Labor vs. Labor - Where are we headed?

[chipmunn]

US Airways and its employees are in a fight for the airline''s survival. Nobody likes this situation and all of the company''s unions just completed difficult restructuring agreement negotiations.
Many of us thought the three-part, well thought out restructuring plan of improving liquidity, increasing revenues, and reducing costs would alleviate the reorganization pressure.
But a strange thing happened. During the final phase of labor negotiations revenue fell off the cliff and began with passenger fear to fly during the one-year September 11 anniversary.
The problem for US Airways and its employees is that the company no longer qualifies for the loan guarantee and the DIP financing. So what should the company do?
Meanwhile, rumors began to circulate within the company and in this forum that there would need to be additional cuts and Sabre (Joesy) and Pit Guy attacked the pilot group by suggesting a socialized pay system where according to Pit Guy pilots should be paid between $65,000 to $100,000 per year, which is 70-seat RJ TOS pay.
After watching the debate unfold for about a week I decided to post an IAM option, outsourcing heavy maintenance, and I understandably received a lot of heated comments. Why? Because nobody likes their pay, working conditions, retirement, or job threatened.
Well, isn''t that what some of our more active IAM posters initiated against the pilots?
Two forces establish pay and benefits in a “capitalisticâ€￾ versus “socializedâ€￾ society: the ability of an employer to pay and market rates.
I do not want to see anybody to get hurt, to lose pay, or face layoff, but this attack on other employees started by Sabre (Joesy) and propagated by Pit Guy serves no useful purpose, just like my comparison of outsourcing maintenance serves no useful purpose, except to try and show others what they initiated. Now some will say my CLT Observer article was an attack on other labor groups, but could it also been construed to be a message of the results of a S.1113 hearing and the damage that could be inflicted?
We have been through that debate and there is no good reason to bring up old wounds. But, for those who like to shoot the messenger and hide behind a computer screen, I suggest this does not present professional decorum and only encourages dissension. When I write a column or post on this message board, I attempt to provide factual information, regardless of whether or not it is pleasant or popular.
I don''t like this situation any more than anybody else, but I believe initiating or continued attacks on one another only make our collective situation worse.
Meanwhile, the most important point is that there are reports some of the aircraft lessors are resisting further concessions and the company may not reach its revised cost cut target necessary to obtain the loan guarantee, DIP financing, and Equity Plan Sponsor (EPS) financing. Sources believe parties interested in outbidding RSA as the EPS, which may or may not be labor friendly and may or may not be interested in running thus fragmenting the company, meet with management last week in CCY to review the same corporate material provided to TPG.
At this point nobody knows how this information will impact the company, but I understand that Dave Siegel and Jerry Glass have asked to meet with the entire ALPA MEC in CCY on Tuesday, October 29, at 2:00 PM.
Chip

 

[Lakeguy67]

