Here comes the BK threat from the company

[Flying low]

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.

I thought our local president said no.

What happened to that committee set up to keep them in house?

 

[strikeforce]

I thought our local president said no.

What happened to that committee set up to keep them in house?

Your local president sold you guys out! That's what you get when a non-amt is elected president! Doesn't affect fleet, so why should he care??

 

[strikeforce]

One good thing that might benefit the AMT's if AA files BK......we can DECERTIFY the TWU!!!

 

[Bob Owens]

The pilots have two pieces to their pension. The A fund is PBGC guaranteed up to the max, which I think is now ~$54,000 for plans terminated in 2011.

Those who retire at 65 are made whole like any other employee. Not certain how it affects pilots who were forced to retire at 60 because of the old law, but anyone else who retired between 64 and 55 is essentially screwed to an increasing degree...

Anyone who was forced to retire at 60 would be 65 now.

 

[eolesen]

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.

Spot on. And that's the biggest issue -- scope. Reduce some of the scope restrictions, and it would make AA more agile. But the unions are going to fight tooth and nail to protect jobs at the expense of growing company revenue.

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

Fluff & others... Bankruptcy is not a foregone conclusion. It is avoidable by a wide margin if the unions figure out how to work with the company.

But the unions don't trust the company or take em at their word when they say the economic targets are what they say they are...

It will take a more proactive version of the 2003 agreements to avoid bankruptcy. And none of the unions want to admit that, or take what will be perceived as another step backward.

Outside analysts and pundits aren't saying AMR is headed towards bankruptcy simply because of what the company is saying or doing. The company has laid the cards out on the table for a while. We've seen enou of what's behind the kimono to know it ain't pretty.

What has some outsiders convinced there will be a filing is the public positions taken by the unions.

This ain't a doomsday situation yet. Cancer can be survivable if you don't argue with the doctor for three or four years over the right course of treatment.

 

[Bob Owens]

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 . . .

Really? If so then why didnt the airlines ask the Judge to set the price of fuel at $1/gallon, after all fuel costs are what has driven the industry into the state its in. Just sayin...

 

[Bob Owens]

This ain't a doomsday situation yet. Cancer can be survivable if you don't argue with the doctor for three or four years over the right course of treatment.

No but you should see three or four doctors.

Management doesnt have the trust of the workforce for many reasons, Shared Sacrifice is one of them. The fact that they add things like Profit Sharing to their cost outs.The Supplimental Medical is another, they sold this to the membership as a supplimental for Retiree medical, then cancelled the plan and pocketed nearly $80 million dollars. Now they want to pocket another $57 million by terminating the Prefunding. Sure it doesnt go directly to the General Fund but it allows other funds to stay in the General Fund.

We see management spending tons of money and claiming lossses, we did our part, nearly doubled productivity and took pay cuts on top of that. If they cant make it and give back a measly $190 million out of the $24,000,000,000 they are taking in this year, less than 1% of total revenues, then there's no hope and we may as well get what we can instead of investing more years at low wages to a dying company.

 

[Buck]

I thought our local president said no.

What happened to that committee set up to keep them in house?

In progress

 

[eolesen]

I know I got a check with interest for my prefunding. What makes you believe it won't be the same for the TWU?

Don't recall if I got a check for supp medical or not.

 

[strikeforce]

Fluff & others... Bankruptcy is not a foregone conclusion. It is avoidable by a wide margin if the unions figure out how to work with the company.

But the unions don't trust the company or take em at their word when they say the economic targets are what they say they are...

It will take a more proactive version of the 2003 agreements to avoid bankruptcy. And none of the unions want to admit that, or take what will be perceived as another step backward.


This ain't a doomsday situation yet. Cancer can be survivable if you don't argue with the doctor for three or four years over the right course of treatment.

The membership has given management 17.5% for 8 years....if that doesn't constitute WORKING with management then you need a neurologist.

It's not the union officials at the INTL that don't trust management....it's the membership. WE don't trust our own leadership at the union, so why should we work and trust management that continues to stall at the table, and continues to mis-lead the membership by crying poor, but going out and spending billions to refurbish terminals, leasing hundreds of aircraft, hiring more management...like we need more incompetent management, and assuming more debt with Eagle's divestiture. As long as this non-sense continues....It will create more animosity and anger towards management, and the customer will suffer. The company just doesn't get it. This is not 2003....people are more acutely aware of the BS from management and union officials. We are not going to agree to more concessions, plain & simple!

