The new fAAmily is feuding already!

[Jacobin777]

Jacobin,
Glad to shine the light on yet one more aspect of this merger.
We can debate about market size and strength or what labor will get or not get out of this merger, but above everything, no one should doubt that this merger is about one thing: a relative small but powerful group of people doing all they can to maximize their ability to recover their loans to AA and US.

US has repaid very little of the debt it came out of BK with. They have figured out how to run a very profitable airline but they are still deeply indebted and the debt repayments in 2014 represent obligations that have just been kicked down the road.

Those debts due in 2014 will be refinanced but they will be part of the new AA’s debt structure.
AMR has not “lost” much debt in BK either. They were heavily in debt going into BK and will be coming out as well.

Add on that new AA is engaging in an aggressive fleet renewal plan that will add debt far faster than it can be paid down, they will have pension obligations to pay that they didn’t plan on paying going into BK, and the merger itself will cost hundreds of millions of dollars, and the line of people looking for money from new AA is and will be very long.

New AA will be a deeply indebted company but the consolation is that UA is too. It is all the more frightening from a banker’s point of view that UA’s costs are the highest in the industry followed by AA’s – and new AA won’t move in that relative ranking. AA and UA are both competitive targets not only because their costs make it easy for competitors to win in the marketplace.

In contrast, AS, B6, DL, and WN all have lower costs AND lower debt levels and each is managing their business to not only limit additional debt but pay down what they already have. AA and UA are vulnerable financially to companies that can win in the marketplace and in the finance markets.

The bankers and finance people who are trying to maximize their own recovery from AA and US know full well that they might get what they want or be creating the best company with respect to the capacity to repay debt. But they are pragmatic enough to support what maximizes the possibility of debt repayment and no one should have any doubt that the merger is first and foremost about maximizing recovery for AA and US’ lenders.

 
Its not the debt itself which is problematic, its debt service which is the most important. If AA doesn't have a problem servicing its debt then it won't be a problem. For the blockbuster deal AA got with Boeing/Airbus (oh yah, courtesy of Tom Horton), they got incredible financing deals.
 
If Parker & Co. can't deliver on their promises, then servicing the debt might become a problem.
 

AA had a cost problem but has nearly completed a successful reorganization through chapter 11 to bring costs in line.

US on other hand HAS a revenue problem, largely a product of the markets they serve that are generally produce lower revenues (and lucrative premium O&D traffic) than AA's hubs, ie MIA.

US is profitable under a low revenue and low cost model. Put another way, 72% of the equity in the combined carrier is for legacy AA, remaining 28% for US. So at a time when AA is in the toilet, it is worth nearly 3x that of US at a (near) record high market capitalization.

Again I think all the proponents of this merger will quickly realize in 12-18 months what a disaster it is and the so called "synergies" will not materialize, certainly at the level DP and his team have been touting.

Josh

 
+1.
 

 
 
Learn to read the posts.

 
Learn to post properly. You didn't cite anyone.
 

Guess you havent seen US has been making record profits.
 
And AA is the #3 Airline in the US, and US Airways is #5, compare apples to apples not oranges.
 
And US has been out of bankruptcy for over eight years, cant say the same about AA, now can you?

 
Guess you haven't seen that US is making record profits by having industry-lagging pay. Why did Parker & Co. promise "instant pay raise" for US employees?

 

[700UW]

He did no such thing with the Flight Attendants, Mechanic and Related, CSA and RES or Fleet Service.

 

[blue collar]

700-
You keep deflecting how bad the US CBA is by talking about how bad the TWU CBA is- when it's known that BOTH are bad. You use the same answer for the dismal pay every time- US was in bankruptcy; but when asked about UAL- who was also in bankruptcy- you say it's a deflection. Just accept that the US CBA is nothing special, and move on from there. By trying to tout how good it is you make yourself and the IAM look weak.

 

[700UW]

UA may have better pay, yet they dont have the scope language, they dont do anything over a C-Check.
 
And UA has mechanics on layoff, and CO is hiring off the street and those jobs arent being offered to the laidoff PMUA AMTs.

They dont even have a JCBA and the IBT is giving work away without the membership even approving it.
 
No current legacy airline has filed for bankruptcy twice in less than two years, now have they?

 

[Thomas Paine]

.
 
The CO and UA mechanics are two separate groups working under two separate CBAs.
 
 

And both of those CBA's have much higher wages than those at US.

 

[700UW]

Because they didnt file chapter 11 twice in less than two years.
 
They might have higher pay, they dont have the jobs, the benefits, pension and scope language that US has, now do they?

 

[Justme]

He did no such thing with the Flight Attendants, Mechanic and Related, CSA and RES or Fleet Service.

or FCTIs

 

[Thomas Paine]

700-
You keep deflecting how bad the US CBA is by talking about how bad the TWU CBA is- when it's known that BOTH are bad. You use the same answer for the dismal pay every time- US was in bankruptcy; but when asked about UAL- who was also in bankruptcy- you say it's a deflection. Just accept that the US CBA is nothing special, and move on from there. By trying to tout how good it is you make yourself and the IAM look weak.