[P]Chip post facts, we are all ready recieving the DIP financing to a tune of over $300 million and the RSA has not filed any motions to pull it. You need to start posting facts instead of your opinions, because you know what they say about opinions![/P]
[P]Read and learn:[/P]
[P][FONT size=4][BIG class=pr]Dow Jones Business News[/BIG][BR][/FONT][SPAN class=t]Bankruptcy Court Allows US Airways to Sign Pact With Alabama Pension Fund[/SPAN][BR][SPAN class=tt]Thursday September 26, 12:17 pm ET[/SPAN]
[P]
[DIV class=ar align=left]ARLINGTON, Va. -- In an about-face, US Airways Group Inc. , which is operating under Chapter 11 bankruptcy protection, agreed to receive $240 million from an Alabama public-employee pension fund in exchange for a 37.5% stake in the restructured airline. [/DIV]
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[P class=ar align=left]The bankruptcy court handling US Airways' case on Thursday authorized the airline to enter into a $240 million investment agreement with the Retirement System of Alabama, one of its top creditors. [/P]
[P class=ar align=left]The deal will be subject to higher offers parties can submit over the next few weeks. Competing bidders must at least match the pension fund's agreement.
[P class=ar align=left]RSA replaces private-equity firm Texas Pacific Group as the lead bidder. Texas Pacific had agreed to provide a $200 million equity investment in the airline subject to certain conditions.
[P class=ar align=left]RSA has committed to a plan sponsor investment that is more than a 20% premium over the prior bid, has fully underwritten a replacement $500 million DIP (debtor-in-possession) facility, and has committed to restructure $340 million of aircraft-debt obligations held by RSA in the company's aircraft debt- restructuring program, US Airways President and Chief Executive David Siegel said in a written statement.
[P class=ar align=left]These actions demonstrate confidence in the restructuring initiatives we have successfully completed to date and the value of a reorganized US Airways operating with a sound business plan and competitive costs, Mr. Siegel said.
[P class=ar align=left]The statement marked quite a change from just days ago, when the airline asked the court handling its Chapter 11 case to deny RSA's request to propose a reorganization. At that time, US Airways said the pension fund's request would interfere with the airline's exclusive right to propose a reorganization plan through at least Dec. 9.
[P class=ar align=left]US Airways filed for bankruptcy protection Aug. 11. It plans to emerge from Chapter 11 in the first quarter of 2003.
[P class=ar align=left]After US Airways emerges from bankruptcy, RSA's investment will be coupled with a $1 billion collateralized loan, backed by the $900 million federal guarantee that has been conditionally approved by the Air Transportation Stabilization Board, US Airways said.
[P class=ar align=left]The RSA deal is supported by US Airways' unsecured creditors' committee, which negotiated much of the agreement. The deal contemplates that US Airways unsecured creditors would get at least 8.5% of the new equity under a reorganization plan.
[P class=ar align=left]The pension fund also will provide $500 million in debtor-in-possession financing on terms similar to the airline's original facility. The bankruptcy court gave US Airways interim approval to borrow up to $300 million under the DIP loan agreement with RSA, pending a final hearing on the facility.
[P class=ar align=left]The company's original DIP loan provided by a group of banks led by Bank of America Corp. (NYSE:[A href=http://finance.yahoo.com/q?s=bac&d=t]BAC[/A] - [A href=http://biz.yahoo.com/n/b/bac.html]News[/A]) and Credit Suisse First Boston and with participation from Texas Pacific has been terminated.
[P class=ar align=left]US Airways said in court papers that it needed the DIP funds to operate its businesses while in Chapter 11, and that its cash on hand wouldn't be sufficient to fund the completion of its restructuring.
[P class=ar align=left]-Maria P. Vallejo; Dow Jones Newswires; 201-938-5400; Diana Rosenberg; Dow Jones Newswires; 609-520-7817; and Deborah Eckert, Dow Jones Newswires; 202-628- 7675.
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[Lakeguy67]

