US Airways Pilots' Labor Thread 7/14-7/21 NO PERSONAL REMARKS

[mach92flyr]

I guess I don't understand. US AIr in bankruptcy twice in 3 years, yet all the money is made in the East? AWA is outbid to buy ATA, yet AWA had no ability to get funding? Some of the claims defy reality. Perhaps this will refresh some faded memories:

US Airways warns it could be in liquidation by February 2005
Airline Industry Information, Sept 28, 2004

US Airways has said that it may have to liquidate in February 2005 if it is not granted the bankruptcy court's permission to impose a temporary 23% pay cut on its union workers.

The claim was made in a court filing asking for the pay cut to be granted by 14 October 2004. The airline said that without the reduction its cash reserves will drop so much by February 2005 that lenders would more than likely withdraw their financing which is keeping the airline running.

Company officials also said in the filing that the airline would now seek USD950m in permanent concessions from its unions, up from the USD800m it claimed it needed before it filed for bankruptcy, reports The Associated Press.

 

[BoeingBoy]

Nothing contained herein shall alter, change, or constitute a waiver of the rights of any party under the Railway Labor Act.

Since "herein" refers to the transition agreement, are you claiming that a Federal Judge doesn't have the power to overrule it?

Jim

 

[ussnark]

I guess I don't understand. US AIr in bankruptcy twice in 3 years, yet all the money is made in the East? AWA is outbid to buy ATA, yet AWA had no ability to get funding? Some of the claims defy reality. Perhaps this will refresh some faded memories:

US Airways warns it could be in liquidation by February 2005
Airline Industry Information, Sept 28, 2004

US Airways has said that it may have to liquidate in February 2005 if it is not granted the bankruptcy court's permission to impose a temporary 23% pay cut on its union workers.

The claim was made in a court filing asking for the pay cut to be granted by 14 October 2004. The airline said that without the reduction its cash reserves will drop so much by February 2005 that lenders would more than likely withdraw their financing which is keeping the airline running.

Company officials also said in the filing that the airline would now seek USD950m in permanent concessions from its unions, up from the USD800m it claimed it needed before it filed for bankruptcy, reports The Associated Press.

Such filings are marketing tools to:

1. convince the judge they have a "legitimate" reason to file and to take their case
2. set the bar for further union "negotiations"
3. play to the market to reset stock price so that the perceived stock value potential upside allows them to offer stock in lieu of cash.

That is not to say they are accurate or not. Just realize who the targets are and factor that in. Your own Glass admitted they did not have to go bk2 other than they felt they had the unions running and that they could get more from them.

 

[Hate2fly]

Since "herein" refers to the transition agreement, are you claiming that a Federal Judge doesn't have the power to overrule it?

Jim

Exactly!THE RAILWAY LABOR ACT – GOVERNING THE AIRLINE INDUSTRY©*

I. LABOR DISPUTES

The Railway Labor Act, as amended, 45 U.S.C. § 151 et seq. ("RLA" or "Act"), was enacted in 1926 to encourage collective bargaining by railroads and their employees in order to prevent wasteful strikes and interruptions of interstate commerce. It is the basic body of law defining employee/employer labor rights and duties. The Act was extended to encompass disputes between air carriers and their employees in 1936. 45 U.S.C. § 181.

The Act is designed to maintain uninterrupted transportation operations and imposes a duty upon the employer and the union to bargain in the event of a labor dispute. The statute mandates that carriers and unions must "exert every reasonable effort to make and maintain agreements concerning rates of pay, rules and working conditions, and to settle all disputes." 45 U.S.C. § 152.

The RLA declares it to be unlawful for any carrier to interfere in any way with the organization of its employees or to use the funds of the carrier to form a competing labor organization. It also provides that disputes between an employee or group of employees and a carrier or carriers growing out of grievances or the interpretation or application of collective bargaining by either party may be referred to a system board of adjustment which each carrier has a duty to establish.

There are two types of labor disputes under the RLA: major disputes or minor disputes.

The United States' Supreme Court has set forth the standard for differentiating between major and minor disputes.

[A] major dispute relates to disputes over the formation of collective agreements or efforts to secure them. They arise when there is no such agreement or where it is sought to change of terms of one . . . [A] minor dispute . . . contemplates the existence of a collective agreement already concluded or, at any rate, a situation in which no effort is made to bring about a formal change in terms or to create a new one. The dispute relates either to the meaning or proper application of a particular provision with reference to a specific situation or to an omitted case.[1]



If there is a major dispute, conduct by either party must be enjoined until the parties complete the mediation process prescribed by the statute. If the actions constitute a minor dispute, a federal district court has no authority to enter an injunction: exclusive jurisdiction over minor disputes is vested in the system board of adjustment, which procedure is mandatory and exclusive.
As one court has said, the dispute is major if the change being imposed is not contemplated or arguably covered by the collective bargaining agreement. It is a minor dispute where the position of one or both of the parties is expressly and arguably predicated on the terms of the agreement.[2]

 

[nic4us]

Serving as sole financial, restructuring and mergers and acquisitions advisor, as well as principal advisor for arranging private equity capital to US Airways, Seabury Group:

Arranged $641 million of new private equity provided by six separate investor groups:

I am still searching the Grand Canyon account of the west pilots to confirm that they in fact did acquire us in the east.

