AA BK Decision Tues. 20th Sept.?

[WorldTraveler]

§ 1113 of the US BK code which provides for the rejection of collective bargaining agreements is a contested process to be used INSIDE Of BK.... You cannot use 1113 BEFORE BK (like what AA did in 2003) and it isn't a prepackaged BK if you have a number of major "loose-ends" of the reorg plan unfinished when filing.
AA's reorg plan completely depends on cuts from AA employees in order to turn the company around; they cannot predict what those costs will be without having new contracts in hand and the debtor cannot reject those contracts before they get to BK.
The 1113 process is relatively fast but it is not an overnight process and labor does have a chance to defend itself.
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The whole notion of AMR filing a pre-packaged BK is rather far-fetched. It is HIGHLY UNLIKELY that AMR could reach agreement w/ ALL of its creditors prior to a BK filing...
besides the majority of AMR's debt is secured debt which means they might be able to restructure it by pushing back the payment schedule (which they are able to and are doing now) but they aren't going to reduce the total level of debt.
It is also possible that AA's airport leases could be a major source of friction in BK... I would bet that AA still is paying lease payments on a number of pre-TW assets including at MCI and STL... those airports will expect to be compensated via claims in the reorg'd company for the unfulfilled parts of the leases AA probably wants to reject. LAX has been an issue for every airline BK and I expect they will be for AA as well if they file. I also wouldn't be surprised if AMR tries to modify aspects of its JFK facilities which could also get messy. And then you have the whole question of AA's maintenance facilities around the country.
The notion of a company the size of AA which must make pretty dramatic changes in its business model and obtain the savings from the changes it has already made make it very doubtful that AA can file a pre-packaged BK. Only if someone came in and rejected w/ agreement parts of AMR's current business which could be agreed upon and then took over the rest of the company (as AA did w/ TW) is it reasonable to think that a pre-packaged BK could be used.
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Others know more on the labor side, esp. w/ respect to Section 1113.

As for the USPS, what better time than for AA to walk away from revenue so they can show the judge how their revenue has fallen off and thus what they need from their employees to cover the losses. Also explains why AA is now hypercompetitive w/ low fare carriers in AA's key revenue markets... whether it stops LFC encroachment or not remains to be seen but at least AA can argue about the new revenue environment it faces... even though NO ONE can make money at $99 fares from DFW to the west coast or ORD to TX or BOS and those fares won't last any longer than it takes for those carriers to inflict damage on AA .

 

[eolesen]

If a pre-packaged filing is so far fetched, then I guess WT isn't on the list of people to check with from the Financial Times for quotes anymore. Maybe you need to call Ray Neidl and correct him....

http://www.ft.com/intl/cms/s/0/0ce9b2c6-ede3-11e0-a491-00144feab49a.html#axzz1ZpbChoFB

Ray Neidl, airline and aerospace analyst at Maxim Group in New York, said: “AMR needs to get its costs down in line with the rest of the industry. That is why I suggest a pre-packaged bankruptcy filing would be the best thing”.

HA negotiated with their unions consensually prior to their pre-pack filing. They agreed *not* to seek changes under S1113 unless as a measure of last resort.

There's no reason that one or more of the unions at AMR couldn't do the same.

 

[WorldTraveler]

HA negotiated with their unions consensually prior to their pre-pack filing. They agreed *not* to seek changes under S1113 unless as a measure of last resort.

There's no reason that one or more of the unions at AMR couldn't do the same.

bingo!
And if AMR's labor groups come to agreement, there is no need for a BK filing at all since labor cost cuts are about the only benefit AMR would gain from a BK filing.
Problem is, AA played that card once before and labor didn't like what happened... you know what they say about the chances of lightning striking twice in the same place.
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Why don't you give Ray a ring and ask him what other benefits he expects AMR could gain in a pre-packaged filing that it couldn't get concensually outside of BK... and go ahead and ask the chances that AA's labor will cave before another BK filing.
Maybe they will but if they do it will mean a whole lot of people here have wasted years of their lives telling us they wouldn't ever agree to more cuts unless the judge shoves it down their throats.

here are a few more of Ray's comments... :

"Southwest (LUV) proved they can work with the unions," says Neidl. Though AMR demonstrates that old-school "management versus labor" hostilities remain, companies that recently went through bankruptcy have a cleaner slate.


"Put Neidl in the camp of free marketeers who think the "invisible hand" should be allowed to work its magic in the airline industry. There are "one too many big airlines," he says, blithely addressing the potential elimination of 20-25% of the Big Airline pool. "Having three legacy carriers plus Southwest is more than enough competition."

"Neidl is hardly a table pounding bull on the legacy groups, but forced to choose between the non-AMR pool of the big boys, his favorite is Delta."

http://finance.yahoo.com/blogs/breakout/american-airlines-too-big-fail-155212722.html

 

[Frank Szabo]

bingo!
And if AMR's labor groups come to agreement, there is no need for a BK filing at all since labor cost cuts are about the only benefit AMR would gain from a BK filing.
Problem is, AA played that card once before and labor didn't like what happened... you know what they say about the chances of lightning striking twice in the same place.
... snip

... and there, boys and girls, is the crux of the problem.

We, labor, thanks to a pack of lies spread by the three unions in question and the company, gave the company back 30%+ of our compensation with the understanding it was to be used to make fundamental changes in the business so this nonsense would not rear its head in the future - instead, the turdlets in Centrepork wasted every dime we gave them and now they want more, not unlike governments at all levels are acting now because they'll have problems keeping their standards of living.

