Tas All Around

[Justme]

This is related to Jim's post regarding the lack of immediate financial relief with the pilot TA. So the company needs about $40M over the next six months to maintain ATSB required cash levels. They are seeking this amount through temporary reductions in salaries.

My question is this: what would the company do if all unions came to TAs today? These TAs (like the pilot TA) would not provide the cash that would meet the required levels. Would RSA then pony up the $40M? The $$$ would have to come from somewhere, right?

jm

 

[BoeingBoy]

Justme,

Here's my two cents worth...and from the company's viewpoint.

The best solution would probably be to have consensual agreements with all the unions in place. The immediate savings would be less, since the paycuts are the prime driver behind immediate savings and the paycuts would be less. However, the longer term savings would be greater - presumably $800 million to $1 billion per year vs the $200 million or so during the term of the temporary paycuts. In theory, these larger long term savings might prompt the ATSB to allow more leeway, or some other source of short-term cash.

Obviously, there aren't consensual agreements in place so that option is moot.

Like most, I suspect the judge will grant interim relief in the form of a paycut. The more interesting question to me is the company's request for "interim" pension changes. Changing the DB plans of the AFA and IAM to DC plans doesn't seem too "interim" to me - more like permanent. But making those changes represents a pretty sizable chunk of money, especially as it relates to the prepetition payments.

In short, I may have "misspoke", as the politicians say. The ALPA TA probably contains enough short term savings in pay and pension changes to equal at least as much as the 23%, it's just that the pension changes fall entirely on the older pilots. Whether that would be true of the other work groups, I don't know, but suspect it would not.

Jim

 

[BoeingBoy]

Justme,

Above I said:
"In short, I may have "misspoke", as the politicians say. The ALPA TA probably contains enough short term savings in pay and pension changes to equal at least as much as the 23%, it's just that the pension changes fall entirely on the older pilots. Whether that would be true of the other work groups, I don't know, but suspect it would not."

Now that the ruling is out, I go back to what I had said earlier. The court imposed relief will give more short-term savings than the TA. Here's why:

TA - 18% paycut vs judge's 21%
TA - 10% max to pension vs judge's 10% max to pension (same)
TA - 85/90/95 hrs per month vs judge's 85/90/95 hrs per month (same)

Other provisions of the TA that save money will be phased in, so even if some are in place by the end of the year, the court imposed relief generates more savings till then.

Jim

 

[UseYourHead]

Jim,

I don't know about you but I took a big hit on my DC plan contribution, and I am 48 years old. My 14% hit for 12 years is equal to say a 40% hit for 2 years (math not correct).

The point is everyone got hammered, and the older folks have a large PBGC benefit that will be collectable,,,vs hoping 12 years from now the PBGC is around....

Justme,

...the pension changes fall entirely on the older pilots.
Jim

[post="191185"][/post]​

 

[Justme]

From: Wednesday, October 13, 2004
By Dan Fitzpatrick, Pittsburgh Post-Gazette

The company's request for a 23 percent pay cut, which would raise approximately $200 million, is a painful move, he acknowledged, describing it as a question of "Do you eat the dog or feed the children? These are very tough calls US Airways management has to make."

Just wanted to clarify my original post, that the company is looking at the 1113(e) for $200M not $40M. So does the 21% for 4 months drops that by 20% to $160M?

As for future TAs, I saw another post that said look out for a 1113© filing over the weekend. I don't think that will happen, but realistically how long will/can the company "negotiate" before filing the 1113©.

Has the company telegraphed the timeframe in some way? Are there upcoming pension and/or lease issues that are going to drive the date?

What chance is there of actually reaching a TA with the various groups before the company moves forward with 1113?

jm

 

[UseYourHead]

My guess is that they won't wait long...give enough opportunity for the unions to engage, and if they drag feet again start the 1113c process.

Although some here are not interested in contributing to the future (they would rather have the airline shut down so they can collect unemployment), the judge has shown the he is in fact interested in the long-term viability of US Airways.

It was a BIG mistake to think that the BK judge would side with labor, it will be a bigger mistake to do it again....

Negotiating your own deal is aways better, 1113c is really going to be a hammering for those groups that go there...this is all about the creditors, not the employees.

