Here comes the BK threat from the company

[FWAAA]

Adjusted for inflation TWA guys were earning more after TWA went BK than they are now for AA.

AA in some cases got more outside of BK from their workers than UAL did through BK.

True, but in many cases, employees of bankrupt airlines fared very poorly compared to AA nAAtives. Pilots at the former TWA, for instance, lost their pensions and then, in the wake of the September 11 attacks, lost most of their jobs. Pilots at USAir, especially in the East, still make less money than jetBlue pilots on comparable equipment.

Speaking of UAL, some of their employees suffered much worse fates than their AA counterparts, like the employees of the UAL versions of Tulsa and Kansas City (Indianapolis and Oakland). UAL's AFW (San Francisco) fared much better.

Of course, closing Tulsa and AFW wouldn't mean those guys would be permanantly out of aviation maintenance like was the case with many IND and OAK employees of UAL given the need to fully staff the line stations. Presumably, many of the TULE employees would find their way to the line stations.

 

[eolesen]

They might find their way to line stations, but the cuts at OAK, IND, TPA, MEM, etc. made by other airlines were done when the housing market was still alive, so moving was actually a viable option.

Texas didn't crash as far as the rest of the country, so perhaps the AFW guys have a chance at relocating if they chose to, but there are also better options for commuting...

The TUL guys?.... I haven't looked at real estate in over ten years, but I can't imagine it is exactly booming right now... And with the dearth of mainline service, commuting is probably out of the question.

 

[damajagua]

I am so sick and tire of rumors and more rumors.
Lets wait till AA files for bankruptcy and see what
happens. I feel everyone here is just beating a dead
horse. Once they file we can have a discussion on
what the best plan of action should be. Right now
is all speculation.
Beside if AA was close to filing for bankruptcy it
would be all over the news. I have try to find
at least one article in the last few days suggesting
that AA might be close to filing and I have not
found ONE. I am not naive to know that things
@ AA are fluids but some of the people here
make it seem like it's the end of the world to
AA. Honestly I won't allow myself to be caught in
this crap; I will deal with it when it happens. Beside
it is all beyond my control. But you know what
deep down inside I know it's all going to work out
exactly as it is suppose to be.

 

[strikeforce]

Could very well be that Boeing and Airbus will applaud AMR for filing Ch 11 when that happens. They might even pressure Arpey to git er done sooner than later. Why? Lenders about to loan a company billions of dollars like to see low costs instead of high costs. They also like to see low levels of debt and lease obligations owed to others. A bankruptcy filing would take care of both of those, better enabling AA to make the payments on its new planes.

So AA files a Ch 11 petition, rejects the remaining MD-80 leases and negotiates a reduction to the debt encumbering the owned MD-80s (and the 763s and the 757s and the older 738s and the 777s). All of a sudden, AA's got lower employee wage expense AND lower airplane ownership costs, making it more likely (in the eyes of Boeing and Airbus and the other new lenders) that the new debt and new lease payments for the new planes will be paid on time.

When an individual discharges their debts in bankruptcy, it can be tough (or impossible) to borrow lots of money at low rates for a few years. Eventually, all is forgiven if the individual pays their bills on time for the subsequent 10 years. But when a corporation reorganizes under Ch 11, lowering their expenses, they can easily borrow billions and incur huge lease obligations at favorable rates right away.

Had AMR filed for Ch 11 protection in early 2003, it could have rejected alll the AB6 and MD-80 leases and ordered fuel efficient replacements right away. Other legacies have ordered new planes in bankruptcy (or immediately upon Ch 11 exit) such as USAir. Not doing that may go down as a huge management failure when the history books are written.

I wouldn't be so proud....one day proclaiming the "biggest airplane order in US history" and the next day filing BK. Doesn't look good on wall street.

