Concession Talk Coming Tuesday

Like it or not, concession is coming. Better play it smart or else take a deeper cut. Don't be like Bob Owens. He's professionally suicidal. I hope you guyz think smarter than my colleagues at UAL who thought the Judge was going to give them a better deal.
 
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On 2/3/2003 6:57:23 PM DFWFSC wrote:


I hate to say it but Mr Little needs to bring along a good pair of knee pads and a big box of kleenex. I would venture to guess that if your a TWU member not working in a hub or major station like LAX/JFK/LGA/etc...your about to get outsourced. I don't see much that Little or the TWU can do to stop it, plus a pay cut to boot.
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DFWFSC,
I hope to HE*L your right about the "little station scenario" !!
There is(almost) nothing worse than being stuck in a little pi*s hole station, when the system is frozen.

NH/BB's
 
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On 2/3/2003 6:05:20 PM RV4 wrote:




AA has always been inovative in adverse times, it will be a dissapointment if the airline is simply following others paths.


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I think it will be a combination of wage reductions and work rule changes.

Am I expecting too much from both the company and the "leadership" of our unions?

Probably.
 
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On 2/4/2003 12:46:49 PM LGA Fleet Service wrote:

Or will we "Full pay to the last day" ourselves into Chapter 11 and let a judge and creditors committee decide what our pay and benefits should be?.
As well as the future course of this airline.
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I think you can safely kiss your bennies buh-bye later this year when the corporate money machine will lower it's contribution to 50% or less.

GET OUT THE K-Y FOLKS!

CHICAGO, Feb 4 (Reuters) - American Airlines President Gerard Arpey said on Tuesday the company's labor unions are aware of the magnitude of the airline's financial problems and while there is good liquidity right now, talks about concessions "can't take forever."
 
I think it's safe to say, one way or another, bankruptcy or not, AA will get the changes it needs and the unions don't have much choice.
 
FOR RELEASE: Tuesday, Feb. 4, 2003
AMERICAN AIRLINES CALLS FOR $1.8 BILLION IN EMPLOYEE COST CUTS

Annual Savings Required to Make Airline Competitive Changes Can Come from Wages, Benefits and Work Rules Shared Sacrifice Includes Management, Non-union and Union Groups

FORT WORTH - Citing its unsustainable current losses and the long-term need to restructure its business, American Airlines today asked its labor leaders and employees for $1.8 billion in permanent, annual savings through a combination of changes in wages, benefits and work rules.

Letters to Employees
APFA APA
TWU Management
Agents, Representatives and Support Staff

"We have together made significant changes in our operation, our product and our service to build a more efficient and innovative airline," the company said in letters to union leaders and non-represented employee workgroups.

"But we need to do more. And we need to do it now. Our financial results make it abundantly clear that American’s future cannot be assured until ways are found to significantly lower our labor and other costs."

In the letters, AMR Chairman and CEO Don Carty and President Gerard Arpey noted that, unlike other financially troubled airlines, the company turned to employees as a last resort, and only after pursuing an aggressive restructuring plan that identified $2 billion in annual, structural cost savings.

Company executives have said the airline needs an estimated $4 billion in permanent annual savings to compete effectively and return to profitability.

The company cited pricing actions by low-cost and bankrupt carriers among the factors putting "unrelenting pressure" on the company’s financial situation.

"Today, as a last resort, we are taking the difficult step of asking all of our employees to participate in American’s recovery by working with us to deliver $1.8 billion in permanent, steady-state savings. We hope to work collaboratively with you to restructure labor agreements to realize these permanent, annual savings and those needed to address our long-term financial health." The company also said it would seek to obtain accommodations from a number of its other stakeholders, including aircraft lessors, lenders and suppliers.

In addition, the company announced the latest steps in its ongoing restructuring efforts, stating it plans to close two of its 10 domestic reservations offices – Norfolk, Va., and Las Vegas – impacting approximately 910 reservations representative positions.

