Official: AMR Bankrupt

[Buck]

<_< ------- 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!!!

How can you have deregulation with the government at the heels of every action or transaction that is made by the industry? Maybe the professor should have deregulated the FAA, NTSB and now the TSA and the Passenger Bill of Rights.

 

[WorldTraveler]

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.



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.

There are two concepts that you can't seem to accept - or won't incorporate into your argument about how well AA's employees actually fared compared to their peers.
1. AA filed relatively early compared to the other carriers.... AA's employees took cuts in 2003, DL and NW did not file until 2005 and they both exited in 2007... AA employees have been living under the same quasi-BK imposed conditions for 8 years; other carriers started later and began the rebuilding process much faster. There is a time value of money and even if you argue that AA employee cuts did not go as deep, they started early and lasted longer.
2. You don't seem to want to accept that airline employees who went through BK received some level of compensation for their cuts in BK while AA employees received none. In BK, employees became unsecured creditors which meant they received stock in the new company and in some cases they also received cash payouts when the company emerged. Further, some other airline employees have received pay raises and profit sharing.
There was no creditors' cmte appointed when AA rammed pay cuts down AA employee throats and they have recovered none of it.... and the next round of cuts will indeed be deeper. But AA employees now have a position on the creditors' cmte and will receive compensation for their cuts.
When you add it all up, AA employees may receive better offsets to their cuts in BK compared to what they received in 2003.
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There is no doubt that deregulation has been horrific for airline employees and it is nothing but a race to the bottom of which the AA BK will be just one more round in the process.
But the notion that AA employees who previously did not take cuts in BK fared better than their peers who took them in BK is simply false. As false as the long held notion that other airlines did not have pension liabilities which put AMR at a much greater disadvantage - until it was finally shown that DL actually has more pension liabilities on its books and in 2011 will pay more into its pensions than AA, even though DL does not have active pension plans.
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andyes, Buck, the notion that the US airline industy is economically unregulated is patently false... there are a host of taxes and regulations which make the US airline industry heavily regulated.

 

[Buck]

American Airlines Bankruptcy Doesn’t Mean the Sky is Falling

then, once again, they’re very poor businessmen who deserve to go bankrupt.



I need help with the Deregulation reference. I was of the opinion that the Carter Administration, enacted this.

 

[Frank Szabo]

American Airlines Bankruptcy Doesn’t Mean the Sky is Falling

then, once again, they’re very poor businessmen who deserve to go bankrupt.



I need help with the Deregulation reference. I was of the opinion that the Carter Administration, enacted this.

Public Law 95-504 signed into law by Mr. Peanut (Carter) 24 Oct. 1978.

 

[chris perry]

189 Airline bankruptcies,I'd say it's not working as planned...

 

[FWAAA]

There are two concepts that you can't seem to accept - or won't incorporate into your argument about how well AA's employees actually fared compared to their peers.

That's because, for the most part, they're not accurate. Yes, DL pilots have recovered a portion of their $1.3 billion of annual concessions much faster than any other bankrupt airline's pilots.

1. AA filed relatively early compared to the other carriers.... AA's employees took cuts in 2003, DL and NW did not file until 2005 and they both exited in 2007... AA employees have been living under the same quasi-BK imposed conditions for 8 years; other carriers started later and began the rebuilding process much faster. There is a time value of money and even if you argue that AA employee cuts did not go as deep, they started early and lasted longer.

True, but US employees took concessions in 2002 and again in 2004-05 and today the pilots and FAs make substantially less than AA's pilots and FAs. UA's employees took two rounds of concessions around the same time as AA's concessions and today, the UA pilots and FAs make less than comparable AA employees.

2. You don't seem to want to accept that airline employees who went through BK received some level of compensation for their cuts in BK while AA employees received none.

That's false. AA's unionized employees received 35 million options in 2003 at a $5 strike price. In early 2007, when the AMR stock hit $41/sh, the options had a total intrinsic value of $1.26 billion. That was an average of $16,000 per employee. Speaking of that time value of money, that was almost five years ago.

In BK, employees became unsecured creditors which meant they received stock in the new company and in some cases they also received cash payouts when the company emerged. Further, some other airline employees have received pay raises and profit sharing.

While true, how many employees of US or UA (both with lower pay rates than AA for most of the past decade) have recovered enough to surpass AA's higher paid employees?

There was no creditors' cmte appointed when AA rammed pay cuts down AA employee throats and they have recovered none of it.... and the next round of cuts will indeed be deeper. But AA employees now have a position on the creditors' cmte and will receive compensation for their cuts.
When you add it all up, AA employees may receive better offsets to their cuts in BK compared to what they received in 2003.

