Tentative Agreement with APA, APFA, TWU

[tom barry]

IF this thing becomes a reality, and IF(then) Parker tries to pull some underhanded SHITE, you'll see a Strike, or at least Chaos the likes he could never imagine. And again, IF it happens, I think Parker already knows he could be playing with a VERY potential FIRE.
I've said all along, that if correctly "cherry picked" it's possible to put together a very strong competitor up against DL and UA.

Then again as someone has already mentioned, one could configure an even BETTER combo consisting of AA/B6/AS.

This is going to be "VEDDY INTARESTING" !


Either way, dumb ARSE USA320pilot WON'T be getting his little paws on the yoke of any 777 anytime soon !

 

[DCaf]

Either way, dumb ARSE USA320pilot WON'T be getting his little paws on the yoke of any 777 anytime soon !

I don't know the good captain, but I see him around. He's a nice guy, friendly to the ground staff. By the time this ever gets sorted out and merged together, my guess is he'll be mandatorily retired. Many US pilots will, same with AA I assume.

 

[etops1]

I don't know the good captain, but I see him around. He's a nice guy, friendly to the ground staff. By the time this ever gets sorted out and merged together, my guess is he'll be mandatorily retired. Many US pilots will, same with AA I assume.

Chip is a very nice guy . Very good to the staff and especially his crew which is a lot I can say for some of the douche bags I have flown with in my career . Why people on here are so disrespectful to him is beyond me . He posts what people want to read .

 

[Justme]

The thing is, I think we are all being played. Never mentioned is how US people feel about this. What has been promised to us at the expense of US? What do they stand to gain? What do we stand to gain, really? Emotions are high, but have the real logistics been worked out?

Your husband's nemesis is out of control!

 

[Vortilon]

Here is the Flight Attendant Term Sheet:

Bridge Term Sheet Highlights

Early Out: APFA's proposal accepted

No Furloughs

Wage Increases: 2.5% on effective date. 1.5% annually
over next 5 years.

Retirement: Pension plan frozen. Replaced with a 401(k)
contribution.

• Current employees will receive automatic 401(k)
contributions for 5 years, with no match
requirement. Contribution levels as follows:
◦ 9.9% age 50 +
◦ 6.75% age 40 – 50
◦ 5.5% age 39 – below
◦ At the conclusion of the 5 year period, all FAs would
receive a 3% contribution with up to a 5.5%
match.

Active Health Benefits: Better than AA’s proposed plan
Retiree Health Benefits: Implementation of Voluntary
Employee Beneficiary Association (VEBA).

Bidding: Preferential Bidding System (PBS) with our input
Reserve:
• Incorporate earlier Reserve assignment notification
• Add AM/PM Ready Reserve shifts.
• Allow Reserve pick-up on days off to be paid on top of
guarantee.
• Current reserve rotation will be maintained.

Sequence Pay Protection: APFA proposal

Schedule Maximum:
• Minimum of seventy (70) credit hours and a maximum of
ninety (90) credit hours per bid period.

• Flex in the maximum line value by an annual amount of
twenty (20) hours, but in no case more than five (5)
hours during any given month.
Incentive Pay/Per Diem: Incentive pay eliminated. Per
diem rates increased to:
• Domestic: $2.00
• International: $2.20

International Override:
• $3.00 per hour for each international leg. Override for
deadhead, trip and duty rigs and trips “not flown”
consistent with CBA

Combined Domestic & International Operation

Current Duty Rigs Preserved

Expedited Negotiations for New Contract: Negotiations
for a market based contract will take place immediately
following a single-carrier certification. If an agreement
cannot be reached within 60 days of the certification the
matter will be submitted to final binding arbitration.

Maintain all other provisions in our current Contract
including:

Vacation accrual and pay
Current PVD'S
Sick hour use and current sick policy
Current Hotel language
ATC/ Code 59
Galley pay

 

[WorldTraveler]

World,
Give it a rest will you? While you've made some valid points, you're just cheerleading for Horton and company while they continue to alienate and stick it to their employees beyond what is necessary while offering little in any sort of a plan that has been respected by Wall Street.
Read this and get back to us:
http://app5.websitetonight.com/projects/6/1/3/6/613675/uploads/American_and_US_Airways_ver_1.pdf