According to the company’s proposal, the $1.8 billion in cost savings would be divided by work group as follows:

Pilots: ($660 million)
Flight attendants: ($340 million)
TWU Represented employees: ($620 million)
Agents and representatives: ($80 million)
Management and support staff: ($100 million)
Each work group’s share was allocated in consideration of American’s strategic goals as well as a review of the competitive landscape and labor costs at other airlines. The company said it hopes to work collaboratively through a process of active engagement with union leaders and non-unionized employee groups to determine how each will deliver its share of the targeted savings through a combination of changes in wages, benefits, and work rules.

In the meeting, Carty and Arpey assured labor leaders that management would continue to do its share and emphasized that today’s proposed cuts come on top of a second year of across-the-board pay freezes for management and a 22 percent reduction in management and support staff positions, resulting in more than $200 million in savings to date.

"Unfortunately, we have little other choice," Carty and Arpey wrote. "What we do have is an opportunity no longer available to our counterparts at United and US Airways: the chance to work together to find mutually acceptable solutions to our financial crisis in order to avoid the uncertainty of courts and creditors determining our fate.

"Given the magnitude of this request and the sacrifice we are asking of our employees, the importance and impact of your leadership during this pivotal time is critical to our success," Carty and Arpey wrote to union leaders.

"This is a painful time, but we are confident that the men and women who have built their careers at American Airlines will recognize the gravity of the situation and work with us as we embark upon a difficult but necessary journey toward recovery," Carty and Arpey concluded. "We are grateful for and inspired by the determination and dedication of the people of American and know that with their support, we will succeed."

Statements in this report contain various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which represent the Company's expectations or beliefs concerning future events. When used in this document and in documents incorporated herein by reference, the words "expects," "plans," "anticipates," "believes," and similar expressions are intended to identify forward-looking statements. Other forward-looking statements include statements which do not relate solely to historical facts, such as, without limitation, statements which discuss the possible future effects of current known trends or uncertainties, or which indicate that the future effects of known trends or uncertainties cannot be predicted, guaranteed or assured. All forward-looking statements in this report are based upon information available to the Company on the date of this report. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. Forward-looking statements are subject to a number of factors that could cause actual results to differ materially from our expectations. Additional information concerning these and other factors is contained in the Company’s Securities and Exchange Commission filings, including but not limited to the Form 10-K for the year ended Dec. 31, 2001.
 
And now, to add insult to injury, here's another helping of corporate manure...
**************************************

SECOND SPECIAL JETWIRE FOR TUESDAY, FEB. 4, 2003

PLEASE POST ON ALL BULLETIN BOARDS

Hello, everyone, and thanks for calling. This is Don Carty with the hotline for Feb. 4.

As you know, in early 2001 - even before the Sept. 11 attacks - we began working on ways to solve what we saw as very serious financial problems on the horizon. Since Sept. 11, we aggressively have been working together to implement short- and long-term fixes to our business and to cut our costs dramatically through our restructuring plan. Those efforts paid off in the reduction of an unprecedented two billion dollars in permanent, annual operating costs from our company.

As a result of our plan, we are today operating our hubs differently and more efficiently, using automation more extensively, flying our schedule differently, altering our on-board product and changing things that used to be untouchable in a business like ours. We are also trying very hard to fix our revenue problems, although that, as you know, is a more difficult problem in today's intense low-fare environment.

Through all of this change, our employees have performed magnificently. We have continued to run a very good operation through enormous turmoil. I am incredibly proud of the individual and team efforts that led American to finish just two-tenths of a point out of first place in the DOT's year-end rankings for on-time dependability. Congratulations to everyone involved in the operation for this performance. I would have expected no less, and you did not disappoint.

As we have discussed before, our challenge now is to get our cost structure in a position where we can compete successfully with the low-cost carriers, including those who have lowered their costs through bankruptcy. We need to reduce at least $4 billion in permanent, annual operating costs - and with $2 billion already identified, we are at least $2 billion short of that mark. When we achieve these savings, we believe our long-term plan will allow American to be more competitive in the new and changing aviation marketplace.

And, as we have also discussed before, our strategic plan is really quite clear. We will continue to play to our strengths - our large network, a quality product, customer loyalty and dedicated people - but with costs that allow us to compete. There are no "silver bullets," no gimmicks. We already know what works: the largest domestic and international network going, with great people providing great service. That is our legacy. The challenge today is to do it with a cost structure that can sustain us for the long-term.

