American Airlines' Response

[eolesen]

They don't have to win a lawsuit. All they need is an injunction, effectively putting a gag order on Parker until the exclusivity period is over.

 

[Super FLUF]

They don't have to win a lawsuit. All they need is an injunction, effectively putting a gag order on Parker until the exclusivity period is over.

I believe the UCC can vote to end the period of exclusivity at any time, making the injunction moot.

 

[Mrs. McFly]

Add me to the "if it sounds too good to be true, it probably is" list.

I'll give US credit for having gotten a lot of support, but at the end of the day, who is going to finance the deal? There's a lot of assumptions on what the other six UCC constituencies have to say, but so far, nothing public that I'm aware of.

Someone I spoke to last week also brought up what I thought could be the next step in escalation: AA filing a lawsuit against US for tortious interference. Maybe Veritas or FWAAA could comment on that possibility....

Could this brokered deal or contract with also be considered a violation of US scope? Will it be considered a breach on the other side? Could get very messy.

 

[BoeingBoy]

I believe the UCC can vote to end the period of exclusivity at any time, making the injunction moot.

Not quite. The UCC can petition the court to shorten the extension already given, but there would then be a hearing where AA would have a chance to argue it's case. After that the judge could shorten the extension if he took the UCC's side. All meaning that it would take 6-8 weeks minimum before the extension was shortened.

Jim

 

[FWAAA]

I wonder if Mr Horton has selective hearing. Where he been? At work a very high percentage of the employees are not happy with the company proposals because they are not fair. We all want AA to be successful but the backbone to the strategy can not be at the employees expense. We gave the company big concessions in 2003 and management was not effective in restoring the airline back to profitability, will they do it this time or the third time? Sorry, but no confidence.

Yes, you gave one round of wage concessions in 2003. Nearly every other airline obtained multiple rounds of concessions and, in the case of US, two bankruptcies in quick succession. In 2003, AA merely cut wages but didn't tackle the more difficult part - productivity. The other airlines slashed wages and outsourced a lot of maintenance and fleet plus they obtained the productivity improvements from the flight crews. AA has shed jobs since 2003, roughly proportional to the reduction in fleet size from over 900 to just over 600 today. Unfortunately, it's now time to outsource (mostly affecting maintenance and fleet) and obtain those productivity improvements from pilots and FAs.

Actually, AA did return to profitability in 2006 and 2007 but the fuel price spike and the larger wage savings obtained by the competition in their bankruptcies did in AA.

Despite Doug Parker's desperate claims, AA's employees face two choices:

1. concessions that might bring AA back to where you and many other employees want to see AA - profitable and the industry leader; or

2. ultimately, liquidation and starting over.

Parker wants everyone to believe there's a third, more palatable choice: pay raises and merger with low-wage, barely profitable US, resulting in untold riches for all - enough to raise the low pay of US employees and to fund the raises of the AA employees. Plus enough money to reduce the job losses faced by AA employees. The numbers simply don't add up. Sure, the AA unions like the sound of Parker's proposals. Many AA employees hate currrent management with such a passion that they'd be happy to see Lorenzo, Icahn and Carty team up to offer an alternative to Horton and current management.

Add me to the "if it sounds too good to be true, it probably is" list.

I'll give US credit for having gotten a lot of support, but at the end of the day, who is going to finance the deal? There's a lot of assumptions on what the other six UCC constituencies have to say, but so far, nothing public that I'm aware of.

Someone I spoke to last week also brought up what I thought could be the next step in escalation: AA filing a lawsuit against US for tortious interference. Maybe Veritas or FWAAA could comment on that possibility....

Texaco learned an expensive lesson in meddling with the contracts of others. Generally, tortious interference claims arise out of interference with a contract or business expectancy. I've never heard of a tortious interference suit arising out a third party's attempt to disrupt incumbent management's Ch 11 reorganization, but that doesn't mean Jamail & Kolius (Joe Jamail's law firm) couldn't articulate such a claim. Management could claim that Parker and US have been making unaffordable promises to the unions and other creditors that might prevent AA's plan of reorg from obtaining a fair shake. Dunno if it would work, but Texas is one place I wouldn't want to interfere with someone else's contracts or business or perhaps bankruptcy proceedings - the potential for huge damages is there.

