Is USAirways hostile takeover Of AA for Real?

[eolesen]

You remind me of two friends from college... One from NYC, one from CHI. Every conversation turned into a battle over which one was better, and they never managed to convince each other otherwise.

I finally found new friends, because it got old after two years of the same examples over, and over, and over....

 

[Hopeful]

You remind me of two friends from college... One from NYC, one from CHI. Every conversation turned into a battle over which one was better, and they never managed to convince each other otherwise.

I finally found new friends, because it got old after two years of the same examples over, and over, and over....

Good analogy.

The sentiment I get from coworkers is that they would like a US merger just for payback.
What they wouldn't voluntarily give to AA, they would gladly give to Parker the same just to "show them."

 

[WorldTraveler]

Good analogy.

The sentiment I get from coworkers is that they would like a US merger just for payback.
What they wouldn't voluntarily give to AA, they would gladly give to Parker the same just to "show them."

and that is exactly the kind of emotion that people use when making mistakes.

These are careers you are talking about... the decision should not be made on the basis of emotions and "getting back" at anyone.

Decisions need to be made on the basis of what will result in the best outcome for all of stakeholders.

I can assure you the pilots and the creditors are analyzing the situation on that basis and could care less about "getting back."

They also realize that if one party has a better proposal, then that is where they need to be... regardless of whatever pride they think there is involved by the other party.

Those who want to reduce the discussion to "they think they better" will miss that the decisions will be made on the basis of what is best for the stakeholders of the company. And I can assure you they could care less what effect it has on DL or US or anyone else if AA's stakeholders don't come out w/ the best outcome possible.

This discussion is about considering all of the options.... and putting all of the options and facts on the table, regardless of personal biases.

I would never expect AA stakeholders to make any decision that doesn't result in the best outcome for them.

 

[Realityck]

Analyst: Could AMR Acquire US Airways in Bankruptcy?

A veteran airline analyst says the scenario for a US Airway/American Airlines merger could develop in an unanticipated way, with bankrupt American making a tender offer for its rival during its reorganization.
While speculation has focused largely on an acquisition by US Airways, Imperial Capital analyst Bob McAdoo maintains that an acquisition by AMR is “a clear possibility that should not be overlooked.
”AMR has the exclusive right to submit a (reorganization) plan through the end of the year,” McAdoo wrote, in a newly issued reported. “We believe that AMR could craft a credible plan that includes tendering US Airways’ shares while still in bankruptcy. Given the strengths of a combined AMR-US Airways entity, we believe AMR should be able to convince the creditors committee that taking over US Airways is central to allowing it to compete successfully.”
The cash needed to do a deal is readily available, McAdoo said, because American has $5.5 billion and US Airways has $2.5 billion. Additionally, International Airlines Group, the holding company for British Airways, has said it could invest in a deal that keeps AMR in the Oneworld alliance and adds US Airways as well. McAdoo said more than $8.3 billion could be available.
Alternate merger scenarios, McAdoo said, are that US Airways would take control of AMR in bankruptcy, or that AMR would emerge from bankruptcy and then buy US Airways.
In any case, the question of who would run the new American is an intriguing one.
It seems clear that AMR CEO Tom Horton wants to retain control. “AMR’s wariness towards US Airways has more to do with who is controlling the combined entity than disagreement on the merits of merging in the first place,” McAdoo wrote. Given that American is twice the size of US Airways, Horton has a strong case to make.
On the other hand, since 2004, CEO Doug Parker’s management team, then working together at America West, has pursued mergers. It succeeded with US Airways, then failed with Delta and United. In every case, the intent has been that Parker and the team would run the merged airline.
“US Airways’ management team has already demonstrated the ability to execute a successful merger followed by a turnaround,” McAdoo wrote. Also, American’s 50,000 unionized employees have made it clear that they prefer Parker. All three of the carrier’s biggest unions have signed tentative contracts with US Airways, but continue to battle over contract deals with American.
For the moment, the airline industry is absorbed in the continuing drama of American’s bankruptcy. Last week, American pilots voted to reject a tentative contract agreement, and the president of the pilots union quickly resigned. On Wednesday, a surprise occurred as Bankruptcy Judge Sean Lane rejected American’s request to abrogate the pilots’ contract. American is back in court, today, with a rewritten abrogation motion that many parties, including the flight attendants union, expect will be approved.
The daily drama is compelling, but McAdoo says it should not detract investors from a focus on the ultimate outcome, which is likely to be a merger that would benefit both carriers, giving American an East Coast presence while US Airways gains international heft. McAdoo thinks US Airways would benefit in any scenario, and has a target price of $19 on the shares, which traded at $10.50 shortly after noon on Friday.