To help us reach our goal, we have been actively engaged with union leaders for the past several weeks, opening our books to them and explaining our situation in considerable detail. The unions' financial advisors have had the opportunity to confirm what we all inherently know: Our cost structure is simply not sustainable, we are losing millions of dollars every day, and we have borrowed money just to meet payroll and keep the operation running. We can't sustain that kind of spending much longer. It is abundantly clear that American's future cannot be assured until ways are found to significantly lower our labor and other costs.

So today, as a last resort, we are taking the difficult step of asking all of our employees to participate in American's recovery by working with us to deliver $1.8 billion in annual, permanent, steady-state savings this year. And we didn't simply toss together a set of numbers. We looked carefully at costs at our competitors, including mainline carriers. More importantly, we looked carefully at these savings in the context of the long-term future of American.

Importantly, as we work toward our recovery, you have our commitment that all employees will share in the opportunities any successful restructuring might provide.

There are savings targets for each work group, and they are broken out in detail in our news release, which you can find on Jetnet and in Jetwire. We'll be working with the unions in meetings later this week to help them understand how we reached each group's share of the total savings we need and to begin finding ways to reach these cost reduction goals.

Rest assured, management will continue to do its part. We are asking for additional cost reductions from management and support staff - on top of two years of frozen management wages and a 22 percent reduction in headcount - because we believe this must be a shared sacrifice across the board.

And, of course, we will approach other important stakeholders in the company as well - aircraft lessors, lenders and suppliers - to restructure our contracts and other agreements to achieve even greater cost savings.

Regrettably, there will be an impact on job totals as well. Today, unfortunately, we announced that we will be closing our Norfolk and Las Vegas reservations offices, meaning we've lost another 910 customer service jobs at American. That's on top of the additional 750 flight attendant layoffs we had to send WARN notices about last week.

Nothing gives me more pain and heartache than seeing the loss of jobs that has happened at American - and all across our industry - in the past two years. If we could restructure our company without that level of sacrifice, we would do so - but there is no way we can survive and be competitive for the long-haul without learning to operate in an environment with fewer people. It is by securing our company's future that we are able to protect and preserve tens of thousands of other jobs - hopefully for many, many years to come.

Now, it's only natural to resist change, to question why it's necessary, to wonder about the fairness of it all, and to want to protect those things that are yours.

But like an illness in the family, there is simply no way to keep things as they were, no way to turn back the clock. Ultimately, the only option is to do the things necessary to get the patient well again. None of it is easy - some of it may not seem fair - but all of it is essential and will be worth it if we can protect and preserve American Airlines for another 77 years.

We still have the opportunity to save our company - to protect the lives and careers that are entwined with the legacy of American Airlines. And I remain hopeful and confident that the people of this company will make the right decisions as we wrestle with these latest cost challenges and will do the right things to save our company.
 
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On 2/4/2003 12:46:49 PM Hopeful wrote:

I think it's safe to say, one way or another, bankruptcy or not, AA will get the changes it needs and the unions don't have much choice.
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The $64K question is do we, as employees have enough Situational Awareness to avoid Bankruptcy?

Will we heed the flaming wreckage of the contracts at UAL and US Airways and avoid that perilous path?

Or will we "Full pay to the last day" ourselves into Chapter 11 and let a judge and creditors committee decide what our pay and benefits should be?.
As well as the future course of this airline.
 
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On 2/4/2003 2:01:56 PM airlineorphan wrote:

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"Full pay to the last day" was not the approach at U. Most of the unions had agreed to staggering concessions before Ch.11 was filed. The company filed anyway, citing, not labor intransigence, but the stubbornness of lease holders and vendors and such.

In the end, Ch. 11 was mainly used as a club against lessors and vendors. Threat of Chapter 7, however, was used against labor later on.

-Airlineorphan
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Wrong!! UA had to file because we didn't get the ATSB loan.
We had a debt of almost a $Billion that needed to be paid by the end of Dec. The cash reserve at that time was around $1.6 billion I believe. We could've paid the debt but we wouldn't have much cash left to operate the airline. The unions agreed to concessions to keep the company out bankruptcy and because they knew it would be much worse once we went into Ch 11, and in fact the concession is going to be worse now that we are in Ch 11.
 