 

[777 fixer]

There's an old saying that often rings true - be careful what you wish for because you may get it.

US has had a number of different management teams, each greeted as though they walked on water. Scofield came up through the ranks and knew US inside and out, Wolf was going to make US a world class airline, "Just call me Dave" Siegel wanted to really run an airline and had experience, Lakefield had all his money connections, and then Parker wanted to really run a big airline. However, in all those cases the honeymoon was soon over and each was then considered the scum of the earth.


Jim

Reminds me of what someone who used to work for Eatern told me once. Frank Borman took over and everyone was happy. That did not last and then everybody's attitude was anyone but Borman. Well we all know who that anybody ended up being.

 

[Super FLUF]

All meaning that it would take 6-8 weeks minimum before the extension was shortened.

True, but it sound to me like all Horton is doing is prolonging the inevitable.

 

[eolesen]

Management could claim that Parker and US have been making unaffordable promises to the unions and other creditors that might prevent AA's plan of reorg from obtaining a fair shake.

There's that, and they could also perhaps claim that US's actions are interfering with the due-process for the bankruptcy proceedings.

The debtor is held to a fixed timeline for submitting a reorganization plan, which includes implementing changes within their control and by rejecting contracts.

US is in effect creating a serious diversion that will eventually force the debtor to stop focusing on the reorganization and deal with the distraction they are supposed to be free from during the exclusivity period.

If US isn't muzzled, I have to wonder if AMR might have a case to argue for extending exclusivity beyond the 2005 revision's limit of 18 months. The 18 months is there to protect the creditors from management prolonging the process. It wasn't intended to allow the creditors to preventing management from doing their job.

 

[BoeingBoy]

True, but it sound to me like all Horton is doing is prolonging the inevitable.

Depends on what "inevitable" you're talking about. If something doesn't change at AA, the "inevitable" is going out of business - 60-70 thousand jobs lost, no paychecks, etc. The question really is whether Parker can make good on the promises he's making. Can he take the two highest cost carriers in the industry - one barely profitable due to low labor cost, the other losing money like pouring water out of a bucket - pay everybody more, and produce a profitable company? Or does Parker promise too much and the "inevitable" is merely put off a year or two? That's what the AA unions and their members need to decide. I'd be the first to admit that the unions may have information about Parker's plan that isn't publicly available - all I've seen is some general comment about $1.5 billion in "synergies" with no indication of where it's coming from other than the obvious elimination of back office and headquarters duplication.

Jim

 

[Mach85ER]

FWAAA,

APA offered productivity before and after Chapter 11. the pilots were not that far out of line regarding pilots costs compared to our competitors (airlinefinancials.com) Over and over again we've heard it from AA and analysts and posters like you. APA recently offered our entire contract up of binding 3rd party arbitration and was turned down by AA. Our pension freeze along with our previous offered productivity gives put AA pilots well in line or below our competitors. With the retirements in a few years of older. higher cost employees, those pilot costs drop even lower.

That isn't good enough for Horton and AA. We get the equal 20% cut B.S. (Of course management is offering 15%), we also get a total gutting of code share more than other carriers, a total loss of E,F,G time so AA can run a ORD pilot to DFW, sit for 36 hours as a ready reserve, then send him back to ORD and pay him 6 hours over 3 days. A grotesque sick time of 60% pay for more than three absences in a year because some @#$hole in a cubilcle can't understand the regulatory issues of a pilot flying with what seems to be just the sniffles, disablility evaluation from a 3rd party vendor whose first question was to the AA side was "who is the FAA?", and on and on. We also have a continuation of a business plan that already has been proven a failure, something nearly every analyst agrees with. "Is that all you got Mr Arpey?". They also haven't even thought about how a labor intensive service company is supposed to expand and grow with a nest of pit viper employees, many who are locked into goverment ordered regulatory payscales like done by Castro and Chavez.