I gave at the "office" already, so to speak. That's not to say we'll end up giving back more eventually in one way or another but I'll be damned if I'll vote to give it to the bastards again after their previous track record of waste. Even though I'm not using the term in its proper context as originally it was the reply of King Leonidas' of Sparta to the Persian Army's demand they lay down their arms. King Leonidas' answer to the Persians was Molon Labe - "Come Take Them". The same with our pay and benefits - "Come Take Them". I'll not willingly give them a damned thing.

T-shirts, anyone?

Let them go through the motions and file their damned petition - put the lawyers on the steps waiting for a call from whoever makes the decisions. I've no idea why they haven't done so as of yet unless it's because the twu and other unions are fearful of having to face music of their own, something they've not had to do before, and are pleading for one last go-'round begging the troops to sacrifice AGAIN so they can stay employed in their offices in the new hall and offices we didn't want built. Another possible reason is the 'management' knows very well things will not be as rosy for them as some believe - poor babies.

It can be fixed as it is if Centrepork will start running the airline as though it were intended to make money rather than a a yearly write-off for the corporation and a bonus/pup payment generator for the executives.

Ooops - that would require a set of balls, wouldn't it? That would require telling the unions to go to hell and the corporate honchos start doing their respective jobs, wouldn't it? I doubt if the infestation has two 'nads to rub together. Obviously, all inhabitants of Centrepork's 6th floor squat to pee.

At least if there were a filing, the Centrepork infestation would feel a little pain - perhaps not much, but maybe just a little (no pun intended).

I don't expect common sense to return to the company as it's been set up to operate without same. One board member is worried about a football team and God knows where the rest are spending their time but it's rather obvious it's not doing their respective jobs.

 

[damajagua]

New bankruptcy date is January 9th.

 

[Buck]

New bankruptcy date is January 9th.

Is that when the union workers get their contracts?

 

[nbmcg01]

New bankruptcy date is January 9th.

And yet with the writing on the wall, you all aren't leaving for a "healthier" airline?

 

[IORFA]

Why leave now? If I stay and ride it till the end I can at least keep my pay, vacation seniority and sick time when I get put on the bottom of another airlines seniority list when they buy us. Either way I am still at the bottom. I might as well keep my pay! Remember that the esteemed congressman/woman from Missouri made it even more likely that I will end up with something a little better. So Thank You to them.

 

[TWskyliner]

Sounds like you already have your plan figured out. It's not an easy decision to make is it? Do you leave a life and place you know and love because "the writing is on the wall," or stay because you've worked hard, and believed that you can help turn things around, and from your limited viewpoint things seem to be doing just that. What do the religious folks say? "There but for the grace of God go I," or something like that.

 

[Mach85ER]

Why leave now? If I stay and ride it till the end I can at least keep my pay, vacation seniority and sick time when I get put on the bottom of another airlines seniority list when they buy us. Either way I am still at the bottom. I might as well keep my pay! Remember that the esteemed congressman/woman from Missouri made it even more likely that I will end up with something a little better. So Thank You to them.

Remember that is only if a purchaser takes more than 50 + 1% of the carrier. It's just Bid'ness'. CAL/UAL and DAL will figure out real quick how they can work the deal and crew each fraction of the surviving operation with 22 year old FA's and $6 plane cleaners, all non-union. Carve out the NYC slots and part the rest out, and it gets real ugly, real quick.

I see zero chance of another carrier eating our entire operation along with it's geratric workforce where everybody is at max vacation, max payscale and max sick benefit use.

 

[jimntx]

Or, other airlines may decide to just wait for the bitter end, and come to the estate sale--like they did with Eastern. None of the employees were taken. Of course, a number of them applied and were hired at AA, but I believe they started at AA as new hires, didn't they?

 

[IORFA]

Entirely possible, yet with the egos involved someone would want most if not all of us in bankruptcy. They wouldn't want the others to get anything worth having. On the subject of max out workforce, for the F/A's, it would be pretty easy to buy a lot of people out and hire tons of new blood. Just offer a decent amount of money to leave with enough advance notice to think about it and people would do it. Might get more than they think possible. Back to Jim, Yes any Eastern person at AA was hired as a new hire.

 

[Hopeful]

Or, other airlines may decide to just wait for the bitter end, and come to the estate sale--like they did with Eastern. None of the employees were taken. Of course, a number of them applied and were hired at AA, but I believe they started at AA as new hires, didn't they?

They did, as did the PanAm guys as well...
I would never-say-never about AA's demise....But I see differences from the Pan Am/Eastern's bitter end as to what is transpiring at AA.. Ch.11 is possible but there is no need for CH.7...
One way or another, AA will get what it wants.

 

[jimntx]

On the subject of max out workforce, for the F/A's, it would be pretty easy to buy a lot of people out and hire tons of new blood. Just offer a decent amount of money to leave with enough advance notice to think about it and people would do it. Might get more than they think possible.

There you go again...trying to apply logic to the situation! How many times to I have do tell you that using the word logic in any sentence about AA operations is a Rule 32 violation. It's the same as talkin' dirty.

I asked a member of upper management (at one of our town hall meetings) once why they didn't offer cash buyouts to the senior f/as--full pension (which they re going to have to pay sooner or later anyway) and retirement benefits (which they are going to have to offer anyway) plus some cash amount. I pointed out to him that retiring 1000 most senior f/as with a $25,000 cash buyout would pay for itself in less than two years just in salary savings alone--even if immediately replaced with new hires. His response was "We just don't have the cash to do that." A short time later they paid some big bonusses to that member of management and others. <_<