US Airways Makes Case for Merger With American

[gabby]

AA has ~600 pilots who haven't accepted recall. Some of those who deferred are senior enough to be 767 captains. We did a "Stand in stead" furlough program where , if you were willing, you could take the furlough vs. the bottom guy. Some of our furloughed are at LCC. Given current firm orders and scheduled deliveries, those guys will be back. At least those who wish to come back will be back. I can't imagine a guy who is a SW captain now wanting to return..... Based on age 60, and firm orders it would be very safe to say they're bringing a job.

As for your "slotting position", how do you define the seats? We operate a good number of 4 man crew ops. There will be more when the rest of the firm ordered 777's and 787's start showing up. BTW, the 787's and all the 777's and 787's weight more and pay more than the couple of A330-3's you guys have... And, there will be 105 in that combined fleet based on firm orders (not including options, they're starting in a couple of months BTW).

So, do we start slotting the LCC guys (assuming for the sake of internet play in the event of a combination) around 1,000+ numbers down? ( I would say yes, and adjust further if AA employs a DAL style 2CA/4 man crew compliment). Side note: there are almost 800 F/O's on our 47-777 fleet right now.

I suppose you'd want to start right at the top with the belief that the A330 equals the 777. Oh yea, we've got close to 1200 CA's in the 767/757 fleet, and the majority of our 767's are -300's, AND pay a bunch more in all seats.. I suppose you'd want to start right at the top of that one too!

Shouldn't the AA pilots get stapled just like the TWA ones did?
Karma is a ####.

 

[Move2CLT]

Unfortunately for you East/West doesn't fall under M-B, while US AA does. Thank ALPA for that.

Spike

East/West does fall under Nicolau Award. Thank ALPA for that as well.

 

[USA320Pilot]

Swelbar Blog on a possible merger

Jim

After thinking about Swelbar's well written column there seems to be many more questions than answers. Why does Swelbar ask so many questions?

In my opinion, there are two major issues that Swelbar did not address.

One, what about the social issue? Tom Horton has repeatedly addressed his desire for AMR to remain independent, successfully independently restructure, and then possibly complete a corporate combination after they company emerges from it formal reorganization. Why? Most likely he wants to keep his job, AMR's management team wants to keep their jobs, and they want to run a major airline.

And two, will AMR's unions accept the company's drastic labor contract concessions (in some cases for example the pilots deeper than LOA 93 with a 1:4 trip rig and RJs paying Captain rates of $109/hour) or Doug Parker's apparent offers that would be less of cut? According to the WSJ, "US Airways could try to persuade the unions representing pilots, flight attendants, mechanics, airport ground workers and others, that the higher revenue the combined airline would generate could be shared with labor by way of less-drastic contract concessions than AMR is seeking."

Bill Swelbar is a bright man he he has been writing a number of columns that seem to argue against US Airways completing its attempt to acquire AA. But, I'm curious why Swelbar did not address the two points above and how will these two questions affect Doug Parker's plans?

Will a merger happen? Maybe, maybe not.

According to ATA SmartBrief, "US Airways is said to be briefing creditors of AMR Corp. on plans for a possible merger with American Airlines, sources say. US Airways would seek to create a merger plan before American's parent exits bankruptcy protection, a move that Allied Pilots Association spokesman Tom Hoban says may be welcome to allow labor unions to negotiate with new management."

Click here to read the story.

According to Bloomberg, "“The leverage pendulum has swung fairly decisively toward US Airways if the company should choose to come to AMR’s labor groups with alternatives to what’s probably going to be fairly draconian cuts,” said Wolfe Trahan’s Keay. “Creditors suddenly have a lot of leverage because of that conditional provision for exclusivity.”

Tom Hoban, a spokesman for the Allied Pilots Association, said that if the union couldn’t reach a consensual labor agreement with AMR as the carrier seeks to rework contracts, the group might be willing to work with new management brought in as the result of a merger.“We’ll consider all options on the table,” Hoban said in a March 21 interview. “Whether that means another suitor that’s capable of bargaining effectively, I don’t know. That scenario hasn’t presented itself yet.”

Click here to read the story.

Will a merger happen? Maybe, maybe not. But, social issues and the ability for labor to minimize their cuts seem to be two big issues, which Swelbar did not seem to address.

 

[USA320Pilot]

AMR filed for bankruptcy protection on November 30, 2011. After more than four months after filing for their formal reorganization why are AMR's labor negotiations proceeding so slowly?

Please see the story below.

AMR Labor Negotiations Update: March 30, 2012

American is now pursuing two parallel paths in its efforts to reach our necessary labor savings through the Section 1113 process. Our goal remains to meet these savings through consensual agreements with our unions. However, this week, American filed a Section 1113 motion to reject the current collective bargaining agreements with the Court, as provided for under Section 1113 of the bankruptcy code. Our hope is that the Court-supervised process will help facilitate agreements and allow the company to move forward with the restructuring process.

