Restructure With Or Without Labor?
- Thread starter Tim Nelson
- Start date
MrAeroMan said:Actually I'm shocked to hear that.With all the chest pounding and sign thumping of IAM members on here about brotherhood and being a brothers keeper I'm very surprised to hear there is a group that would throw their "brothers and sisters" under the bus to keep their jobs. Actually this sounds a lot like ALPA eating their young doesn't it? :unsure:
the group that wants this is U management.....
i'd suggest you wake up and smell the roses....
cwa-auto check in-auto boarding.
res-outsource most to india.
gse/plant maint,fleet,cwa-gone with focus city.
alpa-sold out on some furlougees ever coming back.
mech's??? push comes to shove what do you think would come of it in a vote when there are more mech's than related??
i must go ,i'm getting hungry.
I generally agree with mweiss, oldiebutgoodie, Smartest Loser, and nycbusdriver.
But I think there is another problem with another Ch. 11 BK for US Airways management. That problem is that US Airways management potentially loses control of their airline. The BK judges is responsible to the creditors of the airline. His/Her responsibility is to maximize the payments to those creditors. If the BK judge feels that management's plan will not do that, he can remove management.
Take a look at what is happening in the current BK of Hawaiian Airlines. Hawaiian's CEO, a guy named Adams, took the airline to BK in a financing dispute with Boeing. He wanted lower leases. Boeing did not want to negotiate, and didn't have to because they had a contract. Adams took Hawaiian to BK in order to void the contract.
Well, the BK judge removed Adams, and the airline is currently being run by a BK-appointed trustee. That trustee, has managed a profit out of Hawaiian, and is shopping HA around to potential investors to emerge from BK. Adams, who has since teamed up with former AA CEO Don Carty, have submitted a Plan of Reorg to the court. However, so have several other potential investors, including Boeing and other former CEO's (notable, a guy named Bruce Nobles, I think).
Now, let's relate this back to US Airways... If US Airways goes to Ch. 11 again, the BK judge is required to maximize the what the creditors get from the situation. If the creditors are best served by a liquidation rather than a continuing operation, the BK judge can convert the case to Ch. 7. While this is rare, it does happen. The recent BK of Midway Airlines (the US Airways Express operator) is an example of where the CEO was still looking for investors, but when he repeatedly couldn't find any, the judge declared a Ch. 7 conversion. If such an event were to occur at US Airways, RSA would likely be at the top of the creditor list.
Just because RSA currently controls the airline, that is something that does not have to continue. It could be that a BK judge shops US Airways around as has been done with Hawaiian. In this case, RSA probably loses management control of the company. A BK judge may feel this is an appropriate course of action, since RSA has not materially changed the company's fortunes. Especially if someone like Bonderman/TPG are interested, and have a proven track record of airline turn-arounds (CAL and AWA).
Therefore, while an easy answer for management is to declare BK in order to invoke S.1113 BK/labor laws, which essentially force new negotiations, I think the probable result of those negotiations (more concessions, but probably not as much as management wants/needs) is not worth the risk (management/RSA loses control of the airline to the BK judge temporarily, and maybe to new investors permanently).
But I think there is another problem with another Ch. 11 BK for US Airways management. That problem is that US Airways management potentially loses control of their airline. The BK judges is responsible to the creditors of the airline. His/Her responsibility is to maximize the payments to those creditors. If the BK judge feels that management's plan will not do that, he can remove management.
Take a look at what is happening in the current BK of Hawaiian Airlines. Hawaiian's CEO, a guy named Adams, took the airline to BK in a financing dispute with Boeing. He wanted lower leases. Boeing did not want to negotiate, and didn't have to because they had a contract. Adams took Hawaiian to BK in order to void the contract.
Well, the BK judge removed Adams, and the airline is currently being run by a BK-appointed trustee. That trustee, has managed a profit out of Hawaiian, and is shopping HA around to potential investors to emerge from BK. Adams, who has since teamed up with former AA CEO Don Carty, have submitted a Plan of Reorg to the court. However, so have several other potential investors, including Boeing and other former CEO's (notable, a guy named Bruce Nobles, I think).
Now, let's relate this back to US Airways... If US Airways goes to Ch. 11 again, the BK judge is required to maximize the what the creditors get from the situation. If the creditors are best served by a liquidation rather than a continuing operation, the BK judge can convert the case to Ch. 7. While this is rare, it does happen. The recent BK of Midway Airlines (the US Airways Express operator) is an example of where the CEO was still looking for investors, but when he repeatedly couldn't find any, the judge declared a Ch. 7 conversion. If such an event were to occur at US Airways, RSA would likely be at the top of the creditor list.
Just because RSA currently controls the airline, that is something that does not have to continue. It could be that a BK judge shops US Airways around as has been done with Hawaiian. In this case, RSA probably loses management control of the company. A BK judge may feel this is an appropriate course of action, since RSA has not materially changed the company's fortunes. Especially if someone like Bonderman/TPG are interested, and have a proven track record of airline turn-arounds (CAL and AWA).
Therefore, while an easy answer for management is to declare BK in order to invoke S.1113 BK/labor laws, which essentially force new negotiations, I think the probable result of those negotiations (more concessions, but probably not as much as management wants/needs) is not worth the risk (management/RSA loses control of the airline to the BK judge temporarily, and maybe to new investors permanently).
oldiebutgoody
Veteran
- Aug 23, 2002
- 2,627
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Funguy2,
Also remember, only a portion of the RSA investment would go to the top of the creditors list. That which was converted to stock (240 mil) would be thrown into the till with everyone else. Then the ATSB guaranteed loan would get paid first, followed by the normal Bankruptcy list. You can see that there is a HUGE risk for RSA if another chapter 11 is attempted. The only way that they could guarantee NOT to lose their investment would be to become the DIP financiers again, another "iffy" proposition.