 

[RV4]

Analyst: Could AMR Acquire US Airways in Bankruptcy?

A veteran airline analyst says the scenario for a US Airway/American Airlines merger could develop in an unanticipated way, with bankrupt American making a tender offer for its rival during its reorganization.
While speculation has focused largely on an acquisition by US Airways, Imperial Capital analyst Bob McAdoo maintains that an acquisition by AMR is “a clear possibility that should not be overlooked.
”AMR has the exclusive right to submit a (reorganization) plan through the end of the year,” McAdoo wrote, in a newly issued reported. “We believe that AMR could craft a credible plan that includes tendering US Airways’ shares while still in bankruptcy. Given the strengths of a combined AMR-US Airways entity, we believe AMR should be able to convince the creditors committee that taking over US Airways is central to allowing it to compete successfully.”
The cash needed to do a deal is readily available, McAdoo said, because American has $5.5 billion and US Airways has $2.5 billion. Additionally, International Airlines Group, the holding company for British Airways, has said it could invest in a deal that keeps AMR in the Oneworld alliance and adds US Airways as well. McAdoo said more than $8.3 billion could be available.

...snip

What is incredibale and criminal is that the Bankruptcy Laws allow for a Corporation to file Chapter 11 with no threat of Chapter 7 Liquidation present and $4.5 Billion in cash. Then the Corporation uses the same laws to demand over reaching concessions from employees. Then the Corporation Qualifies for financing they would even make this McAdoo scenario even possible or legal.

And then other criminal aspect side of the Union and the AFL-CIO also stealing from the employee paychecks, claiming to be the watchdog that will prevent this type of activity to begin with.

Does anyone else see something very wrong and sinister about this so-called economic system? Or do I just have a bad attitude this week?

 

[eolesen]

Dunno, some think McAdoo is a bit biased He's the one who claimed AA was being bled dry by ORD-LHR. He's also a former airline exec put ut of work twice by AMR's actions (PeoplExpress and Vanguard).

Yet there are some people like Holly Hegeman who swear by his analysis. He just might be on to something. Is it possible that US's unions have the same level of contempt for Parker that AA's have for Horton?....

RV, the purpose of bankruptcy is to restructure and get a fresh start. It is not intended to have someone start over with absolutely nothing, and then rebuild.

If a merger with US is so critical, why does it matter to the court who is doing the acquiring? If the debtor-in-possession and UCC don't object, then all recognized stakeholder groups interests are protected...

 

[FWAAA]

What is incredibale and criminal is that the Bankruptcy Laws allow for a Corporation to file Chapter 11 with no threat of Chapter 7 Liquidation present and $4.5 Billion in cash. Then the Corporation uses the same laws to demand over reaching concessions from employees. Then the Corporation Qualifies for financing they would even make this McAdoo scenario even possible or legal.

I realize that AA's huge cash hoard is a sore point. But other airlines generally waited until cash was at more critical low levels and then they filed, along with brand new Debtor in Possession financing. Thing is, DIP lenders usually want some collateral and AA had borrowed against nearly all of its collateral. In early-mid 2011, I posted that AA was preparing for a Ch 11 filing by borrowing against its 1110-eligible aircraft, and sure enough, I was right.

Yes, bankruptcy is bad when it permits employers to inflict pain on employees. As I've posted before, AA ain't plowing any new ground here. US (twice), UA, DL, NW, HP and CO (twice) all did it before and inflicted massive pain on their employees. Philosophically, I agree with you. Bankruptcy is not good. Not for anyone relying on the promises of the bankrupt debtor. Especailly not the employees.

I realize that Arpey was the devil, but he was the devil who resisted filing for bankruptcy protection. Hate him for everything he ever did to you, but he was also the cheerleader for keeping overhaul inhouse at Tulsa and Fort Worth. If Horton hadn't bailed from AA to go to AT&T in 2002, I'm convinced that the board would have chosen him, and not Arpey, the following year when Carty got caught. And had that happened, I doubt AA would have waited until 2011 to file its Ch 11 petition. That would have inflicted the pain on Tulsa and Fort Worth years earlier than now.

And then other criminal aspect side of the Union and the AFL-CIO also stealing from the employee paychecks, claiming to be the watchdog that will prevent this type of activity to begin with.

