TWU negotiations.........what?

[Bob Owens]

Is it unusul? No, not for a company staring bankruptcy in the face.

The question was is it unusual for a 75 year old company that has long term leases for most of its facilities?

Yes, cash flow is critical, but AA's cash flow is not sufficient to service the debt and pay all the bills. That's why the company has continuously borrowed since 2003 and has sold additional stock since 2003 and has sold off non-core assets since 2003 - all in an attempt to raise cash.

Yes and they spent much of that money on new terminals, new computers, appliances, mods on aircraft and all sorts of other non-essential expenditures. They would add winglets to save fuel, big expense, down time on the aircraft, labor and the parts but not repair ground power units, a small expense, very little labor, no aircraft down time. So they would have these fancy winglets on a plane with the APU running all night. It would be like me paying for Solar Panels to save electrcity costs and then turning everything on and leaving it on. Like I've said, they've been burning the cash. From 2003 till somewhat recently AA was paying down their debts after 2003, not long ago it was much, much less than what they are quoting now, all of a sudden its $29billion? Wasnt it around $10 billion two years ago? IIRC we discussed how AA claimed they owed over $20 billion back in 2003 and you said they never owed that much, so do you really believe they owe $29 billion now? If so how much of that is tied to aircraft orders? Is this BK just a ploy so AA can buy new toys?

You have the same deficiencies as Mr Shotwell when it comes to balance sheets. If you bought a house for $150k and borrowed $100k, then your net worth is $50k (asset of $150k less the debt of $100k = $50k net worth). The total of your payments is $260 but that does not define your debt. The liability side of AMR's balance sheet does not include the total payments due on its debt - only the payoff balances, like the $100k debt on your house.

Perhaps a more clear example would be a lease, when the company enters into a long term lease the payments over the term of that lease are added to their liabilities. Sign a ten year lease for $10 million and you just added $100 million to what you owe. Even with the house example AA is in better shape than most of us were when we bought our homes, in my case my debt was double my gross revenues, AA's liabilities are only around 20% more than their annual revenues. If I had torn down my home, as AA did in JFK and MIA and built a new one my debts of course would be much higher, and my home is much older than either of those terminals were.

 

[TWU informer]

That was grasping

 

[FWAAA]

The question was is it unusual for a 75 year old company that has long term leases for most of its facilities?

Beats me; I'm not sure I understand the significance of the age of the company.

Yes and they spent much of that money on new terminals, new computers, appliances, mods on aircraft and all sorts of other non-essential expenditures. They would add winglets to save fuel, big expense, down time on the aircraft, labor and the parts but not repair ground power units, a small expense, very little labor, no aircraft down time. So they would have these fancy winglets on a plane with the APU running all night. It would be like me paying for Solar Panels to save electrcity costs and then turning everything on and leaving it on. Like I've said, they've been burning the cash. From 2003 till somewhat recently AA was paying down their debts after 2003, not long ago it was much, much less than what they are quoting now, all of a sudden its $29billion? Wasnt it around $10 billion two years ago? IIRC we discussed how AA claimed they owed over $20 billion back in 2003 and you said they never owed that much, so do you really believe they owe $29 billion now? If so how much of that is tied to aircraft orders? Is this BK just a ploy so AA can buy new toys?

I don't think AMR's Ch 11 case is a "ploy so AA can buy new toys," but bring that theory up in the negotiations and see how everyone responds.

The money spent on new terminals, etc. pales in comparison to the extra $30 billion AA spent on fuel since the concessions over and above the 2002 prices. Had fuel stayed at 2002 prices, AA's total fuel bill would have been about $20 billion from the concessions until now, but instead, the higher prices have caused AA to spend about $50 billion on fuel instead of the hoped-for $20 billion. That extra $30 billion is what bankrupted AA, not the ordinary investments you harp on.

About the bolded portion - the answer is NO, the debts were not a mere $10 billion just two years ago. "Net debt" was about $10 or $11 billion just two years ago, but net debt is comprised of total debt and certain leases minus cash on hand, and that figure was about $12 billion recently. The $29 billion is debt, liabilities and other obligations, including the pension underfunding. The 10-K has a nice summary of the assets and liabilities, and you can see the $29 billion on the 10-K and the most recent 10-Q.

