One thing about bankruptcy is that we will finally see EXACTLY what AA wants and was never able to acheive in negotiations.
I have said on quite a few occasions that AA should have filed when it was the popular thing to do regarding airlines. However, I do not believe that AA chose NOT to go that route because they truly didn't want to screw creditors, shareholders and employees. That's nonsense. They chose NOT to file because they did not want to lose ALL control of running the company.
They assumed employees would bend over as much as humanly possible because "we are lucky to have jobs."
They were ever so grateful when we all folded and voted in force fed concessions. Now they do not want to even come close to restoring what was taken 8+ years ago.
Nobody knows exactly why Arpey fought like he did to force the concessions instead of filing for Ch 11 protection, but I suspect that it's for the reasons that he himself has related: he has a naiive, moral objection to corporations filing for bankruptcy if there's a way to achieve the results voluntarily without the hammer of the bankruptcy court. This article summarizes his view:
http://www.thestreet.com/story/10852291/1/american-airlines-ceo-how-we-do-things-differently.html
So maybe now they will file Chapter 11 because employees are not buying their poverty defense anymore.
So be it!
But I would like to ask everyone to fully understand what Chapter 11 means. The contract as you know it will be decimated in every way shape and form. Pensions will be frozen no doubt. Don't be surprised if the new contract reduces ALL beneifts and wages. Don't be surprised if BUMPING is also removed because the company says it costs too much to pay proteced members $12500.
I have spoken to several mechanics who truly believe a bankruptcy judge will at least give us the last offer on the table. WRONG!!!!!!!!!!!!! You can be sure OH will emerge as a spin off and line mechanics will be paid like 3rd party contractors.
Just please be prepared for the changes that accompany bankruptcy. If you think it's bad now, just wait.
DO NOT let ANY union official tell you we will be better off in bankruptcy.
I agree completely. Anyone who thinks that AA will pay UPS/WN/FedEx wages in Tulsa to conduct regularly scheduled heavy overhaul is in complete denial. On the other hand, AA could easily pay those wages to you and others in high-cost line cities if some of the overhaul happened in SAL where $2/hr to $5/hr wage are paid to the employees (I wouldn't call them "technicians"). In fact, my prediction is that line AMTs at AA would see a pay raise during bankruptcy even while nearly everyone else suffers more concessions (pay rates and/or work rules).
When I say "LET EM FILE", I do so because I am tired of their threats and greed. File and be done with it.
Do not be surprised that even after bankruptcy, AA will contuinue to lose money because current management sucks.. They could go bankrupt every three years and as long as you have an inept management, they will never be profitable.
Personally I would retire and take a couple of years "before 60" penalty. I imagine those who can, will bail out. I am fortunate in that respect.
Those who can't, need to accept what will be rammed down their throats.
As for the pilots, SCOPE will gone with the stroke of a pen and both they and FAs will find themselves flying more hours with less time off.
All in all, Let AA file..When they still lose money, they can no longer blame labor..But of course they will try.
Here's where I disagree with you. You claim that management sucks and predict that management would still lose money after a bankruptcy wrings more costs out of AA (thru increased productivity and/or wage rate cuts).
I realize that you hate Arpey and the rest of senior management. You hated them on May 1, 2003 for slashing your pay and your hatred for them increased dramatically about three years later when the PUP/PSP plan began to payoff in a big way. But if you could pretend for a minute that you aren't an underpaid mechanic but instead were a neutral observer, I think you might see that what management has done for 8+ years is sorta impressive. How so?
AA managed to cram wage cuts down the employee throats without spending money on bankruptcy lawyers, accountants, investment bankers and other parasites. At UA, those costs were about $660 million over their three year bankruptcy odyssey.
Because management didn't file for bankruptcy, the stock was not wiped out and climbed from $1.25/sh in early 2003 to $41/sh in January, 2007. Even though your options did not compensate you for your concessions (which would be mathematically impossible), your options were worth a $16,000 gain in January, 2007, or about five years worth of profit-sharing at the rates AMR paid in the late 1990s (when $3,000/year was the average). Yes, that gain is a pittance compared to the concessions, but it's far more than the aggregate gain to US, UA, CO, DL or NW employees in their recent piddly profit sharing payments.
AA cut its wage expense by a smaller percentage than the other airlines, so the fact that it has lost money and the others have turned profitable shouldn't be a surprise to anyone. AA's cost structure is higher than any other US airline. As annoying as WT is in the way he says it, he's right that the others have been able to grow and prosper during the past couple of years while AA has continued to shrink and lose money during that same span.
Inept management? They've managed to scrape by during the past eight years better than I could have. I'm certain they did better than you or Owens could have. They've been scraping by and keeping enough cash on hand (mostly by borrowing and furniture burning plus some new stock issues) to stay in business. Without filing for bankruptcy and terminating the pilot pensions. Not many other US-based airlines in that club these days.
Has Arpey mismanaged and made mistakes? Certainly.
He waited far too long to order new 738s. Orders should have begun in 2004 or 2005 after the concessions. Oil spiked in the summer of 2005 (Katrina and the other hurricanes) and has climbed rather steadily since then with only a couple of dips in the past six years. Yet he waited to resume 738 deliveries. That cost AA probably more than a billion dollars in fuel costs so far and each day, that total extra expense for fuel climbs higher and higher.
Other mistakes? He naiively assumed that the represented employees would not make such a big deal about his PUP/PSP payoffs. After all, he and the other execs took huge paycuts in the fourth quarter of 2001, long before Carty demanded concessions from the rank and file. Because the stock-based variable comp did not pay off in 2001 or 2002 or 2003 or 2004 or 2005 (which equaled huge pay cuts for the execs - much larger percentages than suffered by the rank and file), Arpey didn't think that payoffs in 2006 and subsequent years would be such a big problem.
Other mistakes? Perhaps not filing for Ch 11 and further reducing labor costs (and dumping the MD-80s and AB6s sooner) will turn out to be a big mistake. It prevented AA from joining with another legacy with valuable franchises like UA or NW.
No doubt there are lots of other mistkes. But losing money as evidence that he sucks? Not so much. AA has higher costs than its competition. Because AA didn't gut pay as much as the competition.
When AA files and reduces its wage expenses by $600 million (or more - perhaps even a billion dollars) per year, making money will be easier. Of course, if oil goes to $150/bbl or higher again, all airlines will once again be in the same boat and AA would probably lose money (like its competition).