Does anyone else see something very wrong and sinister about this so-called economic system? Or do I just have a bad attitude this week?

Nothing wrong with being angry as long as it doesn't consume you.

Don't forget where some of the blame lies: the eager young employees at WN and B6 and VX who didn't mind working for peanuts (new hires at WN work for very little, but their eventual topped out pay is very good). And who helped B6? George Soros. Claims to be a Democrat. Gives tons of money to Democrats. Bankrolled jetBlue so that it could grow and take away business from union-represented airlines like AA. And then your stupid-ass union gives money to the stupid-ass Democrats, just like George Soros does.

Somebody else to blame? Richard Branson. Bankrolls Virgin America, taking away business from your employer with very low-paid nonunion employees. There's a lot of blame to go around. Poor management at AA that should have not kicked the can down the road for so long. Stupid-ass "unions" like the TWU that were more concerned with dues than being a part of the solution. Employees who lived in constant denial and believed that AA could afford "restore and more" even though nearly all competitors had just slashed wages and benefits in Ch 11 or were nonunion upstarts like B6 or VX. Or were extremely successful and unique WN (which has made some stupid-ass decisions lately).

 

[WorldTraveler]

The problem is as much that AA employees are being expected to take ANOTHER round when other airlines are passing out raises or at least not at all in a position to ask for more givebacks. Given that AA employees did give once before, that makes the job of mgmt in convincing labor that they need to give in order for the company to restructure ten times more difficult.

I think history will show that AA's strategy of borrowing what it would have needed before BK instead of as part of DIP will be one more mistake in the eyes of labor.... esp. since it can easily be argued that it has been one more tool the company has used to retain control over the employees.
AA has never ackowledged that it really has a problem w/ its labor groups and acted like it really needs to improve it -and every step forward makes the job much more difficult.
If you look at CO's restructuring, they very much recognized that their labor groups were humiliated to the core by the process and they spent an enormous amount of energy building from scratch..... and it is sad that CO's employee culture has been thrown away in the UA merger.

It is also true that every airline that has been recognized as having a good product in the US - and in some cases worldwide - is known for its good labor relations. Some other countries can use fear and intimidation to get decent service but it doesn't work in the US.


And many of those same new airlines that are attacking the network airlines (AA particularly) not only have decent business plans but also happy employees.


IF AA has any desire to recover the business it has lost, it has to develop far better relations with its employees - and I have yet to here of any desire to make that happen.

 

[eolesen]

The problem is as much that AA employees are being expected to take ANOTHER round when other airlines are passing out raises or at least not at all in a position to ask for more givebacks. Given that AA employees did give once before, that makes the job of mgmt in convincing labor that they need to give in order for the company to restructure ten times more difficult.

Weren't there raises in each of the TA's? Isn't there an increase in the term sheet?

Certainly, take home pay is being impacted with insurance and the shift to a 401K, but hourly rates weren't cut as far as I can tell.

I have little doubt there's a desire by management to improve labor relations. They're just not going to buy them off like other companies have.

Improving employee relations is also not in the unions' best interests. They thrive on the conflict. It makes them relevant.

 

[WorldTraveler]

I'm not even going to go into whether these are concessionary agreements or not - I don't think you'll find anyone on this board in labor who think they have won anything - but instead are having an enormous amount taken from them.

"They thrive in conflict. It makes them relevant."

Yet there are other airlines - and even other heavily unionized companies outside of the airline industry that manage to work together.

To somehow think that the labor-mgmt situation at AA is sustainable is nothing short of fancy.

The pilots may make a decision that requires a more immediate answer but if AA and its unions can't figure out how to work together in a less confrontational manner, AA will not survive - and may not even emerge from BK.

The end game is coming one way or another.

 

[jimntx]

Weren't there raises in each of the TA's? Isn't there an increase in the term sheet?

Certainly, take home pay is being impacted with insurance and the shift to a 401K, but hourly rates weren't cut as far as I can tell.

Actually, E, the f/a term sheet did NOT include raises. Yes, it said 1.5% per year starting 12 months from DOS. However, there was an asterisk..."only if the parties reached a consensual agreement. If the court abrogates the f/a contract, there will be no raises." Well, yes, but the term sheet was what would be imposed if a consensual agreement was not reached, so why even mention raises in the term sheet?

Also, remember that the hourly rates are from the concessions of 2003 which I was told at the time are the 1997 pay rates almost to the penny. So, 3% on DOS? Gee, for me that would mean almost $100/month before taxes and the insurance increases.