Perhaps a more clear example would be a lease, when the company enters into a long term lease the payments over the term of that lease are added to their liabilities. Sign a ten year lease for $10 million and you just added $100 million to what you owe. Even with the house example AA is in better shape than most of us were when we bought our homes, in my case my debt was double my gross revenues, AA's liabilities are only around 20% more than their annual revenues. If I had torn down my home, as AA did in JFK and MIA and built a new one my debts of course would be much higher, and my home is much older than either of those terminals were.

Close - certain leases are valued at their present value, about seven times annual lease payments, so a $10 million annual rent would equate to a liability of about $70 million.

I don't know the terms of the leases at JFK or MIA, but I doubt the increase in annual rent was all that significant. Like I said, it pales in comparison to that $30 billion in extra, unexpected (in 2003) fuel expense from May 1, 2003 thru 12/31/11.

 

[Buck]

Beats me; I'm not sure I understand the significance of the age of the company.


I don't think AMR's Ch 11 case is a "ploy so AA can buy new toys," but bring that theory up in the negotiations and see how everyone responds.

The money spent on new terminals, etc. pales in comparison to the extra $30 billion AA spent on fuel since the concessions over and above the 2002 prices. Had fuel stayed at 2002 prices, AA's total fuel bill would have been about $20 billion from the concessions until now, but instead, the higher prices have caused AA to spend about $50 billion on fuel instead of the hoped-for $20 billion. That extra $30 billion is what bankrupted AA, not the ordinary investments you harp on.

About the bolded portion - the answer is NO, the debts were not a mere $10 billion just two years ago. "Net debt" was about $10 or $11 billion just two years ago, but net debt is comprised of total debt and certain leases minus cash on hand, and that figure was about $12 billion recently. The $29 billion is debt, liabilities and other obligations, including the pension underfunding. The 10-K has a nice summary of the assets and liabilities, and you can see the $29 billion on the 10-K and the most recent 10-Q.


Close - certain leases are valued at their present value, about seven times annual lease payments, so a $10 million annual rent would equate to a liability of about $70 million.

I don't know the terms of the leases at JFK or MIA, but I doubt the increase in annual rent was all that significant. Like I said, it pales in comparison to that $30 billion in extra, unexpected (in 2003) fuel expense from May 1, 2003 thru 12/31/11.

What you are saying is that the operating structure along with its cost has had a major financial impact on the and it's ability to negotiate fairly with the unions, correct?

 

[FWAAA]

Yes and they spent much of that money on new terminals . . .

Here's Ray Neidl saying that Delta's $1.2 billion JFK terminal renewal is long overdue:

“They are losing a certain amount of traffic because people dread that terminal,” said Ray Neidl, a Maxim Group LLC analyst. Delta’s Kennedy redo is “going to make them much more competitive out of New York. The payback is a no-brainer.”

http://www.bloomberg.com/news/2011-12-13/delta-air-chases-rivals-with-1-2-billion-upgrade-at-jfk-airport.html?cmpid=yhoo

Yet you insist that AA's 1999 decision to replace AA's dilapidated terminals was a waste of money. Wonder how much worse AA would be doing at JFK if it had not had the forsight to build the new T8? Whether you like it or not, it's given AA an advantage.

 

[TWU informer]

After reading the below "quoted" statement posted on a TWU Local website, these were my thoughts.

OK, I accept your diatribe as fact Mr. James C. Little, but I have a question of you.

Question:
After years of watching the corporations use the bankruptcy court to circumvent the Railway Labor Act, where is the all powerful AFL-CIO regarding the reversal of this injustice?

I mean you take millions from our paychecks to give to the AFL-CIO to protect our interest. When a non-affiliated independent Union steps on the property to attempt to correct the injustices that you bring to the table, you bring up the AFL-CIO as the organization that will save us from the bankruptcy types of injustice using the political system. You claim that going at it independently will lead to the exact travesty that is happening to us under the AFL-CIO umbrella. In other words Jim, your rhetoric doesn't match fact. Why can't organized labor and you in particular admit that the current AFL-CIO sytem of politics is failing us horribly? Why not dismantle that which does not work? The AFL-CIO is failing and wasting billions just as the management you scathe in your letter, yet you do nothing and I don't hear you sounding off about that.

Another interesting fact is that there are two non AFL-CIO unions on AA property, the APA and the APFA, and since the Chapter 11 filing by AMR, I see no evidence that those members are in any different position than we are with the TWU. Once you get done "fighting like hell" to save us, will you please admit the failues of the AFL-CIO and begin fighting like hell to remove that failure as the system workers rely upon for justice? The AFL-CIO is nothing more than an albatross taking money from our paychecks and failing to meet desired objectives. No different than the fat cats you are attacking in your letter. DO SOMETHING ABOUT THAT JIM!