Recovered none of it? False. The AA concessions totaled $1.0 billion in annual paycuts plus another $800 million of savings from headcount reductions (work rule changes, etc), so the $1.26 billion of options was more than one year of the concession paycuts.

I agree that the AA employees will likely suffer massive concessions in the coming weeks/months. But the 2003 concessions cost employees just $1.0 billion annually. AA's employees simply didn't suffer as much as the employees at US or UA or the FAs at NW or DL or the mechanics at NW (difficult to argue that their concessions were not the worst of any workgroup at any airline).

 

[WorldTraveler]

That's because, for the most part, they're not accurate. Yes, DL pilots have recovered a portion of their $1.3 billion of annual concessions much faster than any other bankrupt airline's pilots.


True, but US employees took concessions in 2002 and again in 2004-05 and today the pilots and FAs make substantially less than AA's pilots and FAs. UA's employees took two rounds of concessions around the same time as AA's concessions and today, the UA pilots and FAs make less than comparable AA employees.


That's false. AA's unionized employees received 35 million options in 2003 at a $5 strike price. In early 2007, when the AMR stock hit $41/sh, the options had a total intrinsic value of $1.26 billion. That was an average of $16,000 per employee. Speaking of that time value of money, that was almost five years ago.


While true, how many employees of US or UA (both with lower pay rates than AA for most of the past decade) have recovered enough to surpass AA's higher paid employees?


Recovered none of it? False. The AA concessions totaled $1.0 billion in annual paycuts plus another $800 million of savings from headcount reductions (work rule changes, etc), so the $1.26 billion of options was more than one year of the concession paycuts.

I agree that the AA employees will likely suffer massive concessions in the coming weeks/months. But the 2003 concessions cost employees just $1.0 billion annually. AA's employees simply didn't suffer as much as the employees at US or UA or the FAs at NW or DL or the mechanics at NW (difficult to argue that their concessions were not the worst of any workgroup at any airline).

ah, yes, AA did offer OPTIONS. Can you tell us how much those options were actually worth to the employees?
I can assure you that the creditors will not and have not accepted OPTIONS as sufficient payment for the cuts that have been made... they want EQUITY... today, not potential promises in an uncertain future.
,
I think what you are saying is that when all is said and done, it will be shown that there are very few airline employees who did not have to take multiple rounds of concessions in order to keep their companies solvent and AA employees will not be in that group.
And of course we know that UA, US, and AA do not constitute the some total of airline employees - even network airline employees. So in fact some employees have in fact recovered significant parts of what they gave up.

 

[Bob Owens]

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.



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.

Well there is more to pay than the wage now isnt there? UAL and AA have been competitors for many years and is the carrier that historically we have been compared to the most. USAIR is an extreme case and has not been who were were put up against.

We currently earn .50 cents more than our brothers at UA, thats a max paid mechanic, not an average mechanic because when you factor in that 25% of our group is made up of OSMs that top out at $22/hr on average we make much much less, however that work was probably farmed out and they probably pay a vendor $80.hr for the work of that $22/hr mechanic, plus los of control.

Ok, so lets look at the 50 cent advantage. We get a weeks less vacation, right ther our 50 cent advantage dissapears, because the 50 cents is only worth $1040. Now we still get the pension, it goes up in value by around $1200 per year according to the companys Total Value Statement, in fact they add that to my value as if it was income but we only get five holidays at half pay while the get 8 at double time, so our Holidays translate into 20 hours extra pay while theirs translates into 80 hours extra pay, that wipoes out thye pension cost advantage, then add in that UAL gets 5% of their eranings put into a 401k and they are considerably ahead when looking at a cost perspective, of course our pension results in more long term liability but thats another discussion. UAL was also granted stock and other payments to make up for the pension being terminated.

You are right, if its false its false and I have better access to the whole bstory than you do glancing over 10Ks as to what AA employees gave up vs what other workers gave up in BK. Like I said when we gave up our concessions in April of 2003, totalling over 25%, all UAL had agreed to was a 13% paycut and maybe a few things that we had given up in 1983. We set the bar lower for all the carriers that were in BK, is a reasonable assumption to say that had we not lowered the bar the cuts at the other carriers would not ahve been as severe.

 

[swamt]

When you add it all up, AA employees may receive better offsets to their cuts in BK compared to what they received in 2003.