Let me translate for you:
“Don’t come on here with facts that shoot down our little plan…”
I’ve heard the same thing for years on here, yet I still keep going and have a pretty strong track record for demonstrating where the airline is going and what works and doesn’t work.
Specifically, a lot of the people, including on this forum, with whom I butted heads with for years were AA mgmt supporters, shall we say, who didn’t like the fact that I very frequently said that AA HAD to fix its problems or it would end up in BK. AA didn’t fix its problems and we are where we are now – and a happy outcome for all involved is far from certain.
Where I now find myself is now standing with many of the same AA mgmt supporters – because we both recognize that AA’s huge problems have to be addressed with real solutions – and cutting short the process of fixing AA to buy labor peace will only doom the future of AA – regardless of whether as a standalone or combined with any other airline – unless the problems are fixed and fixed right.
AA is where it is because it didn’t fully address its problems 10 years ago and then didn’t use the advantage it did gain. Neither AA as a company can afford to settle for half of a solution again – the result of not fixing the problem is way too obvious – and cannot be repeated.
….
Now as to the document you cited,

WARNING - this response is not a 5 word simple response. If you don’t want to read DETAILED reasons why US’ proposal doesn’t work, hit the back button… but don’t complain or berate me if you think it is too long.
1. The author jumped right on the bandwagon to validate that his prediction that AA would not emerge as a standalone is true… so not surprising that he still doesn’t want to believe that they can – and is happy to see US try to move a step closer. Let’s face it – none of us are bystanders w/o an opinion – I don’t know his biases – but anyone can crank out reasons to justify any position.
2. He says a couple things right off the bat that the creditors will certainly pick up on and so should anyone else that wants to intelligently evaluate US’ proposal.
- He acknowledges that AA has pretty well ceded its position in NYC to DL and UA. (NYC is absolutely critical in the future of the industry because it is the largest travel market in the country and has the highest amount of premium/contract traffic. AA was the largest carrier for years. Now, AA is #3 behind UA and DL – UA tapped into CO’s presence at EWR and combined it with UA’s at LGA and JFK which even though wasn’t large still covered the top business markets. DL already grew about 50% larger than AA and is now directly competitive with AA at LGA and JFK in almost all of the markets where AA previously had an advantage. US gave up any hops of being anything in NYC by getting rid of over 100 slot pairs per day – in exchange for gaining less than half that amount at DCA.) The combined AA-US in NYC will still be #3 in NYC.
- He also acknowledges that DL and UA will still be larger than AA/US to Europe including to continental Europe which is far larger than to LHR – and UA/CO now has a presence at LHR as large as AA has on its own metal. AA does not have any of its previous advantages in Europe anymore.
- He acknowledges that AA will have virtually no presence in Asia/Pacific and US can add nothing to it.
- He notes that AA now has and will continue to be the largest carrier in Latin America.
- Domestically, he notes that AA and US are strong in different regions of the eastern part of the US.
.
Now my discussion –
1. Revenue
Parker has thrown about revenue synergy numbers as the reason for justifying the validity of the merger… every merger SHOULD have them and AA/US would likely produce some.
YET –
DL and UA both gained their revenue synergies by combining the dominant position of one partner with the dominant position of another carrier in key regions… ie NW was already the largest US carrier to Japan, DL was in the eastern US – combined the two are stronger than before. CO was strong in NYC while UA was strong from ORD and California… together they are stronger in the key business regions… etc. UA became the dominant carrier in NYC and moved up from #4 in Latin America to #2 via CO’s strengths… DL moved from distant #3 to #2 in the Pacific, #1 in the Midwest.
AA/US will NOT be the dominant carrier in ANY region that either one of them is not dominant in right now and their relative positions won’t change. All the merger will do is strengthen AA where AA is already strong (Latin America) but US is NOT the dominant carrier on the east coast in any region and AA won’t change that. AA and US both are the strongest carriers in their HUBS – except for ORD – but revenue synergies come from creating a stronger position where neither had them before.
AA/US only combines AA and US’ weak positions IN DIFFERENT PARTS of the east coast – but doesn’t create a size necessary to be #1 or a very close tie for #1 – which is what DL and UA did with their mergers.
So, let’s look at Latin America where AA DOES have a distinct size advantage. Yet within a couple years, the US will have Open Skies in every key market – the ones where AA has had an advantage because of size gained from its Eastern Latin America acquisition and the subsequent growth…. But in a couple years, other carriers will be able to move into those markets, just as they have done in LHR where the new entrants – at the time CO, DL, NW, and US – gained slots equal to the size of what AA had at LHR before Open Skies occurred.
