Is USAirways hostile takeover Of AA for Real?
- Thread starter PITbull
- Start date
-
- Tags
- a clever ruse
- Status
signals
Veteran
The truth about PIT...
...ask WN because most of US can't handle it.
nuf sed
...ask WN because most of US can't handle it.
nuf sed
OP
PITbull
Veteran
- Dec 29, 2002
- 7,784
- 456
- Thread Starter
- Thread starter
- #214
PIT put USAirways on the MAP from Allegheny to U Airways. Helped U grow westward, and International. Helped create thousands of jobs and YOUR job as well. They downsized PIT and grew PHL, but PHL couldn't handle all the traffic. It was a nightmare until they downsized PHL too. U eliminated LGA and BOS which fed the east coast corrider.
Again stupid is as stupid still does.
LUV is in Pittsburgh, and many other carriers are serving the local traffic, southwest PA. There just isn't a "carrier dominance", currently.
AA may come into PIT once they emerge from BK. Got to have your ear to the politicians.
Yes a great airport, beautiful city...AFFORDABLE...and "everybody
knows your name".
signals
Veteran
Not quite. WN is cutting back at PIT. PIT may have been a money loser for US, and they were probably smart to cut service. This is not to say that it may not profit other airlines.
I know on this one, 1/9th of US disagrees.
I know on this one, 1/9th of US disagrees.
signals
Veteran
If this is true
It adds fuel to my statement.
signals
Veteran
Follow the discussion. I'm actually on your side on this one. PIT wasn't as profitable as many believe and was actually a loss.
signals
Veteran
That's one way of looking at it. The way I see it, when US had 36,000 employees, over 4000 of them lived in PIT. The majority commuted from PIT, and most to PHL. From a corporate view, although a small amount, this is a loss of revenue. Enter low cost carriers like WN, and you're losing big money. Your original quote shows that most had to adjust by taking furlough, moving to another location, or looking for employment elsewhere.
Sad but true.
Sad but true.
jersey777
Veteran
- May 24, 2006
- 627
- 73
I am reposting this thread from one of my fellow coworkers at JFK. He pretty much sums up the situation as it stands now.....
Quoting phxa340 (Reply 44):
JFKPurser has often mentioned how this merger is imminent and how big news is always forthcoming , yet it never comes to reality ... so take what he says with a grain of salt, with that being said he offers an incredible insight to the employee view of AA , something were fortunate to have on here to understand the entire situation.
Wow. If I recall, I never claimed the merger was "imminent". I have claimed since the beginning when Parker secured TAs with each of AMR's three unions -- a groundbreaking and unprecedented event in this industry and the blow fro which Horton will not be able to recover -- and still claim -- that the takeover is inevitable. I never gave a timeline -- I have only asserted that there is little to nothing Horton can do to avert this, because the de facto boar of directors of AMR are the ones who are actually holding the cards, and none of them support his vision for the future of American Airlines, because even on the surface, it simply does not create the short term financial recovery wanted by the three banks on the UCC or the long-term value desired by the remaining six members, including the unions. I am not going to go into the specifics of this -- the information is widely available and disseminated. And the only people who believe in the standalone plan are Horton, his VPs and a few people on A.net who really have no idea what they are talking about. I have read through these threads in amazement of the abject ignorance and sophomoric armchair CEOing as is typical of this board concerning the fate of AMR. This situation is fluid and ever-changing in the minutae, but the end result will be that US will take over AMR in BK, as soon as all the pieces are put into place according to the protocol set forth by the UCC as agreed upon in the terms of the bankruptcy, which is exactly what has been happening. It simply keeps changing. But the constant and inarguable reality is that nothing AMR can do at this point will result in anything that competes with the US plan.
Quoting incitatus (Reply 47):
Keep on going like... "Boeing is on board", "This merger has a 90% chance of happening".... very entertaining.