[BR]even Siegel never ever mentions anything about being in non-ccompliance in his phone message nor in any company release and the SEC filing.[BR][BR][FONT size=4][BIG class=pr]Dow Jones Business News[/BIG][BR][/FONT][SPAN class=t]US Airways Says Further Cuts in Expenses Will Be Necessary[/SPAN][BR][SPAN class=tt]Friday October 25, 3:26 am ET[/SPAN] [BR][BR][BR]
[DIV class=ar]US Airways Group Inc. , signaling a step needed to emerge from bankruptcy-court protection, said it must excise a further $100 million to $300 million a year from its expenses, Friday's Wall Street Journal reported, citing a regulatory filing. [BR][BR][BR]
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[TD align=middle][BR][A href=http://rd.yahoo.com/M=227043.2186793.3632877.2360608/D=fin/P=m230rej011000000/S=84407157:LREC/A=1189458/R=0/*http://www.bankofamerica.com/adtrack/index.cgi?adlink=016602072452Y0013408 target=_top][/A][/TD][/TR][/TBODY][/TABLE][/TD][/TR][/TBODY][/TABLE]Those savings would be on top of an estimated $1.3 billion already cut by the carrier, which sought protection under Chapter 11 of the Bankruptcy Code in August. [BR][BR]The nation's seventh-largest airline said it needs to tighten its belt more if it expects to regain profitability, win a federal loan guarantee and receive further debtor-in-possession funding. It filed the information Thursday with the Securities and Exchange Commission. Earlier this week, the company told creditors rising fuel prices and the industry's dismal outlook necessitate further trimming. [BR][BR]US Airways said it hopes to achieve some of the savings through continuing negotiations on aircraft lease rates with some of its lessors, whom it wouldn't identify. In theory, the carrier also could shrink its jet fleet further -- to 245 planes from the 279 it expects to operate next month -- a move that would likely prompt additional layoffs. [BR][BR]The expense savings already in place were achieved largely through employee concessions, which workers agreed to on the condition that the company not use the bankruptcy-court process to abrogate their current contracts. It is possible US Airways may try to negotiate further labor-productivity gains with the unions and seek additional expense relief from vendors, affiliates and others. [BR][BR]The Arlington, Va., company declined to comment on specifics about how it will achieve the added savings. It isn't clear if it will succeed in winning further help from parties that already have sacrificed, although the bankruptcy-court judge could influence the process. [BR][BR]The cuts would likely help the company's bid for a $900 million federal loan guarantee it needs to emerge from Chapter 11 with a cash cushion. [BR][BR]Wall Street Journal Staff Reporter Susan Carey contributed to this report. [BR][BR][/DIV]

 

[AOG-N-IT]

Chip , an attempt to mend fences?....followed by more negative overtones!! If U should give up the ghost? Which I doubt!! Do yourself a favor!! Do not attempt to take Tony Robbins job as a motivational speaker/author. You will starve to death!!!

We both discussed Dave's 1-800-***-**** Chat yesterday!! For those that haven't tuned in this week , Dave did mention how The Industries revenues have Fallen off a Cliff He was also very quick to point out that WE were ABSOLUTELY positioned or have methods to weather this in terms of USAirways long term survival.


People, You need to understand what you are dealing with in regard to Chip Munn's views and opinions at times. Captain Munn is certainly concerned about U's survival....and I'm equally convinced that he's a loyal and trusted employee. However, by attempting his constant scare tactics via the daily barage of Munn's Doctrine of Doom He's not relaying things completely ..or in an entirely accurate manner.



Chip concerns and subsequint paranoia is from a very self-serving point of view. He is looking at the senority list...and checking it twice. He is of the un-admitted opinion that additional cuts in the fleet size , will force him into an additional pay-cut by him being reduced from the Left seat of his Airbus , to the Right seat of a TBA aircraft type.


The company has gone on record..and said in the Media , that they will not be approaching the Employee Groups for additional concessions again. Sure , many will not buy off on anything the company is saying at this point. In the companies defense , at least it's comments are documented for everyone to see.

What is known...The Fleet by ALPA contract cannot sink below the 245 figure.....a drop to 245 will certainly create additional losses of jobs. Anyone that has been in this business for more than a week can appreciate or at least understand that aspect. This being based on the known regarding the companies word to not approach the employee's for more..is becoming more and more the likely scenario we are ALL facing.


Captain Munn is correct regarding the reluctance of some of our Lessors and Creditors being hard to negotiate with....Can you blaim them? Honestly No!!....they are fighting for every nickle owed them....just like we are fighting for every nickle and job slot we can retain too!

Here's where we have just a bit more than a glimmer of hope going for us. The Lessors for our Acft , KNOW that this is a very depressed market....They know for fact, that for us to be cleared by the courts to return them under the provisions of Chapter 11...will not NET them anything. The Lessors also know that they will play absolute hell trying to find a buyer...or new Leasee for them in anything close to the immediate future. This of itself creates an enviroment for continued open negotiations....and hopefully negotiations favoring our long term needs?