 

[FWAAA]

Really? If so then why didnt the airlines ask the Judge to set the price of fuel at $1/gallon, after all fuel costs are what has driven the industry into the state its in. Just sayin...

If the airlines had a long-term contract with the oil companies to supply fuel for $1/gal, then the airlines could have enforced that agreement. But airlines didn't have such agreements. Judges can't force companies to sell inputs like oil at prices not agreed to by the vendors.

Bankrupt companies get the option of accepting or rejecting their executory contracts. Creditors, on the other hand, must abide by the contracts unless the debtor rejects the agreement (which would release the creditor/vendor/etc).

That's a softball, Bob. Give me a difficult one.

 

[Bob Owens]

I know I got a check with interest for my prefunding. What makes you believe it won't be the same for the TWU?

Don't recall if I got a check for supp medical or not.

What you seem to forget is that prior to Prefunding it was 100% company paid, prefunding was a concession enjoyed by AA where they had an edge over their "competitors" until their competitors filed BK. So from 1989 to 2002 or so AA had an advantage, now they want out. While not exactly the same you make it sound like they are doing us a favor by refunding only what they took (with interest) and not the matching dollars. I guess if AA had a matching 401K and after twenty of paying into that they decided that they no longer wanted to manage that it would be ok if they refunded your contributions (plus interest) and kept what they put in as well?

If you got a refund from Supplimental I'd like to know.

 

[Bob Owens]

Judges can't force companies to sell inputs like oil at prices not agreed to by the vendors.

Bankrupt companies get the option of accepting or rejecting their executory contracts. Creditors, on the other hand, must abide by the contracts unless the debtor rejects the agreement (which would release the creditor/vendor/etc).

That's a softball, Bob. Give me a difficult one.

Exactly, Labor never challenged those crooks on the bench who on the one hand said that they could change the contracts then said we could not strike. The RLA says if they violate status quo, change rates of Pay, workrules or working conditions that we can strike. No cooling off period, no mediation, straight to self help.

 

[FWAAA]

The membership has given management 17.5% for 8 years....if that doesn't constitute WORKING with management then you need a neurologist.

It's not the union officials at the INTL that don't trust management....it's the membership. WE don't trust our own leadership at the union, so why should we work and trust management that continues to stall at the table, and continues to mis-lead the membership by crying poor, but going out and spending billions to refurbish terminals, leasing hundreds of aircraft, hiring more management...like we need more incompetent management, and assuming more debt with Eagle's divestiture. As long as this non-sense continues....It will create more animosity and anger towards management, and the customer will suffer. The company just doesn't get it. This is not 2003....people are more acutely aware of the BS from management and union officials. We are not going to agree to more concessions, plain & simple!

Strike, point of order: AA and AMR are already on the hook for the Eagle debt as the lenders required guarantees when it was borrowed. Corporate parents often have to guarantee the debt of their subsidiaries. Not unlike parents co-signing for their kids' debt. If you co-sign your kid's mortgage loan, the bank ain't gonna let you out from under that debt if you change your mind after a few years unless you really make it worth their while (like payment of a substantial portion of the debt). You can read about AA and AMR guarantees of the Eagle debt in the 10-K - it's been in there for many years.

Ok, the above was the factual part - the rest is mostly opinion based on facts, which many will find abhorent. So be it.

About agreeing to further concessions - because AA's overall labor costs per ASM are higher than any of its competitors, at some point in the future, AA's employees will be forced to choose between changes in their contracts or the end of AA. Many chest-thumpers will say (GWB-style) "bring it on" or "we'll burn the place down before agreeing to additional conessions" (as they did at EAL) but history shows that when push comes to shove, most legacy airline employees will keep showing up for work no matter what contract is imposed upon them. Not everyone wants to start over again at the bottom of another airline's payscale. I realize that plenty of AA employees have done so throughout their career, having started at EAL or Trump or TWA or PanAM or National or many other airlines. When AA files for Ch 11 protection, some workgroups will probably fare better than others.