Hey Incitatus -- guess what? Boeing is on board. They have been from the get go. Nothing is changed. They believe the best future for AA and the overall health of the entire USA airline industry is a US merge in BK. They won't say it publicly because they are bound by confidentiality laws and there are sticky politics involved. But to those close to the process, it's no secret. And I'm gal you're entertained. That's what this is for you. Entertainment. Speculation based on half-truths you read in the media, rather than hearing what is actually happening from someone like me, who has their whole life invested in this mess and actually knows more about the actual details of this process than you are willing to believe. How much of your total net worth going forward are you willing to bet that you are so right about AMR emerging as a standalone? Because you are certainly sure of it. Are you willing to bet your career on it? Because I'm willing to bet my career on US Airways taking over AMR in BK -- as a matter of fact, I already have -- along with about 50 thousand other unionized AMR employees. This counts for more than you will ever give it credit for, I suppose. But we can revisit this subject, if you like, once the takeover is complete. I will be interested to read what you have to say.
Quoting incitatus (Reply 47):
There have been ZERO critical steps so far, so this would be a first.
Correct. Up to now, there has been lots of lease-renegotiating, 1113 hearings, contract negotiations with AMR unions and PR by Parker and the unions. This is all part of the process. But now that the 1113 is nearing, the tractors will begin moving, and this is where it gets interesting.
That said, I will explain again what is happening now -- which nobody officially knows yet. AMR has agreed to yield a critical step in the takeover process which will allow US unlimited access to previously confidential information in its books which US need to complete a final offer to present to the UCC. This was stipulated by APFA as a condition to sending out a TA for ratification.e Two key docs -- NDA, which allows US to see AMR books and a Hard Scott Rubino which is a review by the DOJ to see if there are conflicts of interest. The docs needd to be signed off by AA in order for US to make an informed offer. It will take several weeks reportedly for US to complete its official plan once they receive this access. The UCC will not formally compare the US plan until it has a final plan from AMR which AMR will not have until after the 1113 process has ended, either through abrogated contracts or with ratified TAs. If there are no TAs forthcoming from current APFA and TWU negotiations, and depending upon the pilots either ratifying or rejecting their TA, we can expect the 1113 to dictate, at least for now, what AMR will have for fixed costs as far as labor is concerned. AMR will then be able to submit a plan, however, the UCC prefers to use an AMR plan which includes negotiated contracts, because they will reflect the higher labor costs AMR will end up with in order to exit bankruptcy. If the judge imposes an 1113, he will absolutely order the parties all back to the table, which means that there will be an increase in AA's structural costs if TAs are reached AFTER the 1113. The reason the UCC want to see negotiated TAs (giving AMR higher structural costs than the 1113 as AMR has been negotiating up by 15% from those initial terms) is so that US will be forced to bid the highest possible amount for AMR, thereby giving the UCC the highest return on their dollar -- particularly the three banks on the UCC -- Wilmington Trust Co., Bank of New York Mellon Corp., and Manufacturers & Traders Trust Co., who are really the only holdouts at this point and want to see the most pennies on the dollar to be recouped as soon as possible.
If there are TAs ratified by the end of August and AMR submits their formal plan of reorganization with those reflected costs, and the US plan is also in front of them, which it should be, the UCC will have everything it needs to ask the judge to overturn AMR's exclusivity. At this point, the due diligence you were referring to Incitatus, will begin. And what is widely expected among experts and everyone involved to occur is that the AMR plan will simply not be able to compete with the US one for the same reasons it does not now or has not from the beginning, and that the UCC will choose the US plan, which may involve, if necessary to clinch the deal, according to widespread reports, large sums of cash to settle with the three banks.
If there are not TAs and the 1113 process results from contract abrogation in all or one of the union contracts, there will be those 1113 term sheet fixed costs available to AMR to use in their UCC proposal, but they will not be the final labor costs in BK because as I said the judge will send AMR and unions back to the table (in the case of those unions who did not ratify TAs). In this scenario, the negotiations could possibly stretch out for a very long time. What happens then becomes less clear, but the prevailing opinion among those close to the matter who have spoken to the UCC about this is that at some point, they may lose patience and be willing to accept whatever plan US has on the table -- and be willing to accept a lower US bid just to end the thing. Another scenario is that because the union employees are working under the draconian 1113 proposals, they would be willing to ratify just about anything to improve their lot in the short term, thereby giving AMR the TAs that it (and the UCC) want -- albeit a few months further down the road.