TWU President Gives Wall Street Journal a Reality Check
December 13, 2011In a recent editorial, the Wall Street Journal blamed American Airlines’ unions and workers for the parent company’s bankruptcy filing. Last week, TWU President Jim Little set them straight.
In a letter to the paper published last week, President Little said,
The premise of your editorial “The AMR Union Warning” (Dec. 1) about AMR’s bankruptcy filing—that workers and unions are unwilling to address changing circumstances—is simply false.

In 2003, responding to industry challenges following 9/11, members of our union and other workers at American Airlines and American Eagle agreed to reduce our compensation by billions of dollars. These concessions, we reasoned, would help management put the business on a sustainable path.

We Transport Workers Union of America members lived up to our end of the bargain, actually boosting AMR’s bottom line by bringing in substantial new business due to the quality of our repair and maintenance work. But management failed to execute. It didn’t upgrade the fleet, missed merger opportunities and lost money year after year. While our members were living with reduced incomes, management rewarded its losing strategy by taking hundreds of millions in executive bonuses. Now it’s declared bankruptcy, while sitting on a $4 billion cash hoard.

If you’re wondering why people are fed up with Wall Street, it might be because we’re tired of seeing wealthy elites blame ordinary citizens for all the world’s financial problems. And we’re mad as hell that no matter what the problem, a reduced standard of living for the middle class is always offered as the solution.

James C. Little
International President
TWUA

Smoke and mirrors will not fool TWU members, and we will fight to make sure we aren’t forced to carry the entire burden of the excesses of the 1%.

TWU has retained the best bankruptcy counsel and economists available. The biggest problem TWU members face is the bankruptcy system itself. Airlines love Chapter 11 of the bankruptcy code because under the Railway Labor Act, employers have an obligation to maintain the “status quo” until they reach agreement, but Chapter 11 essentially gives them an opportunity that the RLA doesn’t—to reject the existing contract and implement new contract terms after a short period of good faith bargaining, as long as the court approves. Even though Congress tried back in the 1980s to protect workers by saying in the statue that contract modifications under bankruptcy have to be “necessary,” in New York, where AMR filed its bankruptcy petition, the federal court of appeals has defined that seemingly clear word quite broadly in favor of employers. What’s more, in a 2007 decision involving Northwest and AFA-CWA flight attendants, that same court held that workers covered by RLA could be stopped from striking after they voted to reject a tentative agreement, even though they rejected the agreement after the bankruptcy court had permitted management to reject the contract and impose new “interim” terms, which is not permitted under the RLA. Effectively, the appeals court found that even though management could use bankruptcy to short-circuit the RLA dispute resolution process, the workers still had to go through that lengthy process.

This is one of the reasons bankruptcy has become an accepted management strategy among struggling but still solvent legacy carriers, instead of a last resort accepted with a sense off shame by the rare carrier that has no other recourse

 

[Hopeful]

Yet you insist that AA's 1999 decision to replace AA's dilapidated terminals was a waste of money. Wonder how much worse AA would be doing at JFK if it had not had the forsight to build the new T8? Whether you like it or not, it's given AA an advantage.

I will say that as an employee, the old JFK terminals 8 & 9 were sickening and an embarassment and i got tired of seeing rats the size of cats in the tool box cage.
the problem is FWAAA, when employees are continually feeling the effects of concessions, spending billions on facilities and aircraft does not sit well with those who struggling with existing paychecks.
No salesman can make that pitch to any employee. As a passenger, of course, it has a positive effect...But don't expect employees to say that these investments will benefit the employee..

But I will post your response to this before you do,.... You will say that returning customers to AA thanks to facilitiy and fleet upgrades will be ample payback...Thus beneiftting employees as a result..

To that I say, wait a couple of months untill AA announces thousands of layoffs in BK.

Employees should get warm fuzzing feeling as they walk on those new terrazzo floors out the door for the last time!

 

[Buck]

I am not sure why the topic has change from negotiations to that of Terminal "This Old House", but what can customer complain about, instead of overhauled terminals, the company gave them laptops. Next under the guise of the "Passenger Rights Bill", AA will have to provide the whole cabin a laptop and the WI-FI while having a tarmac delay or face very serious repercussions.

 

[Overspeed]

The question was is it unusual for a 75 year old company that has long term leases for most of its facilities?