Be honest with yourselves folks...We are not living in the same world we once were. The failures of the past have hunted us down like dogs. The failures of PAST leadership has obviously failed to position us for anything looking like a future. Dave has come here...and saddled up to an absolute quagmire from a financial and workplace enviroment standpoint. However....We have a very energetic 41 yearold CEO , that does not have a moments desire to become labled as the guy that finished off USAirways. I'm sure his present compensation would not carry him through life as he's accustomed too , If failure becomes a definate. Note how he's encouraged his friends to take on this task too....are they all insane?....would they come here awaiting a Fire Sale'??? I highly doubt it!!!



Bottom line....without freaking...without pitting one group against another in regards to hypothetical scenarios , We need to take one day at a time....and allow Dave his time to manuever things. We could have already become history had that been the desire of our BOD and CEO?...I'm sure the verbage difference between CH7 and CH 11 would have been of little difficulty at the time of filing We may not like the results in all respects?..I may hate the results tomorrow? , but in the interum , don't make this a You against Me scenario regarding the work groups. We have unions to represent these cases. The IAM has already screwed me....and I'm dealing with it. I hope and pray that people like Chip Munn will accept the possibilities regarding himself and the provisions of his ALPA contract too!

In summation...You aren't beaten until you admit defeat....You aren't out of work until you are escorted out....and you certainly aren't dead until they are shoveling dirt over you. How much more encouragement does anyone really need beyond that?

 

[Furloughedagain]

Chip Says, Sources believe parties interested in outbidding RSA as the EPS, which may or may not be labor friendly and may or may not be interested in running thus fragmenting the company

I'm sorry...could someone PLEASE remind me what is so labor-friendly about this restructuring? I dont get it!

30% of the pilot group is headed for unemployment (just a bit at a time...) including employees who have worked for this company since the mid-80s!

I'm sure other groups are suffering the same fate.

Everyone has taken massive cuts in compensation and benefits -- and now Dave wants more in the form of productivity and retirement.

Scope has been obliterated allowing massive outsourcing in every job category and the one solitary carrot which was supposed to make this palatable (MDA) is still a year away.

What is labor friendly??? The fact that the airline is still operating??? The fact that it has yet to be fragmented???

At least a fragmentation or liquidation would let the employees know their fate! There would be no more wondering whether they will be furloughed today, tomorrow, next week, next year...

Labor-friendly? BULL! Labor-friendly would be making the cuts and getting back to business... not continuing to cut little-by-little until there is no moral whatsoever among the remaining staff.

This is a customer service industry Dave. Give your employees something to fight for and they'll fight to the death for you. Make them think that failure is inevitable and that will most certainly be the result.

Either save the place, or shut it down. At least we'll finally KNOW.

 

[CS-pro]

[P][FONT face=Times New Roman size=3][STRONG]I don't understand, to this day, why some of the internal cogs of the company wheels aren't being modifed and improved, efficiency wise.We know we can hedge fuel, we can cut labor, both costs and people, we can negotiate with lessors, reduce fleet,etc, but what about,as some have screeched about on this forum(and rightfully so), simplifying fares and fare rules, and making them more user friendly for passengers and employees?The air fares are the essence of our business. But no one seems to want to pay attention to them and the insanity they present in the current situation. You look at WN and Fl, both consistently making money, and they have maybe 1/2 a dozen or so fares average in each market. And their rules are simpler. I bet their employees do not spend more than 2 minutes on refiguring a fare for a changed itinerary, whereas US and majors fares require 5 to 10 minutes often times, so You multiply that scenario 1000's of times a day and you have misplaced productivity and loss. [/STRONG][/FONT][/P]
[P][FONT face=Times New Roman size=3][STRONG]No one is addressing things like this. [FONT size=4]WHY??????[/FONT][/STRONG][/FONT][/P]

 

[AOG-N-IT]

Furloughedagain, Just by your screen name , it's painfully obvious that you are a person that has taken some lumps in this industry and economic fiasco.