But the main point is now that AMR will agree to sign those critical docs after dragging their feet for nearly two months now, the ball will begin to roll in US AIrways favor. AMR made concession in order to be able to emerge from BK with ratified TAs -- what the UCC would want to see in order to approve any exit by AMR from BK. But it does them no good -- because AMR is giving the unions the rope US Airways is about to use to hang them.
Quoting phxa340 (Reply 44):
JFKPurser has often mentioned how this merger is imminent and how big news is always forthcoming , yet it never comes to reality ... so take what he says with a grain of salt, with that being said he offers an incredible insight to the employee view of AA , something were fortunate to have on here to understand the entire situation.
Wow. If I recall, I never claimed the merger was "imminent". I have claimed since the beginning when Parker secured TAs with each of AMR's three unions -- a groundbreaking and unprecedented event in this industry and the blow fro which Horton will not be able to recover -- and still claim -- that the takeover is inevitable. I never gave a timeline -- I have only asserted that there is little to nothing Horton can do to avert this, because the de facto boar of directors of AMR are the ones who are actually holding the cards, and none of them support his vision for the future of American Airlines, because even on the surface, it simply does not create the short term financial recovery wanted by the three banks on the UCC or the long-term value desired by the remaining six members, including the unions. I am not going to go into the specifics of this -- the information is widely available and disseminated. And the only people who believe in the standalone plan are Horton, his VPs and a few people on A.net who really have no idea what they are talking about. I have read through these threads in amazement of the abject ignorance and sophomoric armchair CEOing as is typical of this board concerning the fate of AMR. This situation is fluid and ever-changing in the minutae, but the end result will be that US will take over AMR in BK, as soon as all the pieces are put into place according to the protocol set forth by the UCC as agreed upon in the terms of the bankruptcy, which is exactly what has been happening. It simply keeps changing. But the constant and inarguable reality is that nothing AMR can do at this point will result in anything that competes with the US plan.
Quoting incitatus (Reply 47):
Keep on going like... "Boeing is on board", "This merger has a 90% chance of happening".... very entertaining.
Hey Incitatus -- guess what? Boeing is on board. They have been from the get go. Nothing is changed. They believe the best future for AA and the overall health of the entire USA airline industry is a US merge in BK. They won't say it publicly because they are bound by confidentiality laws and there are sticky politics involved. But to those close to the process, it's no secret. And I'm gal you're entertained. That's what this is for you. Entertainment. Speculation based on half-truths you read in the media, rather than hearing what is actually happening from someone like me, who has their whole life invested in this mess and actually knows more about the actual details of this process than you are willing to believe. How much of your total net worth going forward are you willing to bet that you are so right about AMR emerging as a standalone? Because you are certainly sure of it. Are you willing to bet your career on it? Because I'm willing to bet my career on US Airways taking over AMR in BK -- as a matter of fact, I already have -- along with about 50 thousand other unionized AMR employees. This counts for more than you will ever give it credit for, I suppose. But we can revisit this subject, if you like, once the takeover is complete. I will be interested to read what you have to say.
Quoting incitatus (Reply 47):
There have been ZERO critical steps so far, so this would be a first.
Correct. Up to now, there has been lots of lease-renegotiating, 1113 hearings, contract negotiations with AMR unions and PR by Parker and the unions. This is all part of the process. But now that the 1113 is nearing, the tractors will begin moving, and this is where it gets interesting.