For example, the market rate (hourly pay rates) for line maintenance is rising well beyond AA's AMT book rates, and as I predicted before, AA line AMTs will probably see some increases in hourly pay rates after a Ch 11 filing while other workgroups will likely see reductions. As has been repeated here often, many of the contract changes will be to work rules of pilots and FAs to make them fly more hours for the money they're already earning. Because fewer pilots and FAs will be needed, AA's costs will go down.

 

[commavia]

The membership has given management 17.5% for 8 years....if that doesn't constitute WORKING with management then you need a neurologist.

No question - AA's rank-and-file employees (all of them) sacrificed an enormous amount in 2003 and deserve enormous (though not entire) credit for keeping the company solvent and not following the bankruptcy path of its competitors. But, that being said, the reality speaks for itself: rank-and-file employees at many of AA's competitors not only had to give up those same pay cuts, but also experienced more severe work rule gutting in bankruptcy, and/or saw their pensions frozen or dumped altogether. And, most importantly, more of them got laid off.

Thus, all of these back-and-forth arguments here get a bit academic about whether Group X at AA get paid more or less than the comparable group at Airline Y, etc. The key here is that regardless of where AA's groups are relative to the industry (and in almost every case, their cost is at or near the top in the industry), it's sort of a meaningless argument since other airlines have basically outsourced much of the comparable work. Put another way: comparing the cost of an AA employee to a comparable employee at, say, Delta or United, totally misses the point that those other airlines have basically eliminated most of the people that used to do many of those jobs - overhaul, ground handling, flying, etc. have in many cases shifted to regionals and/or third parties (in some cases in foreign countries).

continues to mis-lead the membership by crying poor, but going out and spending billions to refurbish terminals, leasing hundreds of aircraft, hiring more management...like we need more incompetent management, and assuming more debt with Eagle's divestiture.

Most of the "billions" spent on terminals - I assume you mean JFK and MIA - was already bought and paid for (i.e., bonds issued) before 2003, and/or by the time the near-bankruptcy came around, it would have cost more for them to back out of the contracts already signed.

"Leasing hundreds of aircraft" is going to reduce AA's fuel bill substantially which will have an immediate, material impact on AA's cash flow. That's a good thing, and it's at very little incremental ownership cost to AA. It will, however, dramatically reduce the workload in TUL, though - that is true.

As for "hiring more management" - AA has laid off tons of management (broader sense here of people level 1 and up) in the last decade. They have, however, also added lots of new VPs and MDs, and that is totally inexcusable - I agree - especially considering that some of the VPs they already had were such useless wastes of life.

As for the Eagle divestiture - as was already discussed, no new debt is being taken on. AMR is basically just keeping the debt it already had as the price of offloading Eagle, which to me seems like a really, really good deal for AMR and AA.

As long as this non-sense continues....It will create more animosity and anger towards management, and the customer will suffer. The company just doesn't get it. This is not 2003....people are more acutely aware of the BS from management and union officials. We are not going to agree to more concessions, plain & simple!

Well we agree on one thing - it definitely isn't 2003. In 2003, AA's restructuring outside bankruptcy set AA up with some of the most competitive costs of any major airline in the U.S. The problem, of course, is that since 2003, Delta, Northwest, United and USAirways (twice) have used bankruptcy to drive their costs substantially below AA, and used bankruptcy to free themselves of many of the union contract language that was limiting their growth and network optimization. AA - which didn't do those things - is now at a disadvantage.

About agreeing to further concessions - because AA's overall labor costs per ASM are higher than any of its competitors, at some point in the future, AA's employees will be forced to choose between changes in their contracts or the end of AA. Many chest-thumpers will say (GWB-style) "bring it on" or "we'll burn the place down before agreeing to additional conessions" (as they did at EAL) but history shows that when push comes to shove, most legacy airline employees will keep showing up for work no matter what contract is imposed upon them. Not everyone wants to start over again at the bottom of another airline's payscale.

Not to mention that today, unlike in 1990, bankruptcy is no longer seen as even a "last resort" by airlines or other publicly-traded companies - it's just a business strategy. In that context, if AA cannot get costs and a business model competitive with the industry, they will simply do it through Chapter 11. Every other U.S. legacy carrier already has (at least once).