and staying
informed.
Scary stuff.
Arpey wants help of labor
American chief says ongoing restructuring needs union support
12:00 AM CDT on Friday, October 7, 2005
By ERIC TORBENSON / The Dallas Morning News
American Airlines Inc.'s chief executive suggested Thursday that the carrier's unions would have to offer more concessions to help it stay solvent.
"We have been, in my mind, continuously restructuring the company for many years now, and we're going to have to continuously reconstruct the company going forward, and we need labor to be our partner in that process," chairman and CEO Gerard Arpey said. "We're going to work together to find our way out of this situation."
Mr. Arpey discussed the issue with reporters after a speech to the World Affairs Council of Greater Dallas at the Grand Hyatt hotel at Dallas/Fort Worth International Airport.
He didn't use the word concessions. But he signaled that the airline – the last major network carrier to avoid bankruptcy court – can't survive in its current state. American's 80,000 employees have given back $1.8 billion in annual wages and benefits since May 2003.
At least one union chief said he thinks Mr. Arpey is all but asking for work rule changes that will aid the Fort Worth-based carrier, which has lost $7 billion in the past four years.
Ralph Hunter, president of the Allied Pilots Association, told his board of directors late last month that Mr. Arpey has laid out the grim facts of the carrier's fast-deteriorating finances and expects pilots to conclude that they need to give something back.
"We have the ability to do this right," Mr. Hunter said in an interview last week. "The longer we wait, the less amount of luxury we'll have in making choices – we won't get to study this forever."
No concession talks are under way, Mr. Hunter noted, and it will ultimately fall to his board to start talks with the carrier. Any possible changes in the union's contract would explore pilot scheduling efficiency and not address wages or pensions, he said.
Mr. Hunter's opponents on the board are urging American's 12,000 pilots to change directors to protect pilot interests and not concede any more to the airline.
"The gap at the BOD table between the company advocates and those pilots who represent pilots is closing," said Hunter opponent Sam Mayer, a New York-based pilot and union board member in an e-mail to pilots.
"I'm sure the concessionaires recognize the threat and will attempt sooner rather then later to ram through a concessionary package before the membership has a chance to effect a change at the [board of directors] table."
Mr. Hunter said he cannot spend time fighting board dissidents but instead must put his energy into persuading the average pilot about the urgent situation facing American. Mr. Arpey said he was pleased with how all his labor leaders were working in the new cooperative process he installed 21/2 years ago designed to revolutionize airline-labor relations. He would not discuss whether he expects the unions to volunteer concessions.
Mr. Arpey's address dealt with threats to his airline and D/FW Airport that threaten both their abilities to compete in the globalized economy. Taxes, jet fuel and Southwest Airlines Co.'s campaign to end flight restrictions at Dallas Love Field – potentially forcing American to unravel its D/FW hub to compete at Love – all concern him.
"To purposefully weaken D/FW would be akin to unilaterally disarming in the fight to attract talent, jobs and capital to North Texas," Mr. Arpey said.
Shares of American parent company AMR Corp. rose 85 cents to $12.41.
E-mail [email protected]
Hello, this is APFA President Tommie Hutto-Blake with a hotline update for
Friday, October 7, 2005.
This week your APFA leadership including the Executive Committee, Base Chairs,
Vice Chairs and National Coordinators attended APFA’s annual constitutionally
mandated training in Scottsdale, Arizona.
The purpose of this year’s training was to bring all of our leaders together to
focus on the state of our industry, our Company and our Union, to both
strategize and prepare for all possible scenarios in the months ahead.
During this very intensive three-day training, facilitated by labor attorney and
strategist Mark Richard, we spent two days focused on internal union strategy
and one day reviewing the joint process called the Performance Leadership
Initiative (PLI). The Performance Leadership Initiative is an efficiency study
mandated by the Joint Leadership Team * the labor/management council made up of
senior officers of the TWU, APA, APFA and AA. The purpose of the PLI study is
to collect data and shine the “spot light†on any inefficiency “from the shop
floor to the sixth floorâ€.
The two days of internal union work allowed your APFA leadership to discuss
labor strategies openly with labor attorneys, a top aviation economist, as well
as one of the foremost bankruptcy professionals. This was solid work the best
interest of the AA Flight Attendants. In the months ahead we must be prepared
for any and all events.