Yes and they spent much of that money on new terminals, new computers, appliances, mods on aircraft and all sorts of other non-essential expenditures. They would add winglets to save fuel, big expense, down time on the aircraft, labor and the parts but not repair ground power units, a small expense, very little labor, no aircraft down time. So they would have these fancy winglets on a plane with the APU running all night. It would be like me paying for Solar Panels to save electrcity costs and then turning everything on and leaving it on. Like I've said, they've been burning the cash. From 2003 till somewhat recently AA was paying down their debts after 2003, not long ago it was much, much less than what they are quoting now, all of a sudden its $29billion? Wasnt it around $10 billion two years ago? IIRC we discussed how AA claimed they owed over $20 billion back in 2003 and you said they never owed that much, so do you really believe they owe $29 billion now? If so how much of that is tied to aircraft orders? Is this BK just a ploy so AA can buy new toys?



Perhaps a more clear example would be a lease, when the company enters into a long term lease the payments over the term of that lease are added to their liabilities. Sign a ten year lease for $10 million and you just added $100 million to what you owe. Even with the house example AA is in better shape than most of us were when we bought our homes, in my case my debt was double my gross revenues, AA's liabilities are only around 20% more than their annual revenues. If I had torn down my home, as AA did in JFK and MIA and built a new one my debts of course would be much higher, and my home is much older than either of those terminals were.

Your arguments are circular and they make no sense. Everything you brought up has been soundly refuted. You don't listen to anything that does not agree with you.

Reinvestment in a business is critical. Look at CO for an example since you like to state how they make more money than us. One of Bethune's five lessons was, "Think “money in,” not “money out.” Companies that are headed for disaster try to cut costs, but that can sabotage the product, which lowers revenues more. Break the doom loop by apologizing for your mistakes and focus on delivering a better product." So what did he mean by that? He bought new planes, built new terminals, repainted and updated interiors of old planes. CO was consistently more profitable after that near death experience and two BKs. One of thing CO did as well that precipitated the turnaround, pay cuts, pay freeze, and outsourcing of maintenance. "My first assignment was to help Continental lower its maintenance costs and improve its dispatch reliability – in other words, figure out a way to fix planes that were breaking down when they needed to be flying. Drastic changes were made: within a year we had reduced the annual maintenance budget from $777 million to $495 million, and the airline jumped from worst to first in the in- dustry in dispatch reliability."

Your house argument still makes no sense. You bought it with a down payment according to you. You had equity from day so your net worth was more than your liability. Your debt was not due and payable over one year it was probably 30 years. So your liability was capitalized over 30 years not one year. You house is probably only worth $120K but the dirt and its location are worth probably a lot more, say $500K. The same thing exists for the new terminals that hep generate revenue. Is your house generating revenue? No.

I can't wait for you to dazzle the lawyers, creditors, and judge with your arguments. It will be pure shock and awe!

 

[Vortilon]

Your arguments are circular and they make no sense. Everything you brought up has been soundly refuted. You don't listen to anything that does not agree with you.

Reinvestment in a business is critical. Look at CO for an example since you like to state how they make more money than us. One of Bethune's five lessons was, "Think “money in,” not “money out.” Companies that are headed for disaster try to cut costs, but that can sabotage the product, which lowers revenues more. Break the doom loop by apologizing for your mistakes and focus on delivering a better product." So what did he mean by that? He bought new planes, built new terminals, repainted and updated interiors of old planes. CO was consistently more profitable after that near death experience and two BKs. One of thing CO did as well that precipitated the turnaround, pay cuts, pay freeze, and outsourcing of maintenance. "My first assignment was to help Continental lower its maintenance costs and improve its dispatch reliability – in other words, figure out a way to fix planes that were breaking down when they needed to be flying. Drastic changes were made: within a year we had reduced the annual maintenance budget from $777 million to $495 million, and the airline jumped from worst to first in the in- dustry in dispatch reliability."

Your house argument still makes no sense. You bought it with a down payment according to you. You had equity from day so your net worth was more than your liability. Your debt was not due and payable over one year it was probably 30 years. So your liability was capitalized over 30 years not one year. You house is probably only worth $120K but the dirt and its location are worth probably a lot more, say $500K. The same thing exists for the new terminals that hep generate revenue. Is your house generating revenue? No.

I can't wait for you to dazzle the lawyers, creditors, and judge with your arguments. It will be pure shock and awe!