Latin America is also the smallest global region.
So, the revenue synergies that have been promised come from a relative position much smaller than what DL and UA gained in their mergers – and the one region where AA is dominant and would remain so through the merger (if it happened before Open Skies in Brazil/Colombia etc) would be immediately challenged by new entrants who would be able to add flights including in new markets such as MIA-Latin America. History shows that even though AA had the same advantage in NYC-London and partnered with BA, it still lost a huge amount of market share to its DL and UA who now offer NYC-LHR in corporate contracts, taking away the advantage AA once had.
Domestically, AA/US still has to compete with low fare carriers including WN who has a huge opportunity to grow its presence in Dallas as well as up and down the east coast.
The assumption is made by many that AA/US could codeshare with B6 and AS – yet it is all but certain that one will be bought by a competitor in an attempt to beef up their presence – and it is also very possible that AS or B6 might choose not to codeshare with AA/US based on the additional competition AA/US would create to their AS or B6’s own networks.
AA-US would not create the size necessary to compete effectively with DL and UA either on a nationwide basis or in the international arena.
The revenue synergies that Parker proposes AA/US would have are highly suspect.
…
So, the assumption is always made that AA is better off merging with someone –anyone – to gain enough size to compete – but that is not likely to be the case at all.
2. Cost… and the biggest reason why a merger might hurt AA long-term more than help is because a merger such as US is proposing comes by reducing a huge amount of the labor cost cuts that are necessary for AA to compete even as a smaller airline.
AA ‘s standalone plan contains deep cuts –about a $1 billion from labor - but they position AA such that they could compete even as a standalone – with costs comparable to DL’s and not far from where WN will be – and lower than UA’s. By wiping out half or more of the cuts that AA is proposing, AA would be far less capable of competing against DL or WN – its key lower cost competitors today – and would not have the size of the advantage relative to UA that it needs.
There is no way that US can say they will save 6000 jobs and increase salaries without dramatically increasing the costs that AA previously proposed – and in increasing the costs, also decreasing the combined airline’s ability to compete.
And remember that as FWAAA has noted many times, AA salaries are much higher than US’ – so either Parker keeps all three – or two depending on the workgroup – separate – or pays a very high price to obtain labor peace. That is exactly the problem UA is facing with its merger with CO – and it has yet to resolve it.
Just for contrast, DL has no labor premium left to pay for its merger – and AA people would be on par pay wise or receive pay raises. WN is paying for labor integration at FL – but it is also very rapidly redeploying FL’s assets to obtain revenues high enough to support the WN labor costs.
Remember that US does not have much if any cost advantage over DL who obtains far superior revenue to US all over the east coast other than in US hubs. Parker is proposing doing for AA/US what hasn’t worked for US alone – costs not low enough with revenues not strong enough.
Which brings us to:
3. Value US gives to the creditors
Remember that Parker said he would make the creditors whole in the DL takeover case – but the creditors decided to pursue a DL standalone plan. There remains no assurance that AMR’s creditors will believe a US takeover is in their best interests – and could very well decide that AMR’s standalone plan would be superior – and there is an even greater likelihood that another party – including DL could offer a superior proposal to US’ proposal.
…
US’ proposal likely won’t deliver the revenue premium Parker believes he can get and which DL and UA got from their mergers.
US’ proposal eliminates a lot of the cost cuts that AA mgmt proposed – and puts the combined airline at severe risk of not having low enough costs to effectively compete against larger and lower cost competitors.
In short, Parker is proposing the same formula he has used without viable long term success with US.
And finally it is quite likely that the creditors will realize the huge flaws that exist in Parker’s plan and will choose to continue with AMR’s standalone plan – or if forced to listen to alternatives to AMR’s standalone plan – will end up choosing another proposal that provides a better return and lower risk than what US proposes.
And AA labor may well decide that one of the competing plans are better than US.. but more likely is that AA will proceed with the 1113 process and AA labor will not be in a position to be bribed by reductions in job cuts – which is the primary motivation they have in supporting US’ proposal.
.
In other words, a AA-US merger is far from “in the bag”

