Bob Says

[mwa]

http://www.youtube.com/watch?v=-mJUyYskVYI&feature=youtu.be

Listen Up!

 

[777 / 767 / 757 Love]

Not sure what to say to this.....he keep saying the new American, but if Parker and company run the show, it will be the new US with a new name (American) and new headquarters (Fort Worth).

Cheers,
777 / 767 / 757

 

[bigjets]

I miss Bob, he was tough. But it's better to have a tough CEO, rather then a greedy CEO who delays bankruptcy and takes from the employees and gives the executives bonus's for 9 years before taking the company into bankruptcy.

 

[NewHampshire Black Bears]

Love him, or hate him, he was OUR S O B !!!!!!
In the HISTORY of US commercial Aviation, (uncle) Bobby HAD NO EQUAL !
And I'm really Glad he took the time to make this presentation.

 

[1AA]

I watched the video. I know it is a message to the Pilot group. Unless the pilots agree on their own on seniority integration this merger will not work. Then he goes on to say if you want to decide on your own or have a arbitrator decide for you. With that statement it sounds to me a merger will be done with a voluntary solution on seniority or be forced upon the group. So which is it? Voluntary and the merger is on or no voluntary and the merger is off. It appears it is all about the Pilots. The other work groups have the same issues with seniority and work rules. Are they minor ones that a merger will not affect these work groups? Is this why AA fought so hard to prevent a vote with the Passenger Service agents? USAir has a more complicated structure when it pertains to work rules and seniority. They have not settled them as of today. What makes anybody think that a merger will settle all these issues? Is AA the savior? I don't buy the message that Bob Crandall is selling. I do respect him but this time I disagree with him. This merger has more issues to resolve than just the seniority of the Pilots of both groups. As soon as he mentioned arbitrator that tells me he tells two stories. Almost like a threat. So my message to the Pilots is you better decide on your own or a arbitrator will decide for you since a merger is going to happen. This is based on the video of Bob Crandall to the Pilots. The rest of the employees at AA and USAir must not matter that much.

I would like to add one more thing. AA has frozen the pensions and USAir dumped them to the PBGC. Who is to say that in five years or so the NEW AA will try to dump them to the PBGC? Managing frozen pensions cost money. The company can claim that if they do not dump AA's frozen pensions they may have to declare BK. A new company can file for the first time. It will not be a repeat performance since it will not be AA or USAir as a company who already filed at least once for AA and twice for USAir. They can always make a point to dump all pensions as a streamlining effort for a successful airline to operate. We all know how BK courts rule.

I say NO to a merger with more issues than any other airlines ever existed.

 

[WorldTraveler]

I too watched, 1AA

Seniority integration list must be agreed upon by pilots prior to merger agreement to avoid problems US has experienced.

Network will be materially changed – not as much as an end to end merger as DL/NW or UA/CO

Many AA pilots will be forced to move and could end up flying smaller aircraft.

Bitterness and anger will undermine the integration which is necessary to generate the revenues AA/US needs.

Notes:
Like a lot of analysts, he continues to say that AA will grow and will regain lost market share and compete more effectively with DL and UA but doesn’t offer an explanation as to what carriers will allow AA/US to take over their revenues given that AA/US will not have labor costs lower than other carriers?

Everyone wants to believe that AA-US as the 4[sup]th[/sup] major merger (yes, WN-FL is a major airline merger that overlaps with AA) will be able to regain share that has been lost yet there is no example in history of a network/legacy airline regaining share from another network/legacy airline unless one of them fails. None.

As for the pensions, the real risk in carrying the pension liabilities is on the balance sheet. DL like AA also has billions of dollars in pension liabilities. Unlike AA, DL is limiting its new aircraft purchases to a fairly small amount while refurbishing existing aircraft - esp. the international fleet - in order to allow the company to pay down debt.

Just like the US federal government, AA thinks they can take on debt levels that will be 2-3X what other comparably sized carriers have.... AA expects it will be profitable with those kinds of debt levels even though AA even as a standalone will be paying $1 billion per year more in interest costs compared to other carriers.
The legacy carriers all had similar financial performance for years because they had similar costs; now AA will much higher debt service costs than other carriers which means that in order to make similar levels of profitability or better, they have to cut other costs or generating a whole lot of other revenues.

Where is that happening?

