Official: AMR Bankrupt

[eolesen]

What if via Bankruptcy AA merged with American Eagle, seniority list merged, and then the new Pilot pay scale was negotiated and AA took over the regional flights?

Anything can happen, but I'd expect a merger with USAir before a merger of AA & MQ.

It's not just the pilot scales. It's the ability to fly for more than just AMR which made the notion of an independent Eagle interesting.

Fourth-hand, Republic was interested, and Garton balked. Now Eagle is screwed.

 

[jimntx]

Exactly. If there was a good business reason to spin off AE before bankruptcy, there is a good reason to sell off AE during bankruptcy. In fact, Republic (assuming the rumor is true) may get a better deal in bankruptcy than out. The sale of AE as part of restructuring would still generate a good bit of cash with which to pay creditors. However, I don't think the original plan to spin off AE into a separate, independent company with AMR holding all its debt would be looked on favorably by the creditors committee or the judge now.

 

[FWAAA]

Exactly. If there was a good business reason to spin off AE before bankruptcy, there is a good reason to sell off AE during bankruptcy. In fact, Republic (assuming the rumor is true) may get a better deal in bankruptcy than out. The sale of AE as part of restructuring would still generate a good bit of cash with which to pay creditors. However, I don't think the original plan to spin off AE into a separate, independent company with AMR holding all its debt would be looked on favorably by the creditors committee or the judge now.

I disagree that Eagle could generate any cash, but I've been wrong before.

I think the planned spinoff is toast. With Eagle in Ch 11, its cost issues can be fixed (translation: concessions for Eagle employees). Maybe someone would be interested in buying Eagle once its costs are brought in line with the really low-cost commuters.

The 98 Embraer RJs that seat 37 or 44 are goners. Dunno how much of Eagle's $2.4 billion of debt (guaranteed by AA/AMR) they represent, but they are definitely gone. The 50 seaters? Not quite as worthless as the 98 scope-busters (37 and 44 seaters) but not worth anywhere near what is owed on them. Their debt will be renegotiated. The 47 CRJ-700s? The first 25 are worth less than the recent 22, so their debt can also be renegotiated. The most recent 22 are basically brand new so there's probably less room for debt savings there.

I may be wrong, but a primary reason for the Eagle spinoff was to bring down the cost of regional feed. With everyone in the AMR family currently in the bankruptcy pool, no need to spinoff Eagle to bring down that cost - so maybe Eagle continues inhouse after the bankruptcy.

 

[KCFlyer]

For those who hate Arpey, this was an interesting article in todays KC Star. Couple of things stood out to me:

Gerard J. Arpey, American’s chief executive officer and chairman, resigned and stepped away with no severance package and nearly worthless stock holdings. He split with his employer of 30 years out of a belief that bankruptcy was morally wrong and that he could not, in good conscience, lead an organization that followed this familiar path.

and this

When we discussed the prospect of bankruptcy at American, he spoke with an almost defiant tone of the company’s commitment to its employees and holders of its stock and debt.

 

[jimntx]

Well, pin a rose on Arpey. Back on 4/15/2008 when we announced the (at that time) largest quarterly loss in the company's history, if he and the other execs had refused the $9 million in bonusses they received that day as morally and ethically wrong, I might be more inclined to believe his sanctimonious position today.

It's very easy to protest the presence of a whorehouse in town if you managed to slip out the back without being seen last night.

 

[WorldTraveler]

Well, pin a rose on Arpey. Back on 4/15/2008 when we announced the (at that time) largest quarterly loss in the company's history, if he and the other execs had refused the $9 million in bonusses they received that day as morally and ethically wrong, I might be more inclined to believe his sanctimonious position today.

It's very easy to protest the presence of a whorehouse in town if you managed to slip out the back without being seen last night.

agree.. there are alot of people making a big deal about Arpey's decision and I commend him for that.. .but what about the moral responsibility to recognize that your plan is not working and step aside.
Keep in mind that DL and NW exited BK in 2007 and the DL/NW merger was announced in mid-2008 with the expectation that UA/CO would merge - which has now happened. The industry structure has been set for long enough that Arpey should have had some sense of urgency to complete the job started in 2003.