 

[commavia]

Don't let anyone patronizingly shoot down your "little plan" (as a few particular individuals are so apt to do). At least to me, this seems like good news for AA employees, so I'm happy about it. This seems to give the most people the best shot at keeping the best possible jobs. That's great - good for the unions for finding an alternative. I, like many others, question exactly what this plan entails, and exactly how Parker plans to put together the airline, with labor costs somewhere between where AA and USAirways each are individually today, and make money. I would imagine that the plan he has laid out for the unions banks on the assumption that a larger, stronger airline can generate additional revenue, which can finance (relatively) higher labor costs. In the context of the experience at Delta and United, that seems like a reasonable assumption. I will be interested to learn more.

I am happy that the combined airline would retain the AA brand, and the DFW headquarters. But, I would be dishonest to say that I'm not a little concerned about certain aspects of this based on how Doug handled his last merger. If he eviscerates AAdvantage, tries to replace SABRE with the vastly inferior SHARES, and/or attempts to force certain inferior elements of the USAirways product/service offering onto AA's larger, more premium, network, that would be disastrous for AA's customers, and thus ultimately its employees. If, however, this invigorates new life into the franchise, facilitates aggressive growth and happy employees, and leads to a leaner, stronger, more competitive airline with a great network, and great service, then I'm all for it.

The combined network would be quite impressive. AA will be either the leader or near-leader in all four of the largest northeast business markets (BOS/NYC/PHL/WAS), have a perfectly-situated north-south hub in CLT, the crown jewel that is MIA, remain the 800 lb gorilla at DFW, finally have an opportunity to match the right fleet with a stronger franchise at ORD, and optimize each of JFK/PHL and LAX/PHX for international/domestic connections, respectively. The new AA would be a powerhouse, which is of course why the Delta acolytes are so afraid - they recognize the writing on the wall: Delta would go from being the dominant force in many east coast markets, competing against perennially weak and under-networked USAirways, to going up against a far larger, far stronger new AA with a massive franchise along the east coast. So much for all those "the U.S. really can only support Delta, United, Southwest and some smaller guys" talk ...

As a "management stooge," I continue to wish things hadn't turned out this way. It is ironic that many of the items the AA unions were willing to give to Parker in two weeks were things they refused to put on the table with AA for five years. Nonetheless, it took both sides - of course - to get to this point. Mutual mistrust, mutual hatred, and mutually assured destruction are all just that: mutual. As I have been saying for nearly a decade, both management and labor at AMR both deserve "blame" for not realistically and honestly dealing with the company's situation and with each other, but also deserve enormous credit for what they have gotten right in the last ten years. Staving off bankruptcy for years past when all of AMR's competitors succumbed to insolvency, all while continuing to offer a strong product and service, and fund pensions, etc., really was remarkable and an achievement that all sides should be proud of, and that is (unfortunately) often overlooked.

Nonetheless, all of that being said, I hope that perhaps now things can begin to move on. Perhaps people can begin to move past the inequities and injustices of the past, and put the pain and suffering of the last decade (since 9/11) behind them.

 

[Mach85ER]

World,

The AA pilots aren't going to accept anything close to the 1113C sheet. They will walk out and force the hand on the possibility of liquidation. Horton's plan for the pilot group is a grotesque overreach far beyond what is needed for the airline to survive. AA is going to merge with USAirways no matter what. Horton is screaming bloody murder because he wants to do it after using the court to lock labor into contracts which are essentially worse than having no contract all.

Now figure that into your analysis and decison as to what provides a better return and future for American Airlines.

 

[WorldTraveler]

....
I would imagine that the plan he has laid out for the unions banks on the assumption that a larger, stronger airline can generate additional revenue, which can finance (relatively) higher labor costs. In the context of the experience at Delta and United, that seems like a reasonable assumption. I will be interested to learn more.

.....
The combined network would be quite impressive. AA will be either the leader or near-leader in all four of the largest northeast business markets (BOS/NYC/PHL/WAS), have a perfectly-situated north-south hub in CLT, the crown jewel that is MIA, remain the 800 lb gorilla at DFW, finally have an opportunity to match the right fleet with a stronger franchise at ORD, and optimize each of JFK/PHL and LAX/PHX for international/domestic connections, respectively. The new AA would be a powerhouse, which is of course why the Delta acolytes are so afraid - they recognize the writing on the wall: Delta would go from being the dominant force in many east coast markets, competing against perennially weak and under-networked USAirways, to going up against a far larger, far stronger new AA with a massive franchise along the east coast. So much for all those "the U.S. really can only support Delta, United, Southwest and some smaller guys" talk ...

except that US hasn't demonstrated AT ALL that it can generate revenue premiums of a size necessary to justify higher labor expenses - let alone eliminate the couple billion dollar gap between AA's profitability and what DL and UA are showing, even adjusted for their larger size.
.
And it is NOT true that AA will be near one in the top markets - AA/US will be a distant #4 in NYC to UA and DL, it will not be number one at all in the WAS region - only at DCA - and again you miss the fact that US would have to make AA's network work with US' existing DCA slots. They would be the #1 carrier at BOS, a market in which ALL network carriers have retreated to B6 - and there is no reason to believe that AA/US could compete effectively, esp. with HIGHER costs than DL - to whom AA's business plan proposes cost parity.
.
MIA is a great hub - but it is the principal hub to the smallest geographic region - and AA has a monopoly because no other US carrier can gain a foothold in the market because of restrictive air service treaties in Latin America - that will fall in the next couple years, making it very likely that AA will lose share in MIA-Latin America just as it did in NYC-London.
.
The best plan to ensure that AA emerges strong enough to compete against DL and UA and lower cost carriers such as WN which will still be larger in the US than AA/US is for AA to cut costs deep enough.
And there is no doubt that AA can invest in its product to compete with other carriers if it has overall costs low enough.