 

[Bob Owens]

I would like to add one more thing. AA has frozen the pensions and USAir dumped them to the PBGC. Who is to say that in five years or so the NEW AA will try to dump them to the PBGC? Managing frozen pensions cost money. The company can claim that if they do not dump AA's frozen pensions they may have to declare BK. A new company can file for the first time. It will not be a repeat performance since it will not be AA or USAir as a company who already filed at least once for AA and twice for USAir. They can always make a point to dump all pensions as a streamlining effort for a successful airline to operate. We all know how BK courts rule.

I say NO to a merger with more issues than any other airlines ever existed.

One of the things that makes a pilot merger more complicated is your seniority determines what you fly and that determines what you are paid.

I agree with you on the threat to the pension in the event of a merger. I think that they will eventually dump it. Why would the new carrier carry all that debt when they already dumped it for a large number of their workers? How much of an affect it will have on our pensions is debatable, at first we were told that if your pension was below $45 k that the PBGC would cover it, then it was spun around we were told that if it was dumped we would get less. So if getting the pensions frozen instead of dumped was a selling point for accepting this deal, then having frozen pensions is a selling point against the merger. But then again I never bought into accepting the worst deal in the industry anyway, after all, there is nothing stopping AA from going for another round of concessions and dumping it anyway.

I also think the pension debt is more of a numbers game than anything, the company claimed that switching to the DC would not net them savings, maybe down the road, but not now. With the abysmal wages many of our old timers will work pretty much till they die, so they may never collect a DB check, so AA will save a lot of money, but with the DC if they keep working AA keeps paying and the heirs will get the money instead of AA.

 

[WorldTraveler]

Bob,
the chances of AA/US being successful in dumping pensions in another round of BK is just a slim as it was this go around. The PBGC aggressively acted in order to protect from a potential bailout that could have happened - and that risk won't diminish for AA or DL (who also carries significant pension liabilities from frozen pensions) for a number of years.

The PBGC used the threat of being one of the largest creditors to force a freeze - and that dynamic will also not change in the future. most of AA's debt outside of pensions will continue to be aircraft debt which is supported by assets.

You really don't have to worry about a pension termination in the near future.

Remember that UA employees lost their pensions while many pmCO employees have active pensions for now.
DL pilots have terminated pensions while pmNW's were frozen - they fly and bid side by side and it does not appear to be a problem.

 

[WNMECH]

Bob,
the chances of AA/US being successful in dumping pensions in another round of BK is just a slim as it was this go around. The PBGC aggressively acted in order to protect from a potential bailout that could have happened - and that risk won't diminish for AA or DL (who also carries significant pension liabilities from frozen pensions) for a number of years.

The PBGC used the threat of being one of the largest creditors to force a freeze - and that dynamic will also not change in the future. most of AA's debt outside of pensions will continue to be aircraft debt which is supported by assets.

You really don't have to worry about a pension termination in the near future.

Remember that UA employees lost their pensions while many pmCO employees have active pensions for now.
DL pilots have terminated pensions while pmNW's were frozen - they fly and bid side by side and it does not appear to be a problem.

The PBGC took on everyone else's debt before AA.
Just because they started playing hardball with AA, who is to say they would not go back to business as usual and take on that debt in another round in court.

 

[Bob Owens]

Bitterness and anger will undermine the integration which is necessary to generate the revenues AA/US needs.

Those things are already there, the integration would just make it worse.

As for the pensions, the real risk in carrying the pension liabilities is on the balance sheet. DL like AA also has billions of dollars in pension liabilities. Unlike AA, DL is limiting its new aircraft purchases to a fairly small amount while refurbishing existing aircraft - esp. the international fleet - in order to allow the company to pay down debt.

Delta will suceed because even though they are Non-union they treat they employees better than AA. Even with new aircraft AA , like US, will lag the industry performance wise because the workers just show up because they need the paycheck, they wont really care about the operation or continued success of the airline. The company pays just barely enough to show up and they will do just barely enough not to get fired.

Just like the US federal government, AA thinks they can take on debt levels that will be 2-3X what other comparably sized carriers have.... AA expects it will be profitable with those kinds of debt levels even though AA even as a standalone will be paying $1 billion per year more in interest costs compared to other carriers.

Thats how profits get diverted to the banks. Lets not forget the million dollar fees to renegotiate loans.