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[snip]
Or will we "Full pay to the last day" ourselves into Chapter 11 and let a judge and creditors committee decide what our pay and benefits should be?.
As well as the future course of this airline.
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"Full pay to the last day" was not the approach at U. Most of the unions had agreed to staggering concessions before Ch.11 was filed. The company filed anyway, citing, not labor intransigence, but the stubbornness of lease holders and vendors and such.

In the end, Ch. 11 was mainly used as a club against lessors and vendors. Threat of Chapter 7, however, was used against labor later on.

It is my assessment that Ch. 11 was the plan all along at U. It was probably part of the confidential plan that was filed with the ATSB.

I expect that now that U has used Ch. 11 and the threat of Ch. 7 to slash costs (both leases and labor), AMR management will see Ch. 11 as both a necessity (for competitive purposes) and an opportunity (for going after labor and vendors/lessors).

My unsolicited advice? AMR employees and their unions need to stand together and strategically plan for an unprecedented concessionary onslaught from management. Watch U and UAL closely and prepare.

Good luck to you and good luck to all of the people who do the work in this industry!

-Airlineorphan
 
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On 2/4/2003 2:51:57 PM WingNaPrayer wrote:

The only saving grace in all this BS is that it just might be the catalyst that makes the agent groups get off their collective asses and go for the CWA vote. Something tells me that when all is said and done, the agents are going to wish they had a contract.
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Oh yeah the CWA and IAM did a whole lot of good for the agents over at USAir and Untied. Lots of good. Not.
 
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On 2/4/2003 2:44:08 PM ual747mech wrote:


Wrong!! UA had to file because we didn't get the ATSB loan.
We had a debt of almost a $Billion that needed to be paid by the end of Dec. The cash reserve at that time was around $1.6 billion I believe. We could've paid the debt but we wouldn't have much cash left to operate the airline. The unions agreed to concessions to keep the company out bankruptcy and because they knew it would be much worse once we went into Ch 11, and in fact the concession is going to be worse now that we are in Ch 11.
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I stand corrected on UAL. My point still stands with U. Though I wonder how much of the full story we're getting on UAL management's maneuvers.

It seems to me another important part of the story is the role the ATSB has played in increasing the pressure for concessions by employees and our unions.

Like I said before, good luck to all of us who do the work in this industry!

-Airlineorphan
 
The only saving grace in all this BS is that it just might be the catalyst that makes the agent groups get off their collective asses and go for the CWA vote. Something tells me that when all is said and done, the agents are going to wish they had a contract.
 
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On 2/4/2003 3:59:16 PM airlineorphan wrote:

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On 2/4/2003 2:44:08 PM ual747mech wrote:


Wrong!! UA had to file because we didn't get the ATSB loan.
We had a debt of almost a $Billion that needed to be paid by the end of Dec. The cash reserve at that time was around $1.6 billion I believe. We could've paid the debt but we wouldn't have much cash left to operate the airline. The unions agreed to concessions to keep the company out bankruptcy and because they knew it would be much worse once we went into Ch 11, and in fact the concession is going to be worse now that we are in Ch 11.
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I stand corrected on UAL. My point still stands with U. Though I wonder how much of the full story we're getting on UAL management's maneuvers.

It seems to me another important part of the story is the role the ATSB has played in increasing the pressure for concessions by employees and our unions.

Like I said before, good luck to all of us who do the work in this industry!

-Airlineorphan
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Just to set the record straight, I made no direct reference to UAL in my earlier post. "U" meant US Airways.
-Airlineorphan
 
DFWFSC,
I hope to HE*L your right about the "little station scenario" !!
There is(almost) nothing worse than being stuck in a little pi*s hole station, when the system is frozen.

NH/BB's



NewHampshireBlackBears




NH/BB's,
Some of us guys in little pi*s hole stations take offense to your comments. Some of us don't want to live in ORD,DFW,STL,MIA,LAX, or NYC. It's been going that way for a long time though. How many stations have been closed in the last 10 years? Too many to remember.
 
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