Mach,
the reality that AA labor has failed to grasp is that AA HAS the power in the BK process to impose the cuts it wants... they played a game of chicken w/ AA mgmt for years and AA is now right where every other airline was and they ended up getting what they wanted.
The creditors are not going to accept threats that labor will shut the place down in order to accept a deal that is not going to deliver what is needed.
Evidence is rather strong that the majority of employees WILL show up for work the day and week and month after cuts are made - even if they aren't happy. If the economy was a lot stronger, labor would have more power = but it isn't and they don't.
.
If labor does shut the AAirline done, then it will still come down to a competitive bidding process that will provide the greatest return to the creditors and it is doubtful that US could win that contest.

 

[FWAAA]

But, but, but . . . Doug Parker would be able to increase AA's revenues by a larger margin than AA's incompetent management can achieve.

AA's incompetent management just turned in one of the more impressive quarterly reports of any bankrupt airline, ever, demonstrating a PRASM increase of more than 10% year over year and growing total revenue by more than 9% year over year, all in its first full quarter under Ch 11 protection.

It will be interesting to see what Parker was able to do with US revenues in the first quarter and then see all the Parker-apologists making excuses if the US numbers aren't impressive.

 

[WorldTraveler]

US has posted monthly reports for RASM for the first quarter and they didn't break 10% in any month....
By simply keeping capacity flat, AA generated RASM increases stronger than what US is doing.

And keep in mind these are RASM increases - and US is still at a substantial deficit to AA, DL, and UA's RASM on an absolute basis - so if AA is growing RASM faster, the gap is increasing - which means that AA employees would be giving away even bigger shares of their revenue generating capacity in a merger.
.
US didn't report fuel costs but AA's fuel prices were quite impressive given that the amount of hedging they were able to do in BK was less than a year earlier.
It will be real interesting to see if US obtained any benefit on fuel prices w/o hedges in a quarter that saw a lot of fuel price volatility.

 

[Phoenix]

Here is the Flight Attendant Term Sheet:

Bridge Term Sheet Highlights

Early Out: APFA's proposal accepted

No Furloughs

Wage Increases: 2.5% on effective date. 1.5% annually
over next 5 years.

Retirement: Pension plan frozen. Replaced with a 401(k)
contribution.

• Current employees will receive automatic 401(k)
contributions for 5 years, with no match
requirement. Contribution levels as follows:
◦ 9.9% age 50 +
◦ 6.75% age 40 – 50
◦ 5.5% age 39 – below
◦ At the conclusion of the 5 year period, all FAs would
receive a 3% contribution with up to a 5.5%
match.

Active Health Benefits: Better than AA’s proposed plan
Retiree Health Benefits: Implementation of Voluntary
Employee Beneficiary Association (VEBA).

Bidding: Preferential Bidding System (PBS) with our input
Reserve:
• Incorporate earlier Reserve assignment notification
• Add AM/PM Ready Reserve shifts.
• Allow Reserve pick-up on days off to be paid on top of
guarantee.
• Current reserve rotation will be maintained.

Sequence Pay Protection: APFA proposal

Schedule Maximum:
• Minimum of seventy (70) credit hours and a maximum of
ninety (90) credit hours per bid period.

• Flex in the maximum line value by an annual amount of
twenty (20) hours, but in no case more than five (5)
hours during any given month.
Incentive Pay/Per Diem: Incentive pay eliminated. Per
diem rates increased to:
• Domestic: $2.00
• International: $2.20

International Override:
• $3.00 per hour for each international leg. Override for
deadhead, trip and duty rigs and trips “not flown”
consistent with CBA

Combined Domestic & International Operation

Current Duty Rigs Preserved

Expedited Negotiations for New Contract: Negotiations
for a market based contract will take place immediately
following a single-carrier certification. If an agreement
cannot be reached within 60 days of the certification the
matter will be submitted to final binding arbitration.

Maintain all other provisions in our current Contract
including:

Vacation accrual and pay
Current PVD'S
Sick hour use and current sick policy
Current Hotel language
ATC/ Code 59
Galley pay

Did I read correctly that this is an agreement to go to binding arbitration for a contract? Ie. no self help?