The company remained available to meet with APA throughout the week; some discussions were held on the remote satellite letter of agreement and a possible pension freeze. In addition, the company provided a presentation and demonstration on its manpower planning software. The company and APFA negotiating committees met only one day this week, however, discussions around Scheduling, Active and Retiree Medical continued.

We continue to make progress with the TWU and have narrowed many of the issues. Last night, the company presented proposals that made important moves toward the union, including outsourcing fewer TWU jobs. We committed to the TWU to provide a comprehensive proposal responding to all outstanding items by early next week and will continue to work through the weekend to meet that deadline.

Throughout the restructuring process, American Airlines has remained flexible and available and joined the TWU in many discussions, virtually daily. Both parties remain committed to reaching agreement, as demonstrated by the considerable progress made with many of the TWU workgroups.

American is ready to continue talks with all its unions to bring these important negotiations to a successful conclusion.

Click here to read the story.

 

[luvthe9]

East/West does fall under Nicolau Award. Thank ALPA for that as well.

How's it working?

 

[Move2CLT]

Ready and waiting for the merger.

How's LOA93?

 

[crazystnic]

You've got to be joking. While American's stand alone plan is a joke there is a huge difference between US Airways pre-merger and American in it's current condition. US Airways didn't have a snowballs chance in h@ll of avoiding liquidation if the America West merger had fallen through. Do some research, and I'm not talking about some Pennsylvania small town rag article, those furloughs were never coming back.

Bean

I don't belive that.. There was no labor dispute like EAL.. There was a cash crunch due to the credit card agreements...
There was too much money to be made by Airbus, GE, the insurance companies.. suppliers, etc...

It was going to get done either with or without AWA...

 

[fodase]

I don't belive that.. There was no labor dispute like EAL.. There was a cash crunch due to the credit card agreements...
There was too much money to be made by Airbus, GE, the insurance companies.. suppliers, etc...

It was going to get done either with or without AWA...

And the APA want DOH. Idiots.

 

[Beancounter]

I don't belive that.. There was no labor dispute like EAL.. There was a cash crunch due to the credit card agreements...
There was too much money to be made by Airbus, GE, the insurance companies.. suppliers, etc...

It was going to get done either with or without AWA...

I'm not saying that AWA would have survived long term without the merger. I just don't understand why you guys refuse to accept the fact of where you were at. Parker and McClellan had to move up the timing of the merger because a significant amount of creditors wanted to liquidate. Everyone seems to know where you were at, except you. Lack of Situational awareness? Remember Delta having that fare war, when they really couldn't afford to, they knew US was on death's doorstep and it wasn't going to take muck to push it over. They weren't pleased when AWA stepped in.

Bean

 

[FWAAA]

Shouldn't the AA pilots get stapled just like the TWA ones did?
Karma is a ####.

APA did not staple the ex-TWA pilots. Arbitration was used to integrate them fairly. Not unlike the attempt at LCC to integrate the US and HP pilots around the time of the 2005 merger. You're confusing the pilots with the flight attendants. The APFA (AA flight attendants) stapled the ex-TWA flight attendants.

 

[700UW]

I was at CCY during that time, GECAS and the ATSB were in control of the money and at no time did they threaten chapter 7.

I love how people speculate this, US even raised the money and proposed the merger, not HP and Parker.

 

[robbedagain]

700 was US remotely close to liquidating before the ATSB and secondly I thought AC was part of helping to turn US from liquidation or how did the whole process go?

 

[700UW]

If the ATSB didnt let US use the loan money as DIP it would have went out of business.

AC invested in the merger, not the Chapter 11 in exchange for the widebody work.

The ATSB loan was given to US after the first chapter 11.

Story

 

[BoeingBoy]

If the ATSB didnt let US use the loan money as DIP it would have went out of business.

Actually the ATSB agreed to lower the amount of cash collateral 2 or 3 times, and US was still on the verge of defaulting on the loan 27 days before the merger. Also, the ATSB didn't let US use the money as DIP financing.

AC invested in the merger, not the Chapter 11

As did all the other outside investors except Air Wisconsin, who provided DIP financing which was spent as fast as it came in. That's why I keep saying it doesn't matter who raised the money - the merger was what enabled it to be raised. No merger, no money. If Parker had said no, like everyone else did, US would have liquidated.

Jim

 

[BoeingBoy]

and RJs paying Captain rates of $109/hour)

As opposed to $102/hr for US - so who's got the short end of the stick? If you look at the term sheet for the APA, AA's proposed rates are higher than LOA 93 for all equipment, and worse than west rates for only the A319.

If Parker is going to offer the AA pilots better, and bring the US pilots up to the AA rates, he better have a mountain of money and a plan for financing it going forward...

Jim