Former TWA Employees in Israel Escalate Battle Against American Airlines for Rights Estimated at the

[MCI transplant]

During the transition, when we were still flying as TWA LLC, I spoke to the then acting Director of the TWA Inspection Dept. here at the MCI Overhaul Base. We were talking about the routes into TLV. He said that AA's management had considered continued flights into Israel, but had second thoughts about taking an aircraft into there with "American" painted all over the side of it, at that point in time. --------- Frankly, I didn't see the difference between "American" on the side of an Aircraft, or "TWA".

 

[700UW]

it has been reported that AA's code is not on US' PHL-TLV flight, perhaps the only market where that is not so.

Maybe AA will have a dedicated couple of planes that are registered and part of an offshore company in Switzerland or Bermuda (UK) to fly the route sort of like KLM Asia

The following countries are awaiting government approval for codesharing:
 
Argentina
Brazil
Chile
Columbia
Dominican Republic
Ecuador
El Salvador
Haiti
Israel
Korea
Mexico
Panama
Peru
Uruguay
Venezuela

 

[FWAAA]

During the transition, when we were still flying as TWA LLC, I spoke to the then acting Director of the TWA Inspection Dept. here at the MCI Overhaul Base. We were talking about the routes into TLV. He said that AA's management had considered continued flights into Israel, but had second thoughts about taking an aircraft into there with "American" painted all over the side of it, at that point in time. --------- Frankly, I didn't see the difference between "American" on the side of an Aircraft, or "TWA".

Here's what AA said about the TWA flight to TLV back on March 8, 2001:
 
 

AMERICAN AIRLINES RESPONDS TO INQUIRIES ABOUT TWA’S SERVICE TO TEL AVIV
 
FORT WORTH, Texas – In response to recent inquiries, American Airlines today released the following statement about its decision not to take over TWA’s one daily flight to Tel Aviv if it is the successful purchaser of TWA’s assets:
 
American designed its TWA bid to continue service to as many of TWA’s current destinations as possible. American carefully evaluated the financial benefits of TWA’s flight to Tel Aviv from New York’s JFK and concluded that it was not economically feasible to continue service at this time. In evaluating the flight, American considered a number of factors, including revenue projections, market forecasts, projected yields, employee contracts, network structure and traffic demand.
 
Recent speculation from some parties has suggested that TWA’s Tel Aviv flight has been profitable for the last two years. Although American has not yet seen TWA’s detailed financial information about this flight, TWA has informed the company that its service to Tel Aviv has lost money in each of the past two years. Although many of TWA’s flights to and from Tel Aviv have – until recently – operated at above-average load factors, the unusually high cost structure and low fares associated with this flight made it unprofitable.
 
In addition, American reviewed Israeli employment law and TWA’s severance obligations to its employees. If American began operating TWA’s service to Tel Aviv, but later had to discontinue it for financial reasons, American might be expected to take on TWA’s obligations to pay severance to its employees, which could total as much as $9 million to $18 million. Combined with the other market factors, this presented an unacceptable financial risk for the airline.
 
American recognizes that Israel is an important international market, and it has evaluated the possibility of initiating service to Israel several times in the past. American has a reciprocal frequent flyer agreement with El Al, which flies to Tel Aviv six times per week from JFK and offers other direct flights between Israel and the United States. In addition, American is currently awaiting approval from the Department of Transportation for a codeshare agreement with Swissair that would allow service to Tel Aviv through Swissair’s hub in Zurich.
 
American has decided to continue TWA’s scheduled service to Cairo and Riyadh at this time because those routes are profitable. The negative economic factors existing in Tel Aviv do not apply in either Cairo or Riyadh.

http://web.archive.org/web/20011002024455/http://www.amrcorp.com/news/200103_news_releases/20010308_Tel_Aviv_Response.htm
 
AA said that TWA told them that TLV had lost money in 1999 and 2000, and thus AA was unwilling to continue the route and caused TWA to terminate it at the end of March, prior to the closing of the asset purchase. 

 

[700UW]

Does anyone know if the settlement that was reached, that was talked about in the article is the truth?
 
I know an Israeli court did rule in favor of the TLV employees.

 

[WorldTraveler]

The following countries are awaiting government approval for codesharing:
 
Argentina
Brazil
Chile
Columbia
Dominican Republic
Ecuador
El Salvador
Haiti
Israel
Korea
Mexico
Panama
Peru
Uruguay
Venezuela

thanks... looks like alot of countries in Latin America plus some others.

Note also that AA's estimate of up to $18M correlates fairly well with what the ex-employees are claiming is owed to them.

 

[700UW]

http://finance.yahoo.com/news/american-airlines-us-airways-customers-140000751.html
 

American and US Airways launched the initial phase of their codeshare Jan. 13. This phase extends the codeshare to all flights across the combined global network, except for a select few international markets due to regulatory requirements. The two airlines expect to codeshare on every international flight in these markets by the end of the first quarter.
 

