TWU gets 4.8% equity

[FWAAA]

So even though we make up around half the Unionized workers we only got around 20% of what was given to the unions. We paid roughly $2.2 billion for what may be worth $480 million. Once again, the worst deal.

Consistent with my postings for the past decade, you belong to the worst union on the property (if not the planet), and should never have entered Ch 11 with the TWU pretending to represent you.

On the newspaper's math, I'm confused: last year, the pilots got 13.5%, the TWU got 4.8% and the APFA got 3.0%. So how does that add up to 23.6%? I get 21.3%. Is my math poor or did someone negotiate for more?

 

[IORFA]

Probably the "independent" employees share. I.E. agents and such.

 

[FWAAA]

Probably the "independent" employees share. I.E. agents and such.

Ahh, thanks. I didn't even think of them. That makes sense.

 

[1AA]

American Airlines workers to get stake in company

By KYLE ARNOLD World Staff Writer

Nearly a quarter of the new American Airlines Group Inc. would be owned by employees of the company when AMR Corp. and US Airways Group Inc. merge later this year.

The stock ownership deal is bittersweet for many union employees, who have seen their pension packages dismantled or frozen during the Chapter 11 bankruptcy. Altogether, union groups would get a 21.3 percent stake in the emerged American Airlines.

[background=rgb(255, 255, 0)]The average mechanic at American Airlines could be entitled to more than $30,000 worth of American Airlines stock[/background], and about $142,000 on average could go to each pilot.

"Whatever the equity share is, it won't make up for the losses to our retirement plans," said Tom Hoban, a spokesman for the Allied Pilots Association. "Our contract is worth billions of dollars a year, and this only starts to make up for the concessions."

The biggest hits to workers come in the form of frozen pensions. Workers would no longer be able to accumulate retiree pension benefits but would get any compensation they earned through last summer.

The news came Tuesday as American Airlines filed its official plan of reorganization with the U.S. Bankruptcy Court of the Southern District of New York. The plan still needs court and creditor approval, but all creditors are expected to be paid in whole, thanks to the value created by the merger.

Union representatives for pilots, flight attendants and mechanics already have worked out agreements with the two airlines to give an equity share of the new company to their employee groups.

American Airlines employs about 6,500 people in Tulsa, mostly at the Tulsa Maintenance & Engineering Center. More than 5,000 of those workers are aircraft maintenance employees.

[background=#ffff00]According to court documents, the company is expected to be worth $10 billion to $11 billion[/background], and pilots under the Allied Pilots Association would hold a 13.5 percent stake, flight attendants would be given 3 percent and the Transport Workers Union, which represent maintenance workers, would get 4.8 percent.

American executives said non-union employees would get a 2.3 percent share of the new company. In another rare move, AMR shareholders would get a 3.5 percent stake.

[background=#ffff00]Employees are awaiting a decision from Judge Sean Lane over whether the company can terminate retiree medical benefits as part of the bankruptcy negotiations[/background].

"This was based on the concessions that we gave up in negotiations, and we gave up a lot," said John Hewitt, chairman of maintenance for Transport Workers Union Local 514 in Tulsa.

Hewitt said it hasn't been determined exactly how the equity share would be divided among mechanics.

Hewitt the painter will decide how much we get of the 4.8% of equity?
I see legal action coming soon if the TWU thinks they can get any portion of our equity.

 

[AMFAinMIAMI]

The key question that needs to be asked if we are to rcv stock is it common or prefered?

Most company prefered stock is not usually transferred or allowed to be sold on the open market. So if no other employee wanted your stock and you can't sell it back to the company at face value then what is it worth?

If its common stock then we could sell it and turn it into cash.

If its options we had them before and how did that work for us?

Stock is not cash, it's just paper, and if AA files again for Bk then that will be
just toilet paper.

Has the company said which type of stock?

 

[FWAAA]

Kyle Arnold's numbers are not accurate. He multiplied the union's percentage by the total value of the combined merged new AA (including the US portion), which is not correct. As a result, he has over-estimated the amounts that will be distributed per-employee.

AA's employees are entitled to their percentage of the AA 72% (US shareholders get the other 28%) of the combined merged new AA. The AA 72% will not be worth $10 billion to $11 billion. That's the assumed total value of the new AA, including the US 28% portion. At best, the AA portion will be worth perhaps $8 billion to $9 billion (the other $2 billion is the US 28% share).

Thus, the TWU members are entitled to 4.8% of, at best, $9 billion, or $432 million. When you split that between all the TWU mainline employees, it works out to somewhere in the $20k range each.

APA pilots might get almost $100k each, on average (but it's probably safe to assume that the unions will allocate the stock by the W-2 earnings, so widebody captains will get a lot more than narrowbody first officers.

 

[FWAAA]

The key question that needs to be asked if we are to rcv stock is it common or prefered?

Most company prefered stock is not usually transferred or allowed to be sold on the open market. So if no other employee wanted your stock and you can't sell it back to the company at face value then what is it worth?