Well while you are searching ask yourself this question.

If seabury Group was USAirways sole financial and merger advisor, and they came up with only $641 million, ( a number some 60 million less than USAirways ATSB loan balance of $701 million at the time ) Who came up with the other $1.2 billion required to make the deal happen.

I am not saying that Parker, or AWA were soley responsible, only pointing out that by your own addmission, USAirways sole financial advisors only arranged for 2/5ths of the reported 1.5 billion required to make the merger happen and less than 1/3rd of the 1.8 billion that was actually raised.

I guess what I am saying is that if you are implying Seabury Group made the deal happen, you are probably correct, in that their contribution was necessary, however, they are some 1billion short of making it happen alone.

 

[cleardirect]

Exactly!THE RAILWAY LABOR ACT – GOVERNING THE AIRLINE INDUSTRY©*

I. LABOR DISPUTES


If there is a major dispute, conduct by either party must be enjoined until the parties complete the mediation process prescribed by the statute. If the actions constitute a minor dispute, a federal district court has no authority to enter an injunction: exclusive jurisdiction over minor disputes is vested in the system board of adjustment, which procedure is mandatory and exclusive.
As one court has said, the dispute is major if the change being imposed is not contemplated or arguably covered by the collective bargaining agreement. It is a minor dispute where the position of one or both of the parties is expressly and arguably predicated on the terms of the agreement.[2]

That is really nice and all. Have you been listening to Seham again?

What you and the usapa lawyers continue to miss, is that that has to do with dispute between. Pay attention here. The company and the union. That has nothing, zero, nada to do with disputes involving the union and the people that the union is suppose to represent.

Consider this. The MDA boys are suing ALPA in Federal court. Do you really believe that, that dispute should go to a system board populated by ALPA nation members to decide if ALPA is responsible for failing to represent the MDA boys correctly? Think about it.

Go ahead I will wait.

Now in our situation do you now believe that a usapa system board would or could settle this DFR suit fairly? Do you think that usapa might have a biased interest in the outcome? If not tell your MDA boys to drop the suit and ask for a system board instead. Let ALPA decide if they did anything wrong or not.

 

[Hate2fly]

Well while you are searching ask yourself this question.

If seabury Group was USAirways sole financial and merger advisor, and they came up with only $641 million, ( a number some 60 million less than USAirways ATSB loan balance of $701 million at the time ) Who came up with the other $1.2 billion required to make the deal happen.

I am not saying that Parker, or AWA were soley responsible, only pointing out that by your own addmission, USAirways sole financial advisors only arranged for 3/10ths of the reported 1.5 billion required to make the merger happen and less than 1/3rd of the 1.8 billion that was actually raised.

I guess what I am saying is that if you are implying Seabury Group made the deal happen, you are probably correct, in that their contribution was necessary, however, they are some 1billion short of making it happen alone.

Advised on a public equity offering of $164 million
Advised on a convertible notes offering of $125 million
Advised on supplier financing facilities, providing $705 million in cash

 

[Hate2fly]

That is really nice and all. Have you been listening to Seham again?

What you and the usapa lawyers continue to miss, is that that has to do with dispute between. Pay attention here. The company and the union. That has nothing, zero, nada to do with disputes involving the union and the people that the union is suppose to represent.

Consider this. The MDA boys are suing ALPA in Federal court. Do you really believe that, that dispute should go to a system board populated by ALPA nation members to decide if ALPA is responsible for failing to represent the MDA boys correctly? Think about it.

Go ahead I will wait.

Now in our situation do you now believe that a usapa system board would or could settle this DFR suit fairly? Do you think that usapa might have a biased interest in the outcome? If not tell your MDA boys to drop the suit and ask for a system board instead. Let ALPA decide if they did anything wrong or not.

Hey Clear,

Do me a favor lets wait until tomorrow! Lets see what strategy your Judge comes up with after his little meeting! He has too much skin in the game! Granath warned him before about the NMB lawyers parachuting into his court room. My money is on separate section 6 negotiations.

 

[BoeingBoy]

My money is on separate section 6 negotiations.

Hope you can afford to lose it. While I have no idea what the Judge will do, I know enough to understand that he can require single contract negotiations. Heck, even the transition agreement required that for awhile even though the West section 6 negotiations were due.

You might also want to be careful what you wish for. If East Section 6 talks start before West, it could be another DFR suit, or at least additional damages. If East Section 6 talks yield a better contract than West Section 6, possibly another DFR suit or additional damages.

Jim

 

[Hate2fly]

I guess I don't understand. US AIr in bankruptcy twice in 3 years, yet all the money is made in the East? AWA is outbid to buy ATA, yet AWA had no ability to get funding? Some of the claims defy reality. Perhaps this will refresh some faded memories:

US Airways warns it could be in liquidation by February 2005
Airline Industry Information, Sept 28, 2004

US Airways has said that it may have to liquidate in February 2005 if it is not granted the bankruptcy court's permission to impose a temporary 23% pay cut on its union workers.