 

[AdAstraPerAspera]

During the transition, when we were still flying as TWA LLC, I spoke to the then acting Director of the TWA Inspection Dept. here at the MCI Overhaul Base. We were talking about the routes into TLV. He said that AA's management had considered continued flights into Israel, but had second thoughts about taking an aircraft into there with "American" painted all over the side of it, at that point in time. --------- Frankly, I didn't see the difference between "American" on the side of an Aircraft, or "TWA".

 
 
TLV is arguably the safest, most secured airport in the world. It's surrounded by the Israeli military. I'm pretty sure you could paint a giant depiction of the prophet Muhammad on the side of the plane and it would still come and go unmolested. I probably wouldn't want to fly that plane into RUH, though… a former TWA destination.

 

[eolesen]

There's a pretty good reference from another forum WT is banned on which discussed this issue earlier in the week, and someone forwarded me the actual case information.

The case was Berman v TWA, Tel Aviv District Court 1225/01, not AA. Synopsis provided below:

Loosely transposed to reflect what an attorney more familiar with the TWA bankruptcy posted on that forum...

• What few assets TWA had in Israel (real estate, some ground equipment, and perhaps some ticket revenue still sitting with the BSP) were liquidated and the proceeds kept in Israel
• The proceeds from liquidating went to pay the preferred claims of the local employees
• The value of the assets in Israel exceeding the preferred claim would have turned over to the estate's trustee in the US

The comment "somewhat in excess of the claims due to the employees" makes me wonder if the courts didn't honor the full amount claimed by the employees.

Either way, as correctly stated a few times, the case was never against AA. The employees who felt stiffed had been looking to old AA's deeper pockets, and are now looking to the new AA's deeper pockets. I suspect they probably got more than a lot of the US based employees did as far as severance and retirement due.

It would seem the only tactic they have at this point is a negative PR campaign. Filtered thru the lens of the two bankruptcies, I suspect most people won't care too much about a negative PR campaign, especially if the majority of the route's traffic is going to have a US POS.

 

[WorldTraveler]

yet AA paid 14% of the settlement, did they not? If it wasn't AA's responsibility from the beginning, why did AA pay anything?

 

[700UW]

Did you not read where the ground equipment and other TW assets were sold to pay off the settlement?

 

[WorldTraveler]

So was AA restricted from removing money from Israel? If not, why didn't they sell the equipment and take the money? If they didn't believe they should have paid anything, then they should not have.

They put themselves in a much more difficult position now to argue that they don't need to pay the rest of the bill after having paid even one shekel.

 

[nycbusdriver]

Loosely transposed to reflect what an attorney more familiar with the TWA bankruptcy posted on that forum...

• What few assets TWA had in Israel (real estate, some ground equipment, and perhaps some ticket revenue still sitting with the BSP) were liquidated and the proceeds kept in Israel
• The proceeds from liquidating went to pay the preferred claims of the local employees
• The value of the assets in Israel exceeding the preferred claim would have turned over to the estate's trustee in the US

The comment "somewhat in excess of the claims due to the employees" makes me wonder if the courts didn't honor the full amount claimed by the employees.

Either way, as correctly stated a few times, the case was never against AA. The employees who felt stiffed had been looking to old AA's deeper pockets, and are now looking to the new AA's deeper pockets. I suspect they probably got more than a lot of the US based employees did as far as severance and retirement due.

It would seem the only tactic they have at this point is a negative PR campaign. Filtered thru the lens of the two bankruptcies, I suspect most people won't care too much about a negative PR campaign, especially if the majority of the route's traffic is going to have a US POS.
 

 
What the US courts ruled on the Israeli TWA means little in Israel, where they follow their own laws.  In general, the labor laws in Europe (and likely Israel, too, although they are not in Europe) are much more favorable to labor than they are in the US.  Here, as we have seen dozens of times, companies can declare bankruptcy and hammer their employees with impunity and almost unchallenged.  What's going on in Israel with this case merely puts a spotlight on the fact that their laws don't allow companies to get away with that.  I applaud them.
 
If the Israeli government and courts maintain that these ex-TWA employees are owed this money, that is how that goverment will react.  If the Israeli courts have deteremined that any TWA successor is still responsible for the debt, then AAG will have to eventually pay it, or discontinue all of its flights (including those operated by US Airways).  That is unlikley due to the profitablity of the service.
 
What Israel, it's courts and it's government, has deteremined the outcome will be, then that is it.  My guess is that discussions are ongoing, but at some point the piper must be paid.  If AAG continues to resist, our first indication will be the seizure of the multi-million AAG asset that arrives in TLV every aftenoon, i.e. the US Airways A330-200.  Bottom line: it belongs to AAG now, and I doubt Israel would respect the corporate shenanigans rampant in the United States.  They will get the money, or keep the airplane.  Simple.