If its common stock then we could sell it and turn it into cash.

If its options we had them before and how did that work for us?

Stock is not cash, it's just paper, and if AA files again for Bk then that will be
just toilet paper.

Has the company said which type of stock?

Doesn't matter whether it's common or preferred. The only restriction on sale in the plan of reorg (POR) is that the unions can't sell their claim to speculators BEFORE the POR is confirmed, so the unions will get the stock no matter what, and at that point, it can be sold.

AA doesn't care what the unions do with it - so the unions could sell it and distribute the money how they see fit or the unions could distribute the stock to their members, who could hold it or sell it.

 

[AMFAinMIAMI]

Doesn't matter whether it's common or preferred. The only restriction on sale in the plan of reorg (POR) is that the unions can't sell their claim to speculators BEFORE the POR is confirmed, so the unions will get the stock no matter what, and at that point, it can be sold.

AA doesn't care what the unions do with it - so the unions could sell it and distribute the money how they see fit or the unions could distribute the stock to their members, who could hold it or sell it.

FWAAA

It would matter if once the TWU distributes the stock to each employee.

If its prefered what ever restrictions AA has with its stock. Do you know for a fact that prefered AA stock can be traded or sold? Common stock the answer is "YES"

So it does matter.

 

[FWAAA]

FWAAA

It would matter if once the TWU distributes the stock to each employee.

If its prefered what ever restrictions AA has with its stock. Do you know for a fact that prefered AA stock can be traded or sold? Common stock the answer is "YES"

So it does matter.

From page 38 of the POR (page 54 of the .pdf):

1.229 TWU American Claim means the right to receive 4.8% of the Creditor New Common Stock Allocation granted to the TWU on behalf of the transport workers represented by the TWU pursuant to the order of the Bankruptcy Court entered on September 12, 2012 (ECF No. 4413), in satisfaction and full extinguishment of any and all claims, interests, causes, or demands that the TWU has or might arguably have, on behalf of itself and the transport workers represented by the TWU, as provided by such order; provided, however, that the TWU American Claim shall not include Claims asserted in any proofs of Claim filed in the Chapter 11 Cases by or on behalf of TWU-represented employees. For purposes of voting hereunder, the entire TWU American Claim shall be voted by the TWU on behalf of the transport workers represented by the TWU.

See the bolded part? Common stock.

From page 54 of the POR (page 70 of the .pdf):

TWU American Claim. The TWU shall receive, in full satisfaction of the TWU American Claim, shares of New Common Stock constituting 4.8% of the Creditor New Common Stock Allocation in accordance with the TWU American Section 1113 Agreement as follows: On the Initial Distribution Date, or as soon thereafter as reasonably practicable, the TWU shall receive its pro rata share of the Initial Labor Common Stock Allocation. On each Mandatory Conversion Date, or as soon thereafter as reasonably practicable, the TWU shall receive its pro rata share of the applicable Incremental Labor Common Stock Allocation. In connection with each Interim True-Up Distribution, the TWU shall receive its pro rata share of the distribution made on account of the American Labor Allocation pursuant to Section 7.4(a) hereof. In connection with the Final True-Up Distribution, the TWU shall receive its pro rata share of the distribution made on account of the American Labor Allocation pursuant to Section 7.4(B) hereof. The right of the TWU to receive any distribution on a Mandatory Conversion Date, an Interim Distribution Date, or a Final Distribution Date shall not be Transferable.

Common stock.

As an aside, preferred stock can be sold. Stock in a public company that can't be sold is very rare. Sometimes execs are given restricted stock that they can't sell for a period of time, but rank and file are rarely given stock they can't sell.

Even if the TWU leaders are too stupid to ensure that their new stock could be sold, the other more effective, more responsive, more intelligent unions (APA and APFA) would not be so stupid as to agree to stock that could not be sold. The claim can't be sold, but the stock will be transferrable.

 

[AANOTOK]

APA pilots might get almost $100k each, on average (but it's probably safe to assume that the unions will allocate the stock by the W-2 earnings, so widebody captains will get a lot more than narrowbody first officers.

Why would you assume (and safely I might add) that W-2 earnings will be the template on how the stock is allocated? Why would it not be allocated equally?

 

[Bob Owens]

From page 38 of the POR (page 54 of the .pdf):



See the bolded part? Common stock.

From page 54 of the POR (page 70 of the .pdf):



Common stock.

As an aside, preferred stock can be sold. Stock in a public company that can't be sold is very rare. Sometimes execs are given restricted stock that they can't sell for a period of time, but rank and file are rarely given stock they can't sell.

Even if the TWU leaders are too stupid to ensure that their new stock could be sold, the other more effective, more responsive, more intelligent unions (APA and APFA) would not be so stupid as to agree to stock that could not be sold. The claim can't be sold, but the stock will be transferrable.