That said, I will explain again what is happening now -- which nobody officially knows yet. AMR has agreed to yield a critical step in the takeover process which will allow US unlimited access to previously confidential information in its books which US need to complete a final offer to present to the UCC. This was stipulated by APFA as a condition to sending out a TA for ratification.e Two key docs -- NDA, which allows US to see AMR books and a Hard Scott Rubino which is a review by the DOJ to see if there are conflicts of interest. The docs needd to be signed off by AA in order for US to make an informed offer. It will take several weeks reportedly for US to complete its official plan once they receive this access. The UCC will not formally compare the US plan until it has a final plan from AMR which AMR will not have until after the 1113 process has ended, either through abrogated contracts or with ratified TAs. If there are no TAs forthcoming from current APFA and TWU negotiations, and depending upon the pilots either ratifying or rejecting their TA, we can expect the 1113 to dictate, at least for now, what AMR will have for fixed costs as far as labor is concerned. AMR will then be able to submit a plan, however, the UCC prefers to use an AMR plan which includes negotiated contracts, because they will reflect the higher labor costs AMR will end up with in order to exit bankruptcy. If the judge imposes an 1113, he will absolutely order the parties all back to the table, which means that there will be an increase in AA's structural costs if TAs are reached AFTER the 1113. The reason the UCC want to see negotiated TAs (giving AMR higher structural costs than the 1113 as AMR has been negotiating up by 15% from those initial terms) is so that US will be forced to bid the highest possible amount for AMR, thereby giving the UCC the highest return on their dollar -- particularly the three banks on the UCC -- Wilmington Trust Co., Bank of New York Mellon Corp., and Manufacturers & Traders Trust Co., who are really the only holdouts at this point and want to see the most pennies on the dollar to be recouped as soon as possible.
If there are TAs ratified by the end of August and AMR submits their formal plan of reorganization with those reflected costs, and the US plan is also in front of them, which it should be, the UCC will have everything it needs to ask the judge to overturn AMR's exclusivity. At this point, the due diligence you were referring to Incitatus, will begin. And what is widely expected among experts and everyone involved to occur is that the AMR plan will simply not be able to compete with the US one for the same reasons it does not now or has not from the beginning, and that the UCC will choose the US plan, which may involve, if necessary to clinch the deal, according to widespread reports, large sums of cash to settle with the three banks.
If there are not TAs and the 1113 process results from contract abrogation in all or one of the union contracts, there will be those 1113 term sheet fixed costs available to AMR to use in their UCC proposal, but they will not be the final labor costs in BK because as I said the judge will send AMR and unions back to the table (in the case of those unions who did not ratify TAs). In this scenario, the negotiations could possibly stretch out for a very long time. What happens then becomes less clear, but the prevailing opinion among those close to the matter who have spoken to the UCC about this is that at some point, they may lose patience and be willing to accept whatever plan US has on the table -- and be willing to accept a lower US bid just to end the thing. Another scenario is that because the union employees are working under the draconian 1113 proposals, they would be willing to ratify just about anything to improve their lot in the short term, thereby giving AMR the TAs that it (and the UCC) want -- albeit a few months further down the road.
But the main point is now that AMR will agree to sign those critical docs after dragging their feet for nearly two months now, the ball will begin to roll in US AIrways favor. AMR made concession in order to be able to emerge from BK with ratified TAs -- what the UCC would want to see in order to approve any exit by AMR from BK. But it does them no good -- because AMR is giving the unions the rope US Airways is about to use to hang them.
EastCheats
Veteran
- Mar 12, 2012
- 1,944
- 6,141
That was a tough read. This is an easier version for those of us over 50.
Quoting phxa340 (Reply 44):
JFKPurser has often mentioned how this merger is imminent and how big news is always forthcoming , yet it never comes to reality ... so take what he says with a grain of salt, with that being said he offers an incredible insight to the employee view of AA , something were fortunate to have on here to understand the entire situation.
Wow. If I recall, I never claimed the merger was "imminent". I have claimed since the beginning when Parker secured TAs with each of AMR's three unions -- a groundbreaking and unprecedented event in this industry and the blow fro which Horton will not be able to recover -- and still claim -- that the takeover is inevitable. I never gave a timeline -- I have only asserted that there is little to nothing Horton can do to avert this, because the de facto boar of directors of AMR are the ones who are actually holding the cards, and none of them support his vision for the future of American Airlines, because even on the surface, it simply does not create the short term financial recovery wanted by the three banks on the UCC or the long-term value desired by the remaining six members, including the unions. I am not going to go into the specifics of this -- the information is widely available and disseminated. And the only people who believe in the standalone plan are Horton, his VPs and a few people on A.net who really have no idea what they are talking about. I have read through these threads in amazement of the abject ignorance and sophomoric armchair CEOing as is typical of this board concerning the fate of AMR. This situation is fluid and ever-changing in the minutae, but the end result will be that US will take over AMR in BK, as soon as all the pieces are put into place according to the protocol set forth by the UCC as agreed upon in the terms of the bankruptcy, which is exactly what has been happening. It simply keeps changing. But the constant and inarguable reality is that nothing AMR can do at this point will result in anything that competes with the US plan.