During the one day of joint work, your leaders reviewed the data collection from
the Joint PLI with leaders from APA, TWU, senior AA management and outside
consultants working for this labor/management project. Again, the purpose of
this work is to spotlight ways to reduce costs without impacting the labor
agreements. The three unions on AA’s property are focused foremost on finding
ways to reduce costs without impacting labor agreements. This will without a
doubt be a challenging journey but it must be the next step if we are to be
treated as real business partners.
While none of us knows exactly what the future holds we do know this: that when
times get tough we need to stick together. If we do just that we become a much
more formidable force.
Be assured that your Union leaders came away from this week’s training with a
realistic view of our current challenge. We have surrounded ourselves with top
labor counsel. We are preparing our union for whatever scenario we may face.
In the months ahead we will continue to fortify both paths in the best interest
of the AA Flight Attendants. The duel path and the APFA internal path. It is
important that you know that all three unions on our company’s property have
joined forces with AA on a number of critical issues that affect everyone of us.
As just one example of this hard work by all parties, we have already seen
progress on the Hill in pension reform legislation and you will hear more about
this from Leslie in her portion of tonight’s Hotline. You can stay informed on
these important joint issues in a newsletter entitled, “ON THE FLY.†It is
currently available in PDF format on all union websites.
The fact that we are attempting this very different labor/management business
model in the airline industry sets us apart from the others. It tells the
financial community and AA employees that we are serious about keeping our
company afloat and out of bankruptcy. Our collective goal is to remain in
control of our own destiny.
On that note, I am extremely pleased to report to you that during this 3 day
training your union leaders took a pledge to put all politics aside and focus on
the welfare of the membership. It is no secret that our industry, our Company
and the future of the Flight Attendant career is in serious trouble and we need
all hands on deck in order to survive the challenges that we currently face.
This is a time to be productive instead of destructive.
Tonight, I am asking each and every one of you to join your union leaders in
taking this pledge. Put your individual politics and personal preferences aside
as we focus together in doing everything in our power to protect and preserve
our career and our future. We can do this together!
Thank you and please stay on the line for the rest of tonight’s hotline,
Leslie...
This is Leslie Mayo, National Communications Coordinator, with the APFA Hotline
for Friday. October 7, 2005. We have 4,126 F/As on furlough, and 12 F/As serving
in the armed forces full time. Please keep them in your thoughts.
As Tommie mentioned, the Board of Directors’ annual training took place in
Scottsdale this past week. The primary topic of conversation was the state of
the industry and in particular, the escalating cost of fuel.
FACT: Airlines are expected to pay twice the amount they did in ’03 for fuel. AA
specifically expects to pay $1B more than in ‘04 for fuel. One of the terms we
became all too familiar with this week in our BOD training was the term: “Crack
Spread.†This is the price of refining crude oil into jet fuel. Crude is
unrefined and heavy. “Jet A†fuel is much lighter following the refining
process. Since AA is barely hedged on fuel prices, we are paying $60+ a barrel
and then another $60 or so more for the Crack Spread, which equals the highest
price ever paid for jet fuel. This is due in part to the damage done to
refineries in the South following the hurricanes. In August the Crack Spread was
$13. The Energy Dept. estimates that 15% of the US refining capacity may be on
the blink for weeks. 11 major refineries as of this week remain closed *
accounting for 18% of the nation’s total capacity. So for now, there is little
relief in sight.
On Thursday, October 6, 2005, the price of one barrel of crude oil closed at $61
* up 20% from the same time last year. The crack spread hit $67 a barrel on
Wednesday as opposed to $11 during the same time last year * up 600%. This means
that the total cost for a barrel of refined jet fuel today is more than $120 *
double the amount it was last year.
Where does that leave us? Bottom line: all three unions’ concessions in 2003
have gone to the oil companies instead of getting our own company back to
profitability. A 600% increase in refining crude to jet fuel is unsustainable
for any airline. That, coupled with competing with low-cost carriers and all but
one of the majors in Bankruptcy makes for an enormous challenge ahead. And time
is of the essence.
No airline * whether legacy, low cost or bankrupt * can blame labor costs for
its lack of profitability at this point. Fuel prices are outrageous and the oil
companies have never been more profitable.
Your union is preparing for every possibility that may come our way in the
coming weeks and months. As Tommie said, your Union leaders have put politics
aside in recognition of the struggle to remain out of bankruptcy. The company
has not indicated its intention to attempt to extract more concessions from its
union groups and other employees. At this point, with the cost of fuel, even if
we worked for free, it would not be sufficient to get us out of the red.