That's my concern, instead of citing how far behind the industry we both are he basically supports the idea of concessions for jobs, selling labor at below market rates so the union can collect more dues. He is no different than Jim little and Don Videtich, he deflects and claims that Unions are powerless and stands behind their dismal performance and then accuses others of deflecting when confronted with simple facts, his Justification for being at the bottom of the industry EIGHT YEARS AFTER EXITING BANKRUPTCY is basically that the TWU is doing worse in Bankrupcty than the IAM is doing EIGHT YEARS after? He ignores the fact that with the mid term wage adjustment that US will be the lowest paid and will be dragging down the pay at AA. He ignores that what the IAM is asking for is less than what they were making in 2002 and less than what UAL/CO mechanics turned down. all he does is make excuses for Parker and Buffy.
 
He sits here and blames the NMB for not granting them a release but the IAM has done nothing to pressure them and let them know they are serious. Why didn't the IAM demand mediation two years ago? Why did they wait two full years into negotiations before asking to be released? We don't want to hear how Jim Little and Don Videtich waited 4, they are gone, and that's one of the reasons they had to go. Saying they did worse is no reason to keep the IAM.

 

[Thomas Paine]

Because they didnt file chapter 11 twice in less than two years.
 
They might have higher pay, they dont have the jobs, the benefits, pension and scope language that US has, now do they?

No they stayed in 5 years instead. US management went in and got out quick, only to do it again. UAL went in and went back for seconds without ever leaving, and they still ended up better paid than US.

 

[700UW]

Its quite apparent you dont understand Section 6 negotiations and the process.
 
The IAM is working safe and have reiterated to the board that they want to be released.
 
Please explain how you can force the NMB to grant a release, since you know it all and would rather lay blame than to understand what has transpired.
 
And its only five years after the Transition Agreement was put in place.

 

[Kev3188]

So the masses are busy infighting...
 
 
Meanwhile the bosses laugh & laugh...

 

[Thomas Paine]

Its quite apparent you dont understand Section 6 negotiations and the process.
 
The IAM is working safe and have reiterated to the board that they want to be released.
 
Please explain how you can force the NMB to grant a release, since you know it all and would rather lay blame than to understand what has transpired.
 
And its only five years after the Transition Agreement was put in place.

So in other words three years after leaving Bankruptcy you guys agreed to another five year deal that left you below what you were making in 2002? Sure there were slight improvements over what you left bankruptcy with but by no means was it an industry leading contract.  Eight years after Bankruptcy you are still taking talks in stride, after sitting on the sidelines as management made deals with the AA unions to promote a merger while you guys continued to sit at the bottom of the industry, in the meantime you are working under an expired contract, I know AA worked even longer, but at least the TWU got rid of Little and Videtich. Eight years after Bankruptcy you still are working under a Bankruptcy contract, eight years later and your mechanics wages are still lower than in 2002.
 
Nobody even knows that US asked for a release. Did you guys even try picketing the NMB, asking the AFL-CIO for assistance and calling the Media? Yea your guys are working safe, that's why US is in court getting an injunction right? Didn't hear about that either.
 
So now the excuse is the merger with America West. So what does that mean? That we can expect the IAM, three years after AA exits Bankruptcy to be promoting yet another five (that turns into at least seven) year concessionary deal that would leave our compensation less in 2020  than we both were at in 2002? Enough excuses!!!!!! I understand the process, I understand it provides guys like you handy excuses for poor performance, we are all under the same rules, all have gone through BK now but you guys are way behind a lot of people that the same laws apply to.

 

[700UW]

Everyone at US knows they filed for a release, it's also been posted numerous times on the board. And yes the IAM has picketed in CLT, PHL, and PHX.

 

[737823]

So in other words three years after leaving Bankruptcy you guys agreed to another five year deal that left you below what you were making in 2002? Sure there were slight improvements over what you left bankruptcy with but by no means was it an industry leading contract.  Eight years after Bankruptcy you are still taking talks in stride, after sitting on the sidelines as management made deals with the AA unions to promote a merger while you guys continued to sit at the bottom of the industry, in the meantime you are working under an expired contract, I know AA worked even longer, but at least the TWU got rid of Little and Videtich. Eight years after Bankruptcy you still are working under a Bankruptcy contract, eight years later and your mechanics wages are still lower than in 2002.
 
Nobody even knows that US asked for a release. Did you guys even try picketing the NMB, asking the AFL-CIO for assistance and calling the Media? Yea your guys are working safe, that's why US is in court getting an injunction right? Didn't hear about that either.
 
So now the excuse is the merger with America West. So what does that mean? That we can expect the IAM, three years after AA exits Bankruptcy to be promoting yet another five (that turns into at least seven) year concessionary deal that would leave our compensation less in 2020  than we both were at in 2002? Enough excuses!!!!!! I understand the process, I understand it provides guys like you handy excuses for poor performance, we are all under the same rules, all have gone through BK now but you guys are way behind a lot of people that the same laws apply to.

Awesome post T-Paine.

Josh

 

[robbedagain]

i do recall over the summer iam members picketed at clt phx and i believe phl too   and i do know both iam groups did file for release back over the summer   its all up to the nmb  but chances are they wont  release the group    its the iam that has the best leverage at this point in the game...  we shall see what happens  even after tomorrow when aa visits their ch11 judge