 

[KCFlyer]

agree.. there are alot of people making a big deal about Arpey's decision and I commend him for that.. .but what about the moral responsibility to recognize that your plan is not working and step aside.

Well...I guess that means the union contracts would have been broken years ago. You know one reason why his plan wasn't working? He was competing against every other airline that DID toss out pensions, break union contracts and generally screw the employees. So had he "done the right thing", AA employees would have just had their world turned upside down years ago. I'm only saying that as "bad" as Arpey was, life after him will most likely be a whole lot worse.

 

[WorldTraveler]

Well...I guess that means the union contracts would have been broken years ago. You know one reason why his plan wasn't working? He was competing against every other airline that DID toss out pensions, break union contracts and generally screw the employees. So had he "done the right thing", AA employees would have just had their world turned upside down years ago. I'm only saying that as "bad" as Arpey was, life after him will most likely be a whole lot worse.

life will indeed get worse but the notion that AA employees did not suffer is just not reality... AA employee salaries were cut as low if not lower than other carriers; other carriers - namely DL including PMNW personnel - still have pension obligations on their books; and other airline employees are already recovering some of what they lost through profit-sharing and pay raises.
I know it sounds alot better to say that "the other guys screwed their people and we didn't and are people did better" but the facts just aren't there to say that.
.
IF AA had not filed BK and had succeeded in a turnaround outside of BK, then the world would have rightly lauded AA mgmt... but that didn't happen so let's get past the notion that AA employees were better off... esp. since there is a very strong likelihood that AA employees will be subjected to another painful round of cuts in order to finally turn the company around.
.
When all is said and done, AA employees will fare far worse than most other airline employees - and if there was really a moral responsibility to protect the employees' interests, then the white flag of the pre-BK restructuring process would have been raised soon enough to avoid a C11 filing.

 

[KCFlyer]

life will indeed get worse but the notion that AA employees did not suffer is just not reality... AA employee salaries were cut as low if not lower than other carriers; other carriers - namely DL including PMNW personnel - still have pension obligations on their books; and other airline employees are already recovering some of what they lost through profit-sharing and pay raises.
I know it sounds alot better to say that "the other guys screwed their people and we didn't and are people did better" but the facts just aren't there to say that.
.
IF AA had not filed BK and had succeeded in a turnaround outside of BK, then the world would have rightly lauded AA mgmt... but that didn't happen so let's get past the notion that AA employees were better off... esp. since there is a very strong likelihood that AA employees will be subjected to another painful round of cuts in order to finally turn the company around.
.
When all is said and done, AA employees will fare far worse than most other airline employees - and if there was really a moral responsibility to protect the employees' interests, then the white flag of the pre-BK restructuring process would have been raised soon enough to avoid a C11 filing.

Bottom line WT...AA employees are going to see even more cuts, and their new management will continue to see even more bonuses. At least Arpey walked away, so won't be "raking it in" anymore off the backs of employees. Sorry if this sounds a bit harsh - but I think that US bankruptcy laws have been far too lax. One has to wonder, had US or DAL or UAL or any of the others actually failed, AMR would have been in a very good position. When a company has to compete with an entire sector that has taken advantage of lax bankruptcy laws, it's harder than hell to compete.

 

[FWAAA]

life will indeed get worse but the notion that AA employees did not suffer is just not reality... AA employee salaries were cut as low if not lower than other carriers; other carriers - namely DL including PMNW personnel - still have pension obligations on their books; and other airline employees are already recovering some of what they lost through profit-sharing and pay raises.
I know it sounds alot better to say that "the other guys screwed their people and we didn't and are people did better" but the facts just aren't there to say that.