Well, listen to Mr. Monday morning quarterback - the resident TWU cheerleader. Still ragging on Bob. At least with Bob, we know where his heart is on the issues regarding the AMTs at AA. Now; on the other hand, say we were to use some random TWU International type or someone like you - well now - that would be a different story. I've been listening to you TWU suck-boys for the last 25 plus years, and it's the same old story. You screwed us in 95, you really messed up in 03, and now you've got the gall to bust Bobs balls. Bobs got my support!

 

[Overspeed]

Well, listen to Mr. Monday morning quarterback - the resident TWU cheerleader. Still ragging on Bob. At least with Bob, we know where his heart is on the issues regarding the AMTs at AA. Now; on the other hand, say we were to use some random TWU International type or someone like you - well now - that would be a different story. I've been listening to you TWU suck-boys for the last 25 plus years, and it's the same old story. You screwed us in 95, you really messed up in 03, and now you've got the gall to bust Bobs balls. Bobs got my support!

Well I am crushed now.

Better to be an employed TWU suck boy than an unemployed AMFA suck boy at NWA, UA, and AS.

 

[787nightmare]

Well I am crushed now.

Better to be an employed TWU suck boy than an unemployed AMFA suck boy at NWA, UA, and AS.

Which says A LOT about you.
Btw, AS mechs are doing just fine with there 38/chg top out. And most UA,NWA (union men) have gone on to better gigs. Like I've said before, I'd PAY to see you say that #### to some of my exNWA friends faces up in SEA & elsewhere.

No doubt in my mind, you would've crossed the line at NWA, and here, if the TWU actually would've had the stones to strike. Unionized??.....what a Fn joke.

 

[Overspeed]

Which says A LOT about you.
Btw, AS mechs are doing just fine with there 38/chg top out. And most UA,NWA (union men) have gone on to better gigs. Like I've said before, I'd PAY to see you say that #### to some of my exNWA friends faces up in SEA & elsewhere.

No doubt in my mind, you would've crossed the line at NWA, and here, if the TWU actually would've had the stones to strike. Unionized??.....what a Fn joke.

Your making $38 how about the 600 that use to work at OAK for AS. Yeah out of work. Typical, I got mine.

Nope I would not have but being I work at AA I will say that I am smarter after seeing all those guys get their butts kicked by BK judges and work outsourced under weak scope language.

Yep we have three bases employing 5,000 mechanics and 1,000 OSMs and you have...and NWA has...and UA has...and WN has? Keep doing it the "association way". It's really working for you.

 

[787nightmare]

Your making $38 how about the 600 that use to work at OAK for AS. Yeah out of work. Typical, I got mine.

Nope I would not have but being I work at AA I will say that I am smarter after seeing all those guys get their butts kicked by BK judges and work outsourced under weak scope language.

Yep we have three bases employing 5,000 mechanics and 1,000 OSMs and you have...and NWA has...and UA has...and WN has? Keep doing it the "association way". It's really working for you.

Look fool...I'm working at the same place you are. And I've only been here for a few mos, but I've seen all I need to see. The AA mech & related is SO screwed with the TWU. Of course, AA has more mechs than everyone else(for now, going to change), they're the 2nd lowest paid mechanics in the industry, and highest number of OSMs performing a/p mech work at our bases-full blessing from TWU, of course. It's all going to come to a head soon enough, and I'll probably be furloughed. That's fine...I rolled the dice knowing full well this was a real possibility. I'll land on my feet.
AAs time has come. They too will be forced to play ball the way other carriers hands have been forced. Of course, the TWU will count on TULE to meekly accept whatever AMR executives deem acceptable in this deeply troubling time for the company. So long as the headcount is basically the same for uninterupted flow of dues money. Business as usual for the Totally Worthless Union. Not that the Intl boys will feel any of the pain...

And the NWA mechanics?... were allowed to vote whether to strike or not. Steenland wanted AMFA to strike. He had prepared for a yr and a half for the day the NW mechanics went out. But the NW mechs fully understanding they were about to be gutted one way or anther, walked and decided it's better to stand tall and live on your feet like real union men, than on your knees like the TWU boot licking, management suck asses. But you know all of this and are merely here to antagonize & torment the very ones that pay the dues.
I've never seen anything like it in my entire career...

Btw, many a "Association" has done just fine, ace...Allied Pilots Association, Assoc of Prof Flt Attend, Intl ASSOCIATION of Mach & Aerosp Workers,etc......rather idiotic statement now isn't it? :huh:

And yes you would've too..................I've got you nailed fool.

 

[enough already]

Well I am crushed now.

Better to be an employed TWU suck boy

And that about sums it up...