Quoting incitatus (Reply 47):
Keep on going like... "Boeing is on board", "This merger has a 90% chance of happening".... very entertaining.
Hey Incitatus -- guess what? Boeing is on board. They have been from the get go. Nothing is changed. They believe the best future for AA and the overall health of the entire USA airline industry is a US merge in BK. They won't say it publicly because they are bound by confidentiality laws and there are sticky politics involved. But to those close to the process, it's no secret. And I'm gal you're entertained. That's what this is for you. Entertainment. Speculation based on half-truths you read in the media, rather than hearing what is actually happening from someone like me, who has their whole life invested in this mess and actually knows more about the actual details of this process than you are willing to believe. How much of your total net worth going forward are you willing to bet that you are so right about AMR emerging as a standalone? Because you are certainly sure of it. Are you willing to bet your career on it? Because I'm willing to bet my career on US Airways taking over AMR in BK -- as a matter of fact, I already have -- along with about 50 thousand other unionized AMR employees. This counts for more than you will ever give it credit for, I suppose. But we can revisit this subject, if you like, once the takeover is complete. I will be interested to read what you have to say.
Quoting incitatus (Reply 47):
There have been ZERO critical steps so far, so this would be a first.
Correct. Up to now, there has been lots of lease-renegotiating, 1113 hearings, contract negotiations with AMR unions and PR by Parker and the unions. This is all part of the process. But now that the 1113 is nearing, the tractors will begin moving, and this is where it gets interesting.
That said, I will explain again what is happening now -- which nobody officially knows yet. AMR has agreed to yield a critical step in the takeover process which will allow US unlimited access to previously confidential information in its books which US need to complete a final offer to present to the UCC. This was stipulated by APFA as a condition to sending out a TA for ratification.e Two key docs -- NDA, which allows US to see AMR books and a Hard Scott Rubino which is a review by the DOJ to see if there are conflicts of interest. The docs needd to be signed off by AA in order for US to make an informed offer. It will take several weeks reportedly for US to complete its official plan once they receive this access. The UCC will not formally compare the US plan until it has a final plan from AMR which AMR will not have until after the 1113 process has ended, either through abrogated contracts or with ratified TAs. If there are no TAs forthcoming from current APFA and TWU negotiations, and depending upon the pilots either ratifying or rejecting their TA, we can expect the 1113 to dictate, at least for now, what AMR will have for fixed costs as far as labor is concerned. AMR will then be able to submit a plan, however, the UCC prefers to use an AMR plan which includes negotiated contracts, because they will reflect the higher labor costs AMR will end up with in order to exit bankruptcy. If the judge imposes an 1113, he will absolutely order the parties all back to the table, which means that there will be an increase in AA's structural costs if TAs are reached AFTER the 1113. The reason the UCC want to see negotiated TAs (giving AMR higher structural costs than the 1113 as AMR has been negotiating up by 15% from those initial terms) is so that US will be forced to bid the highest possible amount for AMR, thereby giving the UCC the highest return on their dollar -- particularly the three banks on the UCC -- Wilmington Trust Co., Bank of New York Mellon Corp., and Manufacturers & Traders Trust Co., who are really the only holdouts at this point and want to see the most pennies on the dollar to be recouped as soon as possible.