 

[WorldTraveler]

The continued chorus that nAAtives have fared so much better than other airline employees COMPLETELY misses the point that those other carriers are through cutting and are in some cases still passing out pay raises while AA employees are undoubtedly getting primed for another round of cuts.
Talk to us about how well AA employees fared once the company is back on stable footing - as well as how well the company avoided committing all the "sins" which other airlines have committed.
.
Yes, A and B both want AA to be able to afford their lease payments - and likely do expect them to reject leases on their now-unneeded (or in a couple years) M80 fleet - and reduce costs on the rest of their fleets - marking them down to market levels.
.
I'm a little confused as to how NOT ordering a bunch of new airplanes is supposed to be a failure for those mgmt teams that didn't chose to load up their balance sheets w/ new debt - right after having rejected a bunch of leases and reorganized debt in bankruptcy.
How is it morally superior for AA to dump a bunch of debt in BK and then turn around and load up on a whole lot more, expecting the paycuts that will come from employees to pay for those aircraft.
In fact, not ALL airlines have ordered a bunch of new airplanes coming out of BK.... in fact, SOME have chosen the route that says we'll reduce our debt levels so we don't have to pass this way again, we'll invest in the fleet we do have, and we'll use our mechanics to retrofit the fleet we do have.
.
Doesn't look good in the moral eyes of the community or the employees either, strikeforce.
.
Damaj,
you know as well as everyone else here that AA is quickly coming to the end of its rope. Yes, there is speculation about what will happen - but there is also an abundance of history that can tell all of us what to expect. There are no pills that can be taken to avoid having to face economic reality. Having to face that reality, AA will have to make tough decisions that so far have been avoided... and AA people will unfortunately have to endure yet another round of cuts.
The far bigger question is what AA will have left in terms of a network after the intensity of competition which AA will face. Competitors have been pouncing on AA with increasing strength already and BK always brings even more competitive threats.
.
No one expects you or anyone to be paralyzed by the unknown - but there are a whole lot of us that want to make sure you are well prepared to face the inevitable future.
.
BTW, nearly all airline bankruptcies have been filed in the fall - August and September being the most "popular" months.

 

[jersey777]

I am so sick and tire of rumors and more rumors.
Lets wait till AA files for bankruptcy and see what
happens. I feel everyone here is just beating a dead
horse. Once they file we can have a discussion on
what the best plan of action should be. Right now
is all speculation.
Beside if AA was close to filing for bankruptcy it
would be all over the news. I have try to find
at least one article in the last few days suggesting
that AA might be close to filing and I have not
found ONE. I am not naive to know that things
@ AA are fluids but some of the people here
make it seem like it's the end of the world to
AA. Honestly I won't allow myself to be caught in
this crap; I will deal with it when it happens. Beside
it is all beyond my control. But you know what
deep down inside I know it's all going to work out
exactly as it is suppose to be.

I completely agree. This thread has gone down the path that bankruptcy is unavoidable and all this speculation about what will happen is pure conjecture. Who knows...if the basis of this thread is true then maybe the pilots would rather settle then cut off their nose to spite their face...hell..we all did it in 2003. So I will take this whole thread with a grain of salt just like I have for those others over last 5 years that spoke only of doom and gloom.

 

[Frank Szabo]

I completely agree. This thread has gone down the path that bankruptcy is unavoidable and all this speculation about what will happen is pure conjecture. Who knows...if the basis of this thread is true then maybe the pilots would rather settle then cut off their nose to spite their face...hell..we all did it in 2003. So I will take this whole thread with a grain of salt just like I have for those others over last 5 years that spoke only of doom and gloom.

Taking this thread with a BAG of salt, not just a grain, would probably be the best idea. Even though Centrepork has occasionally managed to pull the proverbial rabbit from the hat, it looks improbable at this point but - the bottom line is nobody posting here has a clue as to the final shape of the table.

Plan for the worst case and anything better is gravy.

 

[FWAAA]

I wouldn't be so proud....one day proclaiming the "biggest airplane order in US history" and the next day filing BK. Doesn't look good on wall street.