Actually, there are plenty of facts that demonstrate that the concessions suffered by AA's employees, while painful, were nowhere near as painful as the concessions suffered by many other legacy employees. Yes, there are exceptions to that generalization, but you sound like Bob Owens (and just as nonconvincing) when you claim otherwise. Two examples: US East pilots' payrates, which are now bested by nonunion jetBlue payrates on the A320 and E190. AA's mainline pilots' payrates are substantially higher (and have been for years) than the US East payrates. In fact, AA's pilot concession payrates exceeded payrates at every other legacy airline (except CO). DL's pilots are now recovering and are surpassing AA's payrates. Another example: FAs at every bankrupt legacy (except DL) whose top payrates averaged about 15% less than AA's FA rates. Even DL's FAs make less per hour than AA's FAs. There are other examples as well. AA's employees did not suffer as much as other bankrupt airline employees. It doesn't matter how many times you repeat something that's false - it's still false.

IF AA had not filed BK and had succeeded in a turnaround outside of BK, then the world would have rightly lauded AA mgmt... but that didn't happen so let's get past the notion that AA employees were better off... esp. since there is a very strong likelihood that AA employees will be subjected to another painful round of cuts in order to finally turn the company around.

The fact that AA employees are facing painful cuts again now that AA is in Ch 11 does not support any fanciful notion that AA's employees were not better off. AA's employees WERE better off for the past few years, but now will be worse off.

 

[TWU informer]

The fact that AA employees are facing painful cuts again now that AA is in Ch 11 does not support any fanciful notion that AA's employees were not better off. AA's employees WERE better off for the past few years, but now will be worse off.

This industry has been nothing more than a leap froggin event by one airline to the next in negative cost structure.

One gets concessions via volunteer negotiations, the other gets concessions via Banruptcy Laws. Each event screws the downward pressures on the next group to give more.

The bottom line is deregulation is destructive to good paying middle class jobs. And as this continues the paid bloggers and management sympathizers will start paying the cost of airline workers to become dependents on government entitlements via their own taxes. It is negative for everyone, not just the shafted. Even the paid bloggers are voluntarily heading down a negative path for themselves as well as us, yet they enjoy their pay today and continue their direction. But not for long. They will be next,

The only way the spiral to the bottom stops will be via a massive labor dispute with more than one work group and more than one airline involved.

This is where folks llike Bob Owens will play a role. But he must expand beyond the Mechanic and Related group and start thinking larger group more people.

I am not sure where the line in the sand is but when it is crossed, the #### will hit the fan.
The sooner this happens the better, there is no other way!

 

[MCI transplant]

<_< ------ And the downward spiral of deregulation continues!!! To what end? :huh: --------- Only time will tell!!!

 

[xUT]

Bottom line WT...AA employees are going to see even more cuts, and their new management will continue to see even more bonuses. At least Arpey walked away, so won't be "raking it in" anymore off the backs of employees. Sorry if this sounds a bit harsh - but I think that US bankruptcy laws have been far too lax. One has to wonder, had US or DAL or UAL or any of the others actually failed, AMR would have been in a very good position. When a company has to compete with an entire sector that has taken advantage of lax bankruptcy laws, it's harder than hell to compete.

Well stated!
While the employees get raped, the 'Executive Class' will retain their pay, pension and bonuses.
Get ready for the KERP program coming to your doorstep soon.
Been There Done That No T-Shirt..

 

[xUT]

<_< ------ And the downward spiral of deregulation continues!!! To what end? :huh: --------- Only time will tell!!!

Deregulation is a small part of "GLOBALIZATION".
B) xUT

 

[MCI transplant]

Deregulation is a small part of "GLOBALIZATION".
B) xUT

<_< ------- I'm sorry sir! I guess I'm just not that smart!------- All I've seen, is since I started working in the Airline Industry in 1968, is the slow degeneration of a once proud profession, and Industry, since deregulation was introduced to Congress by some egg head, economist professor, who know nothing of the dynamics he was to set in motion, only to admit before the same Congress, years latter, that he had screwed up!!!