From: Wednesday, October 13, 2004
By Dan Fitzpatrick, Pittsburgh Post-Gazette


Just wanted to clarify my original post, that the company is looking at the 1113(e) for $200M not $40M. So does the 21% for 4 months drops that by 20% to $160M?

As for future TAs, I saw another post that said look out for a 1113© filing over the weekend. I don't think that will happen, but realistically how long will/can the company "negotiate" before filing the 1113©.

Has the company telegraphed the timeframe in some way? Are there upcoming pension and/or lease issues that are going to drive the date?

What chance is there of actually reaching a TA with the various groups before the company moves forward with 1113?

jm

[post="191635"][/post]​

 

[BoeingBoy]

So does the 21% for 4 months drops that by 20% to $160M?

[post="191635"][/post]​

It should be less than $160M - the company wanted 5-1/2 months (to the end of Mar) and got 4 months (to the middle of Feb). That change alone drops the $200M by 27.3%. Then there is the reduction from 23% paycut to 21% paycut.

but realistically how long will/can the company "negotiate" before filing the 1113©.

Has the company telegraphed the timeframe in some way? Are there upcoming pension and/or lease issues that are going to drive the date?

[post="191635"][/post]​

Purely my speculation, but I would think that the company would want agreements one way or the other by the time interim relief runs out - currently Feb 15.

Jim

 

[Justme]

Purely my speculation, but I would think that the company would want agreements one way or the other by the time interim relief runs out - currently Feb 15.

Jim

[post="191675"][/post]​

caution, B) equals "b"

Section 1113. Rejection of collective bargaining agreements
(B)(1) Subsequent to filing a petition and prior to filing an
application seeking rejection of a collective bargaining agreement,
the debtor in possession or trustee (hereinafter in this section
''trustee'' shall include a debtor in possession), shall -
(A) make a proposal to the authorized representative of the
employees covered by such agreement, based on the most complete
and reliable information available at the time of such proposal,
which provides for those necessary modifications in the employees
benefits and protections that are necessary to permit the
reorganization of the debtor and assures that all creditors, the
debtor and all of the affected parties are treated fairly and
equitably; and

Step One: The company tells unions it will file for rejection of contracts on 15 November if consensual agreements are not reached and ratified by then. It then files on Nov 15th and makes a proposal to each union without a ratified TA that "provides for those necessary modifications in the employees benefits and protections that are necessary to permit the reorganization of the debtor"

(d)(1) Upon the filing of an application for rejection the court
shall schedule a hearing to be held not later than fourteen days
after the date of the filing of such application.

and

(2) The court shall rule on such application for rejection within
thirty days after the date of the commencement of the hearing.

and

(B)(2) During the period beginning on the date of the making of a
proposal provided for in paragraph (1) and ending on the date of
the hearing provided for in subsection (d)(1), the trustee shall
meet, at reasonable times, with the authorized representative to
confer in good faith in attempting to reach mutually satisfactory
modifications of such agreement.

Step Two: Company then required to meet and confer in good faith from filing to hearing in attempting to reach "mutually satisfactory modifications of such agreement." and has 14 and 30 days (7 day extension available for hearing and indefinite extension available for ruling) until ruling which would appear a no brainer to approve. That would be the end of the year.

© The court shall approve an application for rejection of a
collective bargaining agreement only if the court finds that -
(1) the trustee has, prior to the hearing, made a proposal that
fulfills the requirements of subsection (B)(1);
(2) the authorized representative of the employees has refused
to accept such proposal without good cause; and
(3) the balance of the equities clearly favors rejection of
such agreement.

Step Three: With no agreement by union at the date of the hearing then the proposal by the company, if approved by the court, becomes the new agreement. Court approves all applications for rejection of CBAs after finding (1), (2), and (3) have been met.

And then what? Company mandated contracts in place on January 1. What will they look like? Is that preferable to fighting and not coming to mutually acceptable changes in the CBAs before the hearing? I don't know. I think though that if anyone thinks it won't happen they are in a river in Egypt. Does the issue of honor come into play? If so, what is the honorable thing?

Many more questions, but 1113 looks pretty straight-forward when one looks at it.

jm

 

[jack mama]

the consensual agreements give the perception to the creditors and customers that everyone is on board. they would be more willing to let the company use more cash and may allow the delivery of the RJs to continue....