If there are TAs ratified by the end of August and AMR submits their formal plan of reorganization with those reflected costs, and the US plan is also in front of them, which it should be, the UCC will have everything it needs to ask the judge to overturn AMR's exclusivity. At this point, the due diligence you were referring to Incitatus, will begin. And what is widely expected among experts and everyone involved to occur is that the AMR plan will simply not be able to compete with the US one for the same reasons it does not now or has not from the beginning, and that the UCC will choose the US plan, which may involve, if necessary to clinch the deal, according to widespread reports, large sums of cash to settle with the three banks.
If there are not TAs and the 1113 process results from contract abrogation in all or one of the union contracts, there will be those 1113 term sheet fixed costs available to AMR to use in their UCC proposal, but they will not be the final labor costs in BK because as I said the judge will send AMR and unions back to the table (in the case of those unions who did not ratify TAs). In this scenario, the negotiations could possibly stretch out for a very long time. What happens then becomes less clear, but the prevailing opinion among those close to the matter who have spoken to the UCC about this is that at some point, they may lose patience and be willing to accept whatever plan US has on the table -- and be willing to accept a lower US bid just to end the thing. Another scenario is that because the union employees are working under the draconian 1113 proposals, they would be willing to ratify just about anything to improve their lot in the short term, thereby giving AMR the TAs that it (and the UCC) want -- albeit a few months further down the road.
But the main point is now that AMR will agree to sign those critical docs after dragging their feet for nearly two months now, the ball will begin to roll in US AIrways favor. AMR made concession in order to be able to emerge from BK with ratified TAs -- what the UCC would want to see in order to approve any exit by AMR from BK. But it does them no good -- because AMR is giving the unions the rope US Airways is about to use to hang them.
Quoting phxa340 (Reply 44):
JFKPurser has often mentioned how this merger is imminent and how big news is always forthcoming , yet it never comes to reality ... so take what he says with a grain of salt, with that being said he offers an incredible insight to the employee view of AA , something were fortunate to have on here to understand the entire situation.
Wow. If I recall, I never claimed the merger was "imminent". I have claimed since the beginning when Parker secured TAs with each of AMR's three unions -- a groundbreaking and unprecedented event in this industry and the blow fro which Horton will not be able to recover -- and still claim -- that the takeover is inevitable. I never gave a timeline -- I have only asserted that there is little to nothing Horton can do to avert this, because the de facto boar of directors of AMR are the ones who are actually holding the cards, and none of them support his vision for the future of American Airlines, because even on the surface, it simply does not create the short term financial recovery wanted by the three banks on the UCC or the long-term value desired by the remaining six members, including the unions. I am not going to go into the specifics of this -- the information is widely available and disseminated. And the only people who believe in the standalone plan are Horton, his VPs and a few people on A.net who really have no idea what they are talking about. I have read through these threads in amazement of the abject ignorance and sophomoric armchair CEOing as is typical of this board concerning the fate of AMR. This situation is fluid and ever-changing in the minutae, but the end result will be that US will take over AMR in BK, as soon as all the pieces are put into place according to the protocol set forth by the UCC as agreed upon in the terms of the bankruptcy, which is exactly what has been happening. It simply keeps changing. But the constant and inarguable reality is that nothing AMR can do at this point will result in anything that competes with the US plan.
Quoting incitatus (Reply 47):
Keep on going like... "Boeing is on board", "This merger has a 90% chance of happening".... very entertaining.
Hey Incitatus -- guess what? Boeing is on board. They have been from the get go. Nothing is changed. They believe the best future for AA and the overall health of the entire USA airline industry is a US merge in BK. They won't say it publicly because they are bound by confidentiality laws and there are sticky politics involved. But to those close to the process, it's no secret. And I'm gal you're entertained. That's what this is for you. Entertainment. Speculation based on half-truths you read in the media, rather than hearing what is actually happening from someone like me, who has their whole life invested in this mess and actually knows more about the actual details of this process than you are willing to believe. How much of your total net worth going forward are you willing to bet that you are so right about AMR emerging as a standalone? Because you are certainly sure of it. Are you willing to bet your career on it? Because I'm willing to bet my career on US Airways taking over AMR in BK -- as a matter of fact, I already have -- along with about 50 thousand other unionized AMR employees. This counts for more than you will ever give it credit for, I suppose. But we can revisit this subject, if you like, once the takeover is complete. I will be interested to read what you have to say.