Also remember, only a portion of the RSA investment would go to the top of the creditors list. That which was converted to stock (240 mil) would be thrown into the till with everyone else. Then the ATSB guaranteed loan would get paid first, followed by the normal Bankruptcy list. You can see that there is a HUGE risk for RSA if another chapter 11 is attempted. The only way that they could guarantee NOT to lose their investment would be to become the DIP financiers again, another "iffy" proposition.
nycbusdriver
Veteran
funguy2 -funguy2 said:
A very interesting scenario, to be sure. Being the unabashed cynic that I am, however, I cannot see this happening. Bronner is WAY to well-connected to let this happen. Federal judges are political animals no matter how much they like to portray themselves otherwise.
Bronner will file at the exact moment that he knows he will get the judge he wants. I grant that it can happen and has happened, but I think the poor schmuck at Hawaiian just did not have the Bronner-type horsepower to stand up to Boeing. Federal judges be damned!
nycbusdriver:
You may be right. And I am certain that there are "management-friendly" judges out there. I really don't know Bronner's political influence outside of Alabama, but in an election year, anything is possible.
Regardless, at the end of the day, the judges usually do what they must. Sometimes they'll give the management lots of extra time until they just cannot give any more... Look at Midway which was in bankruptcy for almost 2 years or National Airlines which operated longer in BK protection than outside of BK protection. And that was probably done with less influence and less political pressure.
Another example is UAL today. Although in this case I will say that there seems to be valid reasons for the extensions, where Midway and National extensions were granted on the basis of "mystery" investors who never seemed to materialize and might not have even existed.
You may be right. And I am certain that there are "management-friendly" judges out there. I really don't know Bronner's political influence outside of Alabama, but in an election year, anything is possible.
Regardless, at the end of the day, the judges usually do what they must. Sometimes they'll give the management lots of extra time until they just cannot give any more... Look at Midway which was in bankruptcy for almost 2 years or National Airlines which operated longer in BK protection than outside of BK protection. And that was probably done with less influence and less political pressure.
Another example is UAL today. Although in this case I will say that there seems to be valid reasons for the extensions, where Midway and National extensions were granted on the basis of "mystery" investors who never seemed to materialize and might not have even existed.
oldiebutgoody
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- Aug 23, 2002
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True, but as we saw last time, as long as the company isn't forced into bk there is lots of latitude as to where and when the filing is made in order to find judges that have more favorable attitudes toward management.
nycbusdriver
Veteran
Yes, I'm aware of that. The fact remains that they are political animals. Just a bit off topic, but, moderators, please indulge me to make a point regarding these judges.mweiss said:
The political leanings of these life-appointment judges was most famously demonstrated in December, 2000, when all of the conservative, "states-rights," "strict-interpretation" justices preempted a state's election taking the very power away from the state that they had heretofore "defended."
What DELLDUDE is trying to say is that the company will go all out in an attempt to replace or outsource GSE, RAMP, UTILITY and STORES. Because these are positions that currently pay more at UAIR than at the competition. What DUDE failed to mention was the number of MECHANICS that will also become unnecessary if the AIRBUS arbitration finds in favor of the company.....not likely but nevertheless possible.
If the company should prevail then you can kiss the 737 fleet goodbye which would about do it for a large number of maintenance employees. I guess August will be a turning point for many. I just can't imagine the company sitting on their hands waiting for the decision to arrive......hence the additional AIRBUS aircraft going to BFM. Only ten........Yeah right. They want to send the whole thing to Mobile.
When push comes to shove the IAM will do what is best for the IAM....I mean the membership <_<. The company will see to it.....perhaps another $1.2 million for "administrative costs" should the proposal be voted in????????? Get the red shirts out boys, put on your hulk hands and get ready to roll over
h34r:
If the company should prevail then you can kiss the 737 fleet goodbye which would about do it for a large number of maintenance employees. I guess August will be a turning point for many. I just can't imagine the company sitting on their hands waiting for the decision to arrive......hence the additional AIRBUS aircraft going to BFM. Only ten........Yeah right. They want to send the whole thing to Mobile.
When push comes to shove the IAM will do what is best for the IAM....I mean the membership <_<. The company will see to it.....perhaps another $1.2 million for "administrative costs" should the proposal be voted in????????? Get the red shirts out boys, put on your hulk hands and get ready to roll over
h34r:to much time to quit
Senior
- Jun 17, 2003
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As we type they (iam) are probably paying OUR attorneys to write that first memo about the concession stand reopening.E-TRONS said:When push comes to shove the IAM will do what is best for the IAM....I mean the membership <_<. The company will see to it.....perhaps another $1.2 million for "administrative costs" should the proposal be voted in????????? Get the red shirts out boys, put on your hulk hands and get ready to roll over
It will be something like this: Due to circumstances beyond our control and in the best interest of us, oh we mean the membership, followed by a bunch of other lies. The iam will eventually fall to their knees as usual and STRIKE A DEAL WHEN PROVOKED! i believe if you know how the union represents...it will be the membersip who ultimately decides if the concession stand really is closed or not....not the grand lodge.....
E-TRONS:thanks for the backup.....i take the 737 and bus issue as a known quantity.
E-TRONS:thanks for the backup.....i take the 737 and bus issue as a known quantity.