As I said, the f/a's are being screwed either way. A Yes vote just gives the company permission to do it. Rep. Akin would not call it a "legitimate" rape because we consented to it..

 

[PITbull]

What is incredibale and criminal is that the Bankruptcy Laws allow for a Corporation to file Chapter 11 with no threat of Chapter 7 Liquidation present and $4.5 Billion in cash. Then the Corporation uses the same laws to demand over reaching concessions from employees. Then the Corporation Qualifies for financing they would even make this McAdoo scenario even possible or legal.

And then other criminal aspect side of the Union and the AFL-CIO also stealing from the employee paychecks, claiming to be the watchdog that will prevent this type of activity to begin with.

Does anyone else see something very wrong and sinister about this so-called economic system? Or do I just have a bad attitude this week?

I have been saying this since the first legacy carrier went into BK twice back in 2002, (US Airways). And I went on the DL boards, and UA boards, and AA boards shutting this at the roof tops! I had a front row seat in all this mess,got baptized in it, and experienced it first hand. Couldn't do a damn thin in BK.
BK was US Airways trump card and Jerry union-buster Glass was heading the management clan at US Airways when all this "union-busting" contracts began. The laws in BK protect corporations, and judges can throw out contracts. US Airways employees still are the lowest paid of the legacy carriers, and have the worst labor-relations going on a decade now. Some of those employees that are posting on this board are so accustomed to the torment that they are desensitized by it.

This BK crap will permeate into local and state governments who can also go into BK and wipe out government worker contracts. This movement is all about busting unions and bringing workers into slave labor contracts by forcing labor to either take the "last offer" or risk abrogation just because those in control have made mistakes and can't are unable to honor the contracts that they negotiated. That's why my mantra is a "deal is never really a deal" because the trump card for corporations is a Chapter 11 reorganization where all bets are off!

AA just happens to be the last legacy in this industry to go into BK...where have you been when all this was going on this past decade with US Airways, DL, UA, NW, CO? Can we see it???...hell yea!

The entire Airline labor industry has given up hundreds of billions of dollars in concessions, job losses over the past decade. And the employees can't change jobs, because the current economy has no jobs to absorb these folks. Heck, US Airways f/as are no longer in BK, haven't been in 7 years, aren't permitted to go into bk again, and the f/as needed a federal mediator to negotiate a T/Afor pete's sakes , and that mediator basically told them that they can't push US Airways any further for increases and better working conditions???....what's that about???? What happend to the right to strike????
Doesn't exist! The mediator basically told the f/as group at US Airways, you need to send out this T/A to your members NOW. Meanwhile, the f/as still are the lowest paid even with this T/A pending a vote.

The sacrifices given haven't translated to anything for labor except the "same old/ same old"...and the fat cats get richer, call the shots, and boldly go where no one else has gone with their arrogance.


US Airways wrote the book on how do screw labor in BK, and AA unions are nuttts to think they will get any kind of better deal with Parker..in light of the fact that US Aiways employees have never had such a thing.. just demonstrates the desparation in all these folks who have no protections whether inside or outside BK, whether union or not.

 

[WorldTraveler]

US Airways employees still are the lowest paid of the legacy carriers, and have the worst labor-relations going on a decade now. Some of those employees that are posting on this board are so accustomed to the torment that they are desensitized by it.

you sure there is no competition for that title?

 

[EastCheats]

Pitbull doesnt work for US or any other airline, Pitbull is retired and is in a field unrelated to the Airlines.

Says the expert.....On everything......

700UW
Posted 12 August 2012 - 09:48 AM

Never been to A&P school cause I was never a mechanic, I was a stock clerk.

 

[700UW]

Local Local Lodge Trustee
Local Lodge Recording Secretary
Bylaw Committee
Local Lodge Editor (won numerous awards for my work)
Organizer, worked on US fleet and UA CSA Campaigns
Shop Steward for over 10 years
District 142 Communicator and rep.
Negotiating Committee Member
Attend Leadership I, II, Advanced Leadership and Train the Trainer
Web School
Basic and Advanced Editor Training.
Trained by the man who organized the IAM at US back in 1949 and many other educated and experienced union reps.

Whats your background?

And under the US CBA, is Mechanics, Stock Clerks and Utility.

One's classification has nothing to do with their experience and educational level and knowledge.

And you are still not addressing how you would stab your other union coworkers in the back.