The claim was made in a court filing asking for the pay cut to be granted by 14 October 2004. The airline said that without the reduction its cash reserves will drop so much by February 2005 that lenders would more than likely withdraw their financing which is keeping the airline running.

Company officials also said in the filing that the airline would now seek USD950m in permanent concessions from its unions, up from the USD800m it claimed it needed before it filed for bankruptcy, reports The Associated Press.

America West Airlines Inc. 10-Q For 06/30/05

Moreover, the terms of the government guaranteed loan restrict our ability to incur additional indebtedness or issue equity unless we use the proceeds of those transactions to repay the loan, require prepayment if our employee compensation costs exceed a certain threshold, require us to maintain a minimum cash balance of $100 million, and restrict our ability to take certain other actions, including mergers and acquisitions, investments and asset sales. As of the end of the second quarter of 2005, approximately one month after the merger agreement was executed, U.S. Air had almost four times the amount of cash on hand as did AWA ($557 million - $116 million), had an $11 million advantage in net operating income for the quarter ($41 million - $30 million), had over twice the number of available seat miles ("ASMs") (16.4 billion - 7.7 billion) and enjoyed significant advantages over AWA in Revenue/ASM (10.72¢ - 9.07¢) and Yield/Revenue Passenger Mile (14.11¢ - 10.25¢). Tr. 97-101; Local 545 Ex. 9 (Financial Condition Comparison, AWA and U.S. Air, June 30, 2005); see also Local 545 Exs. 1 and 10 (AWA’s SEC Form 10Q Report for Quarter Ending June 30, 2005).

 

[hp_fa]

I seem to recall seeing something on these forums at a point in time after the merger was announced that many of the actual expenses of US Airways were being attributed to America West for bookkeeping purposes. Does anyone know where that bit of history can be found?

 

[BoeingBoy]

Primarily in the quarterly filings, although it's buried in the various footnotes and expense itemizations. For example, HP went from paying nothing to AWH for the res system to paying US Group a significant sum for use of the res system while US Inc (mainline) had it's cost for the res system cut significantly.

Jim

 

[BoeingBoy]

America West Airlines Inc. 10-Q For 06/30/05

Would you also be so kind as to tell us all:

- How much of that $527 million in cash that US had on hand on 6/30/05 was devoted to cash collateral for the ATSB loan?

- What the cash burn rate for US was in the final months of BK2?

- How close US was on 8/31/05 to defaulting on the ATSB loan?

Jim

 

[cleardirect]

Hey Clear,

Do me a favor lets wait until tomorrow! Lets see what strategy your Judge comes up with after his little meeting! He has too much skin in the game! Granath warned him before about the NMB lawyers parachuting into his court room. My money is on separate section 6 negotiations.

Pretty bold of a losing lawyer to "warn" a judge. After reading the transcripts I would say that once again the Seham firm is out of their element.

But even if the judge finds out that he has to allow section 6. The west still has seniority so he could rule that usapa has to finish the west contract FIRST. Before moving on to the east contract.

Where is your money on the success of the adventure?

 

[nic4us]

America West Airlines Inc. 10-Q For 06/30/05

Moreover, the terms of the government guaranteed loan restrict our ability to incur additional indebtedness or issue equity unless we use the proceeds of those transactions to repay the loan, require prepayment if our employee compensation costs exceed a certain threshold, require us to maintain a minimum cash balance of $100 million, and restrict our ability to take certain other actions, including mergers and acquisitions, investments and asset sales. As of the end of the second quarter of 2005, approximately one month after the merger agreement was executed, U.S. Air had almost four times the amount of cash on hand as did AWA ($557 million - $116 million), had an $11 million advantage in net operating income for the quarter ($41 million - $30 million), had over twice the number of available seat miles ("ASMs") (16.4 billion - 7.7 billion) and enjoyed significant advantages over AWA in Revenue/ASM (10.72¢ - 9.07¢) and Yield/Revenue Passenger Mile (14.11¢ - 10.25¢). Tr. 97-101; Local 545 Ex. 9 (Financial Condition Comparison, AWA and U.S. Air, June 30, 2005); see also Local 545 Exs. 1 and 10 (AWA’s SEC Form 10Q Report for Quarter Ending June 30, 2005).

Hate2fly

This is post merger money, earlier you were discussing pre-merger money. but I would like to point out that although it had twice the ASMs, no upper management salary to pay, no corporate office rent, minimal reservation system fees, less of a tax burden, and lower paid pilots, east was only able to make 25% more than the West operation that was footing the bills.

If you would like to discuss pre-merger follow the money again, I would point out that the money for the merger went into a corporation named Barbell Acquisition. Barbell (i.e. the "money") mergered with and into America West Holdings, not USAirways. America West Holdings then mergered into USAirways in a reverse acquisition, thereby retaining control of the new company. If Seabury came up with all the money, why did it not simply go to their client USAirways? To say they "advised" on the other 1 billion is a stretch. Of course they advised, they advised their client to take this deal because as your man Lakefield said (paraphrase) "this is the best deal we could hope to get, and it is better than we could have expected".