To paraphrase Captain Munn from the past....Dave is not the hammer He's trying everything that the circumstances will allow to keep U aloft. Simply closing it down out of frustration will help out how? I know , your thinking I'm still working..and that's all that matters in my world. Let me say up front...that's not all that matters. I'm trying to look at things in much broader terms. I'm looking at how U's existance impacts the hundreds of communities we serve , not only from the provided service....but the provided impact our salaries and taxes have on the communities we live in.


To ask for an all telling awnser from Dave right now , is beyond possible. Events are changing daily. The current changes are due to the Soft Demand for our services...that nobody was really calculating for at this stage of the game. U is not alone in this regard either!! Soft demand and lowered fares coupled to increases in fuel prices has brought havoc to our circumstance especially.


Last of all....the constant slamming of the term Labor Friendly We all know it's just a term of convienience. Nobody that gets 'Furloughed , Laid-Off or Terminated or makes monitary, benefit or vacation concessions could ever say that something was friendly....un-less they were just too doped up on morphine to care about anything. However...I would imagine if an alike scenario were to befall a noted Labor Friendly Company like SouthWest?, you wouldn't see anyone jumping up and down for joy either.


Business has a nasty way of turning phrases to illicite a given response.....The threat of something not being labor friendly had no bearing on my choices regarding concessions....my choices were based purely on the industries over-all condition....and my preferences as to what I want to be doing with my life. On another note.....I have prepared myself since all this started 14 months ago...to be ready for a rapid ejection into un-charted waters. In the meantime...I refuse to drag myself through the emotional mill.....only to find myself right back in the un-known mess I'm in.



What I can say about things not being labor friendly is related to the potential for other investors. This scenario un-nerves me about as much as Chapter 7 does.....at least with Chapter 7....all concerns regarding U would be put to rest for good. The potential for the outsiders is there. You have all kinds of 'Un-Friendly creatures about. Johnathan Orenstien of Mesa Air Group is my biggest concern when alligned with Marvin Davis's money.


Johnny O has already lost a tiddy some with his previous investments in U....but rest assured it was a deeper motive than just a speculative investment. Johnny O was trying to insure some further leverage for his Mesa Air Group with U.....and don't rule out for a minute that he had an eye for a seat on our BOD. This in a pre-Sept 11th world , could have lead him toward taking the riegns of U in a post Wolf world. This man is not labor friendly....CCAir is an example of that. A union-less Freedom Air is an example....and the So So level of pay and motivation at Mesa says alot too.



All in all things could be alot worse.....and they may get worse before they start getting better again. You are seeing airlines the size of AA, UA , DL and NW holding off on purchases of aircraft up until the year 2005 already....this spells out a very slow return for the airline industry as a whole.....I just hope we have a chance to be around for it!!

 

[Furloughedagain]

AOG:

All good comments, but you didnt answer my basic question.

What, exactly, is labor-friendly about this restructuring? It is a restructuring -- nothing more, nothing less.

I'm tired of hearing about how this management is committed to a 'labor-friendly' restructuring. Meaningless words. Do what you're going to do but dont piss on my shoe and tell me its raining.

 

[AOG-N-IT]

Furloughedagain, I think I did awnser your question...It's a term of convienience..that's far from a term of substance!! Nothing is Friendly in terms of business and finance anymore. Least of all in a world where Craddle to Grave Employement has disappeared along with Full Service gas station.

The term Labor Friendly is just a buzz word with a hope of a fleeting attempt to create a warm and fuzzy feeling among us. I suggest a puppy if that's what you are looking for? Beacuse you aren't going to find it in a phrase or term.

I for one am as dedicated to my job as I ever was...but do I feel good?..do I feel secure?..do I feel like I have been treated in a friendly fashion? The awnsers to all the above is a catagoric NO!!