Today, it is imperative that every single Flight Attendant get informed on the
state of the airline industry. Join the InfoRep program (it’s as simple as
sending an email to [email protected]), read Skyword, call or read the Hotline,
visit apfa.org, call your Chairs, Vice Chairs or APFA Headquarters with
questions or rumors you might have; attend local base meetings and most
importantly: spread factual information to your coworkers and all employees of
AA. Denise Pointer, DFW InfoRep, will be visiting all bases throughout October
and November to recruit new InfoReps along with our Legislative Representative
Rick Musica. October 11th they will be visiting Chicago Ops and October 12th,
they will be in St. Louis Ops. Knowledge is power * misinformation is poison.
On a more positive note, this last week resulted in an amendment to the Pension
Reform Bill in the Senate that allows AA and CO to qualify for the airline
provision without freezing their plans. Your emails and letters to U.S. Senators
helped make this happen. But our fight is far from over. Until the Pension
Reform Bill comes up for a vote, it is crucial that we continue contacting our
Representatives via Capwiz on the APFA website to ensure that AA isn’t punished
within the Pension Reform Bill language for actually PAYING THEIR BILLS and
staying out of bankruptcy. Next on the agenda: The House of Representatives!
In regular APFA news, Mexico and Canada are imposing a deadline of December 31,
2006, for entry - without a passport - into their countries. Flight Service
began processing the reimbursement of all passports for domestic F/As this week.
Reimbursement procedures can be found on aaflightservice.com. All questions
should be directed to your FSM or the APFA Contract Department.
This week, New York City raised the terror threat level after receiving what
they called credible information that an attack to their subway system was
possible. Please continue to remain vigilant on the aircraft, and when traveling
to and from work, especially via public transportation.
In rumor control this week: Several Flight Attendants have written asking
whether the company has opened its books to the pilots’ union. Also, has the
company asked us for concessions or let us know if bankruptcy is inevitable?
Were the leaders of our union in Phoenix to discuss concessions?
So, let me break it into separate pieces:
First, during the 2003 RPA, AA committed to all three unions to keep an open
line of communication regarding its finances. All three unions continue to
participate in monthly meetings with senior management on several issues,
including financial updates and “open books†with CFO James Beer. Second, as I
mentioned, the Company has not come to APFA asking for concessions. All three
unions and the company have been trying to find ways to save money outside of
our bargained agreements and we will continue to do just that. One reporter
misinterpreted Arpey’s request for more ways to save money within our company by
working together to identify waste, with the call for concessions. Arpey was
quoted as stating: "We have been, in my mind, continuously restructuring the
company for many years now, and we're going to have to continuously reconstruct
the company going forward, and we need labor to be our partner in that process.â€
He went on to say, "We're going to work together to find our way out of this
situation." So the answer to what APFA was doing in PHX is “No * our Union was
NOT in PHX to discuss concessions and the company has NOT asked us for any.â€
And finally, regarding Bankruptcy as being inevitable, the ever-rising cost of
fuel will answer that question.
BANKRUPTCY UPDATE: Citigroup and JP Morgan provided $3B in financing United has
been waiting for to finalize their exit strategy. Their plans are to leave
bankruptcy in February ’06 after more than three years of protection. Part of
UAL’s proposal for exiting bankruptcy includes unrealistic fuel prices that are
much lower than today’s cost of crude, including the crack spread. The
Citigroup/JP Morgan deal is pending approval by the Bankruptcy Court on October
21, 2005.
Northwest Airlines is expected to ask the Bankruptcy Judge overseeing its
reorganization to abrogate the contracts between the company and all of its
unions within days and impose new ones that will include hefty cuts in pay, work
rules and most probably pensions. This action is always anticipated once a
company enters the protection of bankruptcy since the unions are now considered
creditors. NW will still be required to attempt to reach an agreement between
its unions, however, the likelihood of this happening doesn’t look so great
considering NW’s proposals in the past few months have been blatant deal
breakers. Proposals such as laying off more than 50% of its mechanics, or
halting the payment clock upon first impact in the event of a crash for Flight
Attendants will be nearly impossible to get ratified by union members. So far,
NW has secured $35m in cuts from management and salaried employees in the past
three years, and $250m from its pilots. It is also saving $205m under the recent
contract it imposed on the NW mechanics. On a side note, it appears that the
hiring of scab mechanics at NW isn’t paying off: the FAA reports training
problems and staffing shortfalls within the mechanic workgroup at NW Airlines
since the Strike began.
Delta Airlines is looking at just under $1B in paycuts from its employees
including 1/3 of that from the pilots alone.
That’s it for this week. Thank you for calling the APFA Hotline and staying
informed.