News Flash: Wall street is already pricing AMR common stock as if bankruptcy is around the corner; at today's closing price of $3.54/sh, it's as low as it was in January, 2003. In case you've forgotten, bankruptcy almost always results in the worthlessness of the existing stock - it will fall to $0.00 per share the day AMR exits Ch 11 and new stock will be issued to the unsecured creditors of the company. The old stock (worthless) will be canceled.

Quirky thing about bankruptcy law: You can refuse to enter into a contract with a bankrupt company (so Boeing and Airbus wouldn't have to do business with a bankrupt AMR if they didn't want to) but if a customer has a contract with a vendor or creditor and the customer files Ch 11, the vendor/creditor cannot refuse to do business with the debtor - only the debtor has the power to accept or reject the contract. Probably makes sense to line up some long-term contracts at favorable rates and THEN file the Ch 11 petition rather than the other way around. Just sayin . . .

 

[Maark767]

I am so sick and tire of rumors and more rumors.
Lets wait till AA files for bankruptcy and see what
happens. I feel everyone here is just beating a dead
horse. Once they file we can have a discussion on
what the best plan of action should be. Right now
is all speculation.
Beside if AA was close to filing for bankruptcy it
would be all over the news. I have try to find
at least one article in the last few days suggesting
that AA might be close to filing and I have not
found ONE. I am not naive to know that things
@ AA are fluids but some of the people here
make it seem like it's the end of the world to
AA. Honestly I won't allow myself to be caught in
this crap; I will deal with it when it happens. Beside
it is all beyond my control. But you know what
deep down inside I know it's all going to work out
exactly as it is suppose to be.

Thank you for your post! I agree as well.....We have been hearing the BK threat for so long but it hasn't happened. If I had a penny for every time someone or some analyst brought it up I'd be all set.

 

[Super FLUF]

Beside if AA was close to filing for bankruptcy it
would be all over the news. I have try to find at least one article in the last few days suggesting that AA might be close to filing and I have not found ONE.

I guess you missed the start of the thread. First off, the thread is titled "here comes the BK THREAT from the company". The issue here is the company's threats that have already been issued at the bargaining table, and the upcoming threats to be made at the table after their "last best offer" is plopped on the table next week in front of our negotiating committee.

The second issue is whether the threat is credible or not. As I stated a couple of times in this thread, I do not think that BK will happen with this company. There are a number of reasons that I think this and I am not alone in my opinion. Obviously a lot of participants here think it is a foregone conclusion. It will be interesting to see who is right. In addition to the bankruptcy threats, I would not be surprised to see threats of lock-outs to the FA's and Mech's.

I think this discussion is germane to the groups that participate here as you will be soon hearing the same BS at a negotiating table near you.

Here is the latest blast from APA -

Over the last several months, our negotiating sessions have yielded significant progress, resulting in many agreements-in-principle. Negotiations are narrowing down to the core issues of Scheduling, Work Rules, Scope and Pay. We have received information indicating that management may soon be presenting a comprehensive proposal encompassing all of these remaining areas.

In anticipation of this, your APA leadership is taking action to facilitate a successful conclusion to contract negotiations.

To date, your APA leadership has taken the following actions:
Formed the Contingency Committee and charged its members with researching and reporting the facts on various contingencies, including mergers, acquisitions, reorganizations and liquidations.
Engaged the services of professional negotiator Seth Rosen and ALPA contract advisers, including the ALPA Economic and Financial Analysis group.
Received informational briefings from consultants on the effects of corporate restructuring on pilot pension plans and the collective bargaining agreement.
This week, in response to recent developments, your APA leadership formed an advisory group consisting of former APA National Officers and negotiators, our ALPA advisers, our Negotiating and Scope Committee chairmen, and NO/BOD representatives. This advisory group has been tasked with advising the APA leadership on strategies to obtain a restorative industry-leading contract.