Most of my heartburn was created by the Union that Shang-Hi'ed me into it without my vote of consent to begin with. My problems with concessions and the alike , predate any of the economic downturn or the post Sept 11th ramifications. The company itself had no direct role in this.

Like I said...such terms being tossed about, is an attempt to create a reaction..be it fear...or feel good? How it impacts the individual..and how the individual reacts to it? will determine if it's friendly or not? I'm sure very few would say things are Labor Friendly now....but like I said before..if you think it's bad now? There are some really potentially terrible scenarios to be feared out there...I can conjecture a few , that could really happen , without even stretching my imagination an inch.

 

[Lakeguy67]

[P]They could have liquidated the company or sought deeper cuts or gone to court and abrogated the labor contracts and become a a virtual airline. This whole thing sucks but it could have been a lot worse.[/P]
[P] [/P]

 

[sabre]

Chip, give me a break! I never EVER said the things you mention I said. I simply asked how low a pilot would go. I even qualified it to say that if I was a pilot I would not vote for a new cut.
At any rate, the fact that I managed to piss you off [not my intention] suggest to me that pilots won't give a dime if nobody else does.

And this Labor vs Labor thing [your manufactured topic] would be nonsense if we didn't have employees advocating every single thing David does to be 'labor friendly'.

When the splintered and fragmented employees at US AIRWAYS have the balls to collectively stand up [pilots, mechanics, customer service, etc] and say we are 'one' and management can either close this place down or manage this airline by successfully seeking the needed cuts from big business's. That's it. Either they get the cuts from big business or they close down the shop.

Dont count on your unions, they have no balls and will not come out against further pay cuts. Sure they will throw in rhetoric like our Tiberi does but when it's all done, they will roll over because of the 'dues'. We have seen it before and had to vote twice on the same thing.

 

[pitguy]

Chip,
I am sorry you have taken my views as an attack. I feel a heart felt sickness that you may not want to help this company pull out of this situation. I believe if maybe something could be worked out we could pull through this as a superior carrier. The mechanic group works at a slightly higher rate than a feeder airline. It would behoove to have the pilot group at a similar rate. The savings would be great. If the $65,000 to $100,000 range is not acceptable maybe $70,000 to $105,000 would be accommodating or possible working out something with per diem not being paid any more. Maybe flight simulator or training could costs could be born by the individual pilot and then the company could pay a higher rate for salary.

 

[jcrb]

[blockquote]
----------------
On 10/27/2002 136 AM chipmunn wrote:

But a strange thing happened. During the final phase of labor negotiations revenue "fell off the cliff" and began with passenger fear to fly during the one-year September 11 anniversary.

----------------
[/blockquote]

Chip, I hate to tell you this but it wasn't a strange thing, and it wasnt because of our fear of September the 11th. We weren't flying because our corporate travel departments had told us not to buy tickets on US after the no refund, no change, no standby.... rules went into effect. So untill the other carriers matched US on some of those rules, they got all US' business. Once almost everyone had those rules, any travel that didn't absolutely have to be booked didn't get booked early as you would normaly do to get a better. And then by the time you knew for sure if you had to go you were no longer looking at 14-21 day fares but at

 

[MCORORES]

As I have posted previously in another thread, it is not uncommon for U to have light bookings from after Labor Day until around Thanksgiving. This is not new. Has been the so called norm for the past 10 years. If the biz was not to pickup after the holidays then we have reasons to be more concerned. What is distorting the facts of revenue is that we are now in the new business environment something we have never had to experiance. Do not know what the current norm will be and neither does anyone else.

 

[pitguy]

Chip,

I want to thank you for starting this post. Labor vs. Labor

Ten years ago in October of 1992 the mechanics went out on strike.
The ramp workers were non-union and could not honor our strike (Which is understandable). The flight attendants tried to honor our strike, but were ordered back to work by a federal judge. The pilot group voluntarily crossed the picket lines and some of the pilots did accomplish struck work.

How do you feel about this?

How do you think mechanics feel about this?