The legacy carriers all had similar financial performance for years because they had similar costs; now AA will much higher debt service costs than other carriers which means that in order to make similar levels of profitability or better, they have to cut other costs or generating a whole lot of other revenues.

Sure, AA is banking on the new planes letting them dump workers in OH and saving fuel which they claim will make the planes pay for themselves. What they arent counting on is the lack of interest their mechanics on the line have, and while the plane may save even more fuel when its sitting in a hangar it wont be generating the revenue needed to service the debt. So is it off to BK #2 to get rid of the debt? Nah, theres nothing left to get from labor, except writing off the pension debt but the banks wont get screwed, so AA will operate at a loss until the banks find new homes for their assetts.

 

[cf6mech]

Wow leadership!,....what a concept,...strange someone now outside of the company (even though its Uncle Bobby) is doing Hortons job and showing what leadership is all about. Straight tough talk and you don't walk away with a knife in your back,....boy I miss Mr. Crandall.

 

[777 / 767 / 757 Love]

I respect the hell out of Uncle Bob, even though he was not exactly a friend to labor, he wasn't an enemy either. He did his job, and his job was to run a great airline and to keep costs as low as possible, hene he had to battle with unions.

That being said, there are hidden msgs in this video to not just the Pilots. He knew others would be watching.......he is no idiot. I think a video like this makes a merger less likely perhaps because of the way it really highlights some of the negative effects on pay and seniority for pilots (and ultimately all of the seniority based pay groups). I also think this video tells another tail: he believes AA will be the controlling entity, not US.....and I don't mean in name, I mean in operation as well. My gut now says that Parker AND Horton will both be involved, and there will be NOTHING hostile about this merger. Plane order will probably be compelted, many US older planes sat down, and AMR international will stay the same, while US domestic will be the dominant domestic part or the merged entity.

If this happaned, and bascially all that comes over from US is some bases, routes and employees, but the new plane order stays in tact, the older US planes A330s are dumped, A350 orders canceled, the other US planes are all transformed into what AA's management had in mind for teh new AA and the AAdvantage Program is the surviving program and credit cards, then maybe this merger works out great for the passengers and the investors.

However, a merger will SCREW a lot of AA pilots and other employees because of drop in equipment and thus pay and thus will wind up seeing less money then the CURRENT contract that was just approved, putting them back down to the older LBFO, the one they voted down. I think the battle inside APA membership is just starting to warm to a early boil.........it will get worse. The only way this works is if ALL unions agree, and not just their leadership, BUT THEIR MEMBERSHIP. This must be voted on like a contract, even if it prolongs the process into March.

Cheers,
777 / 767 / 757

 

[OldGuy@AA]

The PBGC used the threat of being one of the largest creditors to force a freeze - and that dynamic will also not change in the future. most of AA's debt outside of pensions will continue to be aircraft debt which is supported by assets.

You really don't have to worry about a pension termination in the near future.
.

They won't try to dump the pensions until there is a republican in the white house. Everyone got to dump them with Bush's boy in the PBGC but Obama's guy is fighting. If there is a republican president in 4 years that is when it will happen. Maybe I am old but 4 years to me is the near future.
Also wonder when Bob Crandall all of a sudden became all knowing. This is the guy who insisted we buy F100s as well as Air Cal and Reno. IMO the rest of the industry passed him by. Also don't forget that Carty was picked by Crandall to become CEO. Do any of you think that was a good idea?

 

[LD3]

like US, will lag the industry performance wise because the workers just show up because they need the paycheck, they wont really care about the operation or continued success of the airline. The company pays just barely enough to show up and they will do just barely enough not to get fired.

Who the hell are you to judge anyone?????

 

[bigjets]

I don't think the merger will happen either, what all of a sudden the pilots from AA, TWA, USair and AW are all going to agree on seniority, and as Uncle Bob said this merger will only be good "IF", the seniority intigration is agreed apon before the merger.

Then think about the FA's. USair FA's aren't willing to give up anything big so the AW FA's get USair their pay rates, and I doubt AA FA's are not going to be willing to give up anything big to help the USair FA's (the FA's tell me that AA FA's still have a better contract then the other legacy carriers) get to AA FA's standards.



As far as Bob Crandel and Labor goes. We were always even with the other carriers, may of varied a little, but we were never down over $5 dollars in cash alone, not to mention shift diff, holiday, sick pay, vc etc.........