For the AA employees, they are gonna have to recieve better offsets. In 2003 they didn't recieve any offsets or get any kind of snap back clause. AA got all the concessions they wanted. Yes they stayed out of BK. However, AA has not only enjoyed lower wages and bennies and work rules for the last almost 10 years, AA will in fact now get the lowest cost (labor) in the airline industry. AA actually waited for all the other airliners to get done with thier BK's, not only to sit back, watch and learn from everyone else, but in order to have a road map and examples of how deep thier cuts will go. I think AA will want to go in and come out of BK ASAP. Yes it will take about 14-18 months, but that's without merging with someone. I don't see AA and US merging, IF AA was to merge or buy out, I see it being JetBlue and AA merging. I also see a possibility of AA buying JetBlue and, of coarse keeping the AA name. AA will only merge with US only if it "absolutely" has to in order to compete as far as size with the other merged airlines. But AA could buy AE, JB and Frontier and take over the number one spot, once again, and allow US to just wither away on its very own over time.

 

[FWAAA]

ah, yes, AA did offer OPTIONS. Can you tell us how much those options were actually worth to the employees?
I can assure you that the creditors will not and have not accepted OPTIONS as sufficient payment for the cuts that have been made... they want EQUITY... today, not potential promises in an uncertain future.

Did you not read my post? I clearly said that the options had an intrinsic value, in the aggregate, of $1.26 billion in early 2007. 35 million shares that peaked at $41/sh with a $5/sh strike price equalled $36/sh profit multiplied by 35 million shares for a total of $1.26 billion, more than one year's worth of paycuts (the paycuts were roughly $1.0 billion per year). Your repeated claims (and those of the disgruntled employees) that AA's employees got nothing for their concessions are simply false.

Of course the creditors will not accept options in the current bankruptcy. The existence of the options refute your earlier false claims about the past (what the employees got and what they didn't get). They have nothing to do with this bankruptcy nor what the creditors will receive.

 

[FWAAA]

Well there is more to pay than the wage now isnt there? UAL and AA have been competitors for many years and is the carrier that historically we have been compared to the most. USAIR is an extreme case and has not been who were were put up against.

We've covered this issue before, Bob. Your focus is, naturally, on the mechanics. It is the center of your universe. That's to be expected. And yes, AA's mechanics are not now, nor have they been, the highest paid mechanics. I have never posted otherwise.

As WT has pointed out, however, AA's maintenance costs are the highest in the industry. That's a result of the pesky difference between wages and labor expense. You can be among the lowest paid but still cost the most (hint: productivity is usually the problem).

My posts are generally directed at overall costs, including the pilots and FAs, where AA's employees have been among the highest paid since 2003. Once DL pilots gave back $1.3 billion in annual concessions, AA pilots were the highest paid except, of course, for WN pilots, who were paid substantially more than all of AA's pilots except for the AA 777 captains, whose hourly rate was slightly higher. Now, of course, DL pilots have secured raises that bring their pay above AA's pilots.

 

[Buck]

We've covered this issue before, Bob. Your focus is, naturally, on the mechanics. It is the center of your universe. That's to be expected. And yes, AA's mechanics are not now, nor have they been, the highest paid mechanics. I have never posted otherwise.

As WT has pointed out, however, AA's maintenance costs are the highest in the industry. That's a result of the pesky difference between wages and labor expense. You can be among the lowest paid but still cost the most (hint: productivity is usually the problem).

My posts are generally directed at overall costs, including the pilots and FAs, where AA's employees have been among the highest paid since 2003. Once DL pilots gave back $1.3 billion in annual concessions, AA pilots were the highest paid except, of course, for WN pilots, who were paid substantially more than all of AA's pilots except for the AA 777 captains, whose hourly rate was slightly higher. Now, of course, DL pilots have secured raises that bring their pay above AA's pilots.

It would be nice if a labor cost breakdown could be seen so that the readers here can follow more closely. Since AA has the highest labor cost in the industry, what are the comparative salaries for each work group? Pilots, Mechanics, Flight Attendants and Fleet Service.

 

[Buck]

Dupe

 

[Birdman]

It would be nice if a labor cost breakdown could be seen so that the readers here can follow more closely. Since AA has the highest labor cost in the industry, what are the comparative salaries for each work group? Pilots, Mechanics, Flight Attendants and Fleet Service.

Do you trust the compAAny version?
www.aanegotiations.com

 

[Buck]

Do you trust the compAAny version?
www.aanegotiations.com

Don't you hammer me! I am referring to what part of the equation is pushing the labor cost over the top? I do not believe it is the mechanic wage and benefit scenario.....