 

[WorldTraveler]

well said. There are countries that protect worker rights far better than the US and US companies DO have to play by the rules of those countries in order to do business there.

And despite the attempts to distance AAG from AMR, there is plenty of evidence to show that they are the same company in more ways than they are not. AAG benefits from AMR's tax losses. AAG assumed nearly all of AMR's obligations etc.

BTW, the potential payment amounts to the equivalent of between one and two month's TOTAL REVENUES on US' PHL-TLV flights... not profits, but total revenue. Depending on the profit margin, it could amount to the profit on a year or more's worth of flying the route.

It is not an insignificant penalty relative to the revenue that the route generates.

Relative to what TW generated on the route 13 years ago, it was an even higher percentage of the revenues on the route at the time - but highlights how fat TW and PA had both become in many of their foreign locations where it was impossible to walk away from their obligations.

Other US carriers assumed significant employee-related obligations as part of their acquisitions of airline assets in foreign countries.

It also goes to show why the economics of employee obligations that large worked against AA's ability to generate profits.

The only likely way to ensure that AA is not liable for the payment and thus safe to operate without fear of having its aircraft seized is to show some document that AA was legally released in Israel from that obligation, not just in a US BK court.

 

[eolesen]

What the US courts ruled on the Israeli TWA means little in Israel, where they follow their own laws.

And that's why the ancillary proceedings were conducted.

The quotes I posted above are from the Israeli proceedings, not the US.
 

What Israel, it's courts and it's government, has deteremined the outcome will be, then that is it.  My guess is that discussions are ongoing, but at some point the piper must be paid.  If AAG continues to resist, our first indication will be the seizure of the multi-million AAG asset that arrives in TLV every aftenoon, i.e. the US Airways A330-200.  Bottom line: it belongs to AAG now, and I doubt Israel would respect the corporate shenanigans rampant in the United States.  They will get the money, or keep the airplane.  Simple.

All fine, except that the suit was filed against TWA, not AA.
 
Keeping an airplane? AA will use a leased asset. Legally, those can't be seized because legally they're not AA's asset. They're owned by the leasing company.
 

So was AA restricted from removing money from Israel? If not, why didn't they sell the equipment and take the money? If they didn't believe they should have paid anything, then they should not have.

They put themselves in a much more difficult position now to argue that they don't need to pay the rest of the bill after having paid even one shekel.

 
Maybe if I posted this in Aramaic or Hebrew you'd understand, but AA wasn't restricted from removing anything. They never had anything in Israel.

TWA was injuncted. TWA sold the equipment. The courts took the money from TWA. It's been distributed to the TWA employees to satisfy the preferred portions of their claim.
 

yet AA paid 14% of the settlement, did they not? If it wasn't AA's responsibility from the beginning, why did AA pay anything?

It's sounding more and more like the 14% they got wasn't a settlement from AA.

The excerpt above confirms the employees received the proceeds of liquidating the Israeli assets. It doesn't list a valuation, but it's likely that the real estate and any other assets did add up to around 14% of the claim at the time.
 

The only likely way to ensure that AA is not liable for the payment and thus safe to operate without fear of having its aircraft seized is to show some document that AA was legally released in Israel from that obligation, not just in a US BK court.

I don't need to show proof that AA was released of anything -- AA was never the target. Nobody can prove they were released from a claim if it wasn't a claim to begin with.

But hey, go find the cases yourself, Skippy. Bermann vs. TWA, filed in Tel Aviv.

Perhaps you can show proof that AA was actually held responsible. Right now, it's sounding like the only one assigning responsibility are a bunch of ex-employee/creditors who got pennies on the shekel.

-------------------

I find this entire line of discussion interesting, because here, you're all about backing the employees wronged by an evil corporation, yet on the DL forum, you're the exact opposite. The corporation doesn't do wrong: they just have used the flexibility...

Maybe we should be calling you George Babbitt. Google it. You're good at that.

 

[WorldTraveler]

Others and I have both said that if AA can legally fly to TLV and not be held responsible for any of TW's obligations, then more power to them and may they not only succeed but expand their presence in Israel.

But you continue to argue that AA has no legal connection to what TW did and that is where there might be some doubt.

Maybe it is all just noise that will blow over.

BTW, even if AA is right, how does it work out for AA in TLV if those former TW employees put up a billboard outside TLV saying they are owed X million shekels or some other comments that can be legally correct but not exactly business promoting for AA?

Even if the ex-TW employees are wrong, if they have the potential to harm AA, either AA has to settle or legally end the case such that AA can say they can't talk about it anymore.

13+ years after TW, they are still putting out press releases.

Tell us what other airline has faced that type of public relations issue in any other country after an asset sale.
It's all the more ironic that the case continues to be raised given that nearly all of TW's operation worldwide, not just in Israel, has been dismantled.

Maybe AA can operate the remaining M80s from FCO to TLV and let them get seized until they are gone too.

(it's a joke - please don't trip any circuit breakers)