Rarely?
We couldn't sell ours right away, UAL made you resign from the company before they could sell and didn't EAL also force their employees to hold onto their stock until it was worthless as well?

Not so rare in this industry, didn't Avis have a similar scheme?

I recall talking to a UAL mechanic who had obviously drank the cool aide. He claimed he loved the forced ESOP and that he was not just an employee but the owner and would retire a millionaire. I asked him if he could sell his stock, he said no, I told him that if he couldn't sell it, he didn't own it.

Wonder how he feels now?

 

[Bob Owens]

Why would you assume (and safely I might add) that W-2 earnings will be the template on how the stock is allocated? Why would it not be allocated equally?

Because the value of the sacrifice was not equal. Mechanics were hit harder than any other group. We ended up further behind our peers than any other group at AA. In addition to the cuts our concessions will allow the company to reduce our head count from 11500 before they filed to just 6325 by 2017, that alone would have more than covered the 20% but our union did not even try and get us credit for it, just like we did not get credit when we went from 18000 to 11500 with the 2003 concessions.

 

[Overspeed]

Why would you assume (and safely I might add) that W-2 earnings will be the template on how the stock is allocated? Why would it not be allocated equally?

The APA and APFA have put out their distribution plans. The APA seems pretty complicated while the APFA is basing their's on W2 earnings. No word from the TWU as of yet on their plans for distribution.

APA https://public.alliedpilots.org/apa/AboutAPA/APAPublicNews/tabid/843/ctl/ArticleView/mid/1983/articleId/2848/Equity-Distribution-APA-BOD-approved-eligibility-and-allocation.aspx


From APFA website: All FAs on the APFA/AA Seniority List as of August 19, 2012, with W-2 earnings as an American Airlines Flight Attendant between January 1, 2009, and August 31, 2012, will receive an allocation of the equity provided to APFA in settlement of its bankruptcy claim.

The reason this equity is being distributed as "retro pay" is because it is intended to compensate flight attendants that should have seen their average paycheck increase in the years since our current contract became amenable. Often when a new collective bargaining agreement is about to be reached after a prolonged period of negotiation, the union will seek a retroactive wage increase or “retro pay” to cover the time when the employees' wages had remained stagnant. Retro pay ensures that the employees won't be harmed by the delay in bargaining and the employer won't benefit from it. For example, if a union were able to achieve a 5% retroactive wage increase for the year preceding the signing of a new agreement and during that time an employee had earned $40,000, he or she would receive a check for $2,000 in retro pay ($40,000 x .05).

 

[AMFAinMIAMI]

Rarely?
We couldn't sell ours right away, UAL made you resign from the company before they could sell and didn't EAL also force their employees to hold onto their stock until it was worthless as well?

Not so rare in this industry, didn't Avis have a similar scheme?

I recall talking to a UAL mechanic who had obviously drank the cool aide. He claimed he loved the forced ESOP and that he was not just an employee but the owner and would retire a millionaire. I asked him if he could sell his stock, he said no, I told him that if he couldn't sell it, he didn't own it.

Wonder how he feels now?

Bob

At Eastern we could not sell the Prefered stock out side the company, only to another employee. Then they just took it off the market 3 days or so after they said they would give us $18.00 a share, but at the time it was given to us was worth $80.00 a share. I lost $22k in that rare deal.. I did sell me common stock though. What about our options here at AA they just did away with those since they filed for bk, since they were under the $5.00 value they were worth. Must of been another rare deal as well.

 

[FWAAA]

Rarely?
We couldn't sell ours right away, UAL made you resign from the company before they could sell and didn't EAL also force their employees to hold onto their stock until it was worthless as well?

I understand that you might not appreciate the difference, but the situations you brought up were completely different than AA's bankruptcy.

You didn't receive shares of common stock in 2003; AA distributed stock options which didn't vest immediately. Once the options vested (IIRC, one-third per year for three years), you could exercise the options and sell the stock. Incredibly, some employees didn't exercise their options even when the stock hit $41/sh in January, 2007.

The ESOPs at UAL, EAL, NWA and Pan Am did not represent payment of Ch 11 claims with new common stock - the employees of those airlines were duped into thinking that an ESOP made sense for them. ESOP participants cannot move in and out of the stock they hold.

As part of their bankruptcies several years ago, UA and DL distributed new stock to their employees which they were free to sell.

Not so rare in this industry, didn't Avis have a similar scheme?

I recall talking to a UAL mechanic who had obviously drank the cool aide. He claimed he loved the forced ESOP and that he was not just an employee but the owner and would retire a millionaire. I asked him if he could sell his stock, he said no, I told him that if he couldn't sell it, he didn't own it.

Wonder how he feels now?

All of the above were ESOPs, Bob. Even Avis. AA's unions are not participating in an ESOP.

AA's unions (and the nonunion employees) were granted a claim by AA management and the UCC for new common stock when AA exits bankruptcy. The three unions will receive distributions of new common stock which they can either sell or distribute to their members.