ALPA Agreement Now Invalid?

[OldpropGuy]

Is the ALPA agreement now invalid, as it was contingent on the other labor groups agreeing to meaningful participation in the Restructuring Program, now that the mechanics have voted NO?

 

[repeet]

I'm not a lawyer, but as a ten year shop steward I've been taught about contractial law.

The answer to your question is yes, and no. (See I told you I understand contractual law).

Yes, in that as long as the Mechanics and Related group doesn't "participate meaningfully", your contract allows your group to not participate also.

No, in that in bankruptcy, the judge has as much authority over your work rules as he does over the I.A.M.s. But because your group is "participating meaningfully", he is honoring the company's 1113 request to leave you alone.

So no, you don't have a contract by the legal definition. But yes, you still have to live by it.

Some things never change.

 

[oldiebutgoody]

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On 8/31/2002 3:18:52 PM

Is the ALPA agreement now invalid, as it was contingent on the other labor groups agreeing to meaningful participation in the Restructuring Program, now that the mechanics have voted NO?
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They'll participate....Just wait and see...

 

[chipmunn]

The ALPA agreement states that all stakeholders must take "meaningful" concessions ro the MEC can take action. This is subjective language, but in my opinion the MEC won't take any action against the company during this difficult period.

The ALPA MEC and its Legal Advisors and attorney's strongly recommended the pilots accept/obtain the S.1113 language.

Oldiebutgoody, I agree with you. I believe both the IAM-M and the CWA will reach accords before September 1o. There is to much at risk for the employees and the company.

On August 30 the Charlotte Observer said, "Getting labor concessions is crucial to US Airways because they trigger access to $425 million in cash (DIP financing). When US Airways filed for bankruptcy protection, several lenders, including Charlotte's Bank of America, agreed to lend the airline $500 million in four installments to help it operate. The lenders set milestones to trigger each installment. The airline received the first installment of $75 million on its first day of court. The second, $175 million, comes with IAM concessions. The third and fourth come after agreements with the CWA and other unions."

Without the IAM-M reaching a $154 million and CWA a $70 million giveback, the company will not have access to the DIP financing listed above and would likely be forced to liquidate as early as September 26.

Again, the hammer is not Dave Siegel, it's TPG, CSFB, BOA, & the ATSB. However, the judge will see the DIP agreement employee concession requirements and will make a choice: Either force the unions to accept contract changes or authorize the sale of US Airways' assets and the fragmentation/liquidation of the company.

Chip

 

[OldpropGuy]

Correct me if I am wrong. I understand that the IAM Mechanics can still seek self-help or strike, even after the judge imposes concessions to their contract, if they are not satisfied with the outcome. Of course that would probably lead to liquidation, etc. and be the end of U. I'm not so sure that they aren't bitter enough at the current situation to do that!

Is Dave willing to risk this by asking for even more drastic cuts?

 

[chipmunn]

If the judge imposes a contract, the union has two options: accept the terms or strike. If the union strikes the company has two options: liquidate or continue to operate with replacement workers.

Again, Siegel cannot agree to concessions that do not meet the target numbers because this would violate the DIP financing, emergence financing, and loan guarantee agreements. Siegel is not the hammer; it's the investors who want a cost structure that they believe is necessary to obtain a 7 percent ROI.

There are no options.

Chip

 

[OldpropGuy]

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Again, Siegel cannot agree to concessions that do not meet the target numbers because this would violate the DIP financing, emergence financing, and loan guarantee agreements. Siegel is not the hammer; it's the investors who want a cost structure that they believe is necessary to obtain a 7 percent ROI.

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Siegel may not appear to be the hammer, but his promise to seek even deeper concessions from employee groups without an agreement would seem to weaken that opinion.

This threat certainly doesn't do much to win the support of the opposition with their perception of the six million dollar management bonus, arrogant, still overpaid pilots, etc.