Quoting incitatus (Reply 47):
There have been ZERO critical steps so far, so this would be a first.
Correct. Up to now, there has been lots of lease-renegotiating, 1113 hearings, contract negotiations with AMR unions and PR by Parker and the unions. This is all part of the process. But now that the 1113 is nearing, the tractors will begin moving, and this is where it gets interesting.
That said, I will explain again what is happening now -- which nobody officially knows yet. AMR has agreed to yield a critical step in the takeover process which will allow US unlimited access to previously confidential information in its books which US need to complete a final offer to present to the UCC. This was stipulated by APFA as a condition to sending out a TA for ratification.e Two key docs -- NDA, which allows US to see AMR books and a Hard Scott Rubino which is a review by the DOJ to see if there are conflicts of interest. The docs needd to be signed off by AA in order for US to make an informed offer. It will take several weeks reportedly for US to complete its official plan once they receive this access. The UCC will not formally compare the US plan until it has a final plan from AMR which AMR will not have until after the 1113 process has ended, either through abrogated contracts or with ratified TAs. If there are no TAs forthcoming from current APFA and TWU negotiations, and depending upon the pilots either ratifying or rejecting their TA, we can expect the 1113 to dictate, at least for now, what AMR will have for fixed costs as far as labor is concerned. AMR will then be able to submit a plan, however, the UCC prefers to use an AMR plan which includes negotiated contracts, because they will reflect the higher labor costs AMR will end up with in order to exit bankruptcy. If the judge imposes an 1113, he will absolutely order the parties all back to the table, which means that there will be an increase in AA's structural costs if TAs are reached AFTER the 1113. The reason the UCC want to see negotiated TAs (giving AMR higher structural costs than the 1113 as AMR has been negotiating up by 15% from those initial terms) is so that US will be forced to bid the highest possible amount for AMR, thereby giving the UCC the highest return on their dollar -- particularly the three banks on the UCC -- Wilmington Trust Co., Bank of New York Mellon Corp., and Manufacturers & Traders Trust Co., who are really the only holdouts at this point and want to see the most pennies on the dollar to be recouped as soon as possible.
If there are TAs ratified by the end of August and AMR submits their formal plan of reorganization with those reflected costs, and the US plan is also in front of them, which it should be, the UCC will have everything it needs to ask the judge to overturn AMR's exclusivity. At this point, the due diligence you were referring to Incitatus, will begin. And what is widely expected among experts and everyone involved to occur is that the AMR plan will simply not be able to compete with the US one for the same reasons it does not now or has not from the beginning, and that the UCC will choose the US plan, which may involve, if necessary to clinch the deal, according to widespread reports, large sums of cash to settle with the three banks.
If there are not TAs and the 1113 process results from contract abrogation in all or one of the union contracts, there will be those 1113 term sheet fixed costs available to AMR to use in their UCC proposal, but they will not be the final labor costs in BK because as I said the judge will send AMR and unions back to the table (in the case of those unions who did not ratify TAs). In this scenario, the negotiations could possibly stretch out for a very long time. What happens then becomes less clear, but the prevailing opinion among those close to the matter who have spoken to the UCC about this is that at some point, they may lose patience and be willing to accept whatever plan US has on the table -- and be willing to accept a lower US bid just to end the thing. Another scenario is that because the union employees are working under the draconian 1113 proposals, they would be willing to ratify just about anything to improve their lot in the short term, thereby giving AMR the TAs that it (and the UCC) want -- albeit a few months further down the road.
But the main point is now that AMR will agree to sign those critical docs after dragging their feet for nearly two months now, the ball will begin to roll in US AIrways favor. AMR made concession in order to be able to emerge from BK with ratified TAs -- what the UCC would want to see in order to approve any exit by AMR from BK. But it does them no good -- because AMR is giving the unions the rope US Airways is about to use to hang them.
EastCheats
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- Mar 12, 2012
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No problem. I used the tool to the left of the smiley to change the color to black and increased the font size to 12.
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