The National Officers and Board of Directors are also requesting a meeting with AMR CEO Gerard Arpey and AMR President Tom Horton to candidly discuss the current status of negotiations. It is our goal to jointly find solutions that address the needs of our membership while allowing American Airlines the opportunity to grow and prosper.

 

[commavia]

While I realize that for any employee, their mortgage, car payment, kid's college, etc. naturally dictate that for them it pretty much all comes down to the paycheck.

But the other point that is often missed here is that another huge component of the benefit that insolvent carriers were able to reap from bankruptcy is not just lower cost, but also freedom and flexibility to generate higher revenue.

Now - no doubt - the fact that Delta, Northwest, United, USAirways, etc. were able to use bankruptcy to freeze and/or dump pensions, outsource overhauls to Mexico/El Salvador/Korea/China, etc., relax SCOPE and outsource more and more flying to non-owned regional operators, lay off thousands of additional workers, etc. all massively impacted their operating costs.

But, alas, bankruptcy also gave those airlines the ability to rewrite mountains of work rules and protections that made them more nimble and agile in adding or reducing capacity quickly, allocating flying to new and emerging markets with diversified revenue streams, and generate more revenue from the same fixed amount of assets.

For example, if AMR were able to profitably operate a 90-seater within the AA-branded network - somehow - it would allow AA to reduce excess capacity in markets where the MD80 today is suboptimal, and open up new markets where a 70-seater is either economically or commercially uncompetitive, and an MD80 is too large. As another example, if AA could fly longer-haul flights today without requiring side letters for each new route, AA would be able to deploy its 777s in longer-haul markets with greater revenue-generating potential, which would also increase the amount of ASMs AA's network generated, and subsequently lower unit costs network wide. Just as two examples.

In short - other economically failed airlines used bankruptcy to rewrite their business models and make themselves more competitive - not just through lowering costs (although they did plenty of that, to the extreme detriment of many of their employees), but also through increasing revenue. AA, having not gone through bankruptcy as has every other U.S. legacy carrier at least once, is today at a competitive disadvantage in both cost and revenue as a result.

 

[Birdman]

This week, in response to recent developments, your APA leadership formed an advisory group consisting of former APA National Officers and negotiators, our ALPA advisers, our Negotiating and Scope Committee chairmen, and NO/BOD representatives. This advisory group has been tasked with advising the APA leadership on strategies to obtain a restorative industry-leading contract.

How far is the APA from an industry leading contract now? The TWU would be lambasted for even a hint of seeking such a lofty goal. The pilots negotiating skills have always been the envy of the other work groups at AA, but this notion, now, is over the top.

 

[imwithstupid]

How far is the APA from an industry leading contract now? The TWU would be lambasted for even a hint of seeking such a lofty goal. The pilots negotiating skills have always been the envy of the other work groups at AA, but this notion, now, is over the top.

Why would AA give the TWU an Industry Leading Contract. The TWU does not industry lead anything. The Tulsa Base is outsourcing planes due to their lack of performance, the line stations have twice the mechanics other carriers have. the membership voted for the concession road. To expect it to be given back, hey folks that shipped has sailed. If AA goes the BK route the Union will not have a say except bend over and take it. Many of the folks here need to wake up its 2011 not 2003.

 

[Buck]

Why would AA give the TWU an Industry Leading Contract. The TWU does not industry lead anything. The Tulsa Base is outsourcing planes due to their lack of performance, the line stations have twice the mechanics other carriers have. the membership voted for the concession road. To expect it to be given back, hey folks that shipped has sailed. If AA goes the BK route the Union will not have a say except bend over and take it. Many of the folks here need to wake up its 2011 not 2003.

Tulsa is outsourcing about 5 757's at this time and it is due to yields falling off. One thing for sure, 1D is the model dock of the whole aircraft industry. 😀

 

[AA767JET]

Tulsa is outsourcing about 5 757's at this time and it is due to yields falling off. One thing for sure, 1D is the model dock of the whole aircraft industry. 😀

How is the TWU Allowing this to happen ???