It's simple Aircon porn FWAAA. They are pumping for their ultimate wish list and just like their incompetence when it comes to their customers, they are incompetent when it comes to their employees.

 

[FWAAA]

Mach85ER: I don't disagree with you. My response was aimed at someone whose post read a little like "we gave as much as any other airlines' employees and we're not going to give again," which smacks of some of the "denial" that's been, well, rampant for the last several years. I'm not putting you in that group at all. I'm not equipped to argue the details of the APA negotiations with AA - only to point out to the nonbelievers that every other airline's employees suffered more under their multiple rounds of bankruptcy-era concessions than did AA's employees under the one round of 2003 concessions. The denial of that basic truth is widespread.

All of a sudden, the guy who pays his East narrowbody pilots $125/hr for the last several years (less than even nonunion B6) now claims he's going to raise your pay and not require as much from you as AA in the way of productivity gains. The same guy whose airline is under a credit card holdback (not experienced by AA) and the same guy who didn't increase first quarter unit revenue by more than 10% (like AA did - US did not). The same guy whose airline has paid, since its 2005 merger, several hundred million dollars more for fuel than it would have paid had it paid AA's price, in part because he's admitted that hedging is just too difficult (and when he did hedge, his performance was much worse than AA's).

 

[Mach85ER]

Thx for reply FWAAA.

It's understood by APA who and what Parker is. APA fully understands that it's members are making a concessionary deal with Parker that includes many productivity givebacks. There isn't any, "let's roll our Caddy up to the new hotel" and think it won't get reposessed (the pilot contract).

The feeling I got was that we will give up much to help keep AA as a going concern, we will be earning less and under similar productivity rules or worse than DAL/NWA and UAL/CAL even considering both are well into negotiatng new contracts. The difference is that there seems to be a plan that would compete in network size with DAL and UAL and we won't be gutted beyond what it takes for that plan to work.

Now if we can avoid ending up like Tessio in "The Godfather" because he made a smart business deal with Don Barzini (the other family), we might have a future.

 

[777 / 767 / 757 Love]

FWAAA,

APA offered productivity before and after Chapter 11. the pilots were not that far out of line regarding pilots costs compared to our competitors (airlinefinancials.com) Over and over again we've heard it from AA and analysts and posters like you. APA recently offered our entire contract up of binding 3rd party arbitration and was turned down by AA. Our pension freeze along with our previous offered productivity gives put AA pilots well in line or below our competitors. With the retirements in a few years of older. higher cost employees, those pilot costs drop even lower.

That isn't good enough for Horton and AA. We get the equal 20% cut B.S. (Of course management is offering 15%), we also get a total gutting of code share more than other carriers, a total loss of E,F,G time so AA can run a ORD pilot to DFW, sit for 36 hours as a ready reserve, then send him back to ORD and pay him 6 hours over 3 days. A grotesque sick time of 60% pay for more than three absences in a year because some @#$hole in a cubilcle can't understand the regulatory issues of a pilot flying with what seems to be just the sniffles, disablility evaluation from a 3rd party vendor whose first question was to the AA side was "who is the FAA?", and on and on. We also have a continuation of a business plan that already has been proven a failure, something nearly every analyst agrees with. "Is that all you got Mr Arpey?". They also haven't even thought about how a labor intensive service company is supposed to expand and grow with a nest of pit viper employees, many who are locked into goverment ordered regulatory payscales like done by Castro and Chavez.

It's simple Aircon porn FWAAA. They are pumping for their ultimate wish list and just like their incompetence when it comes to their customers, they are incompetent when it comes to their employees.

I'm no Union cheerleader, nor am I a Management cheerleader, but this description of the contract is DEAD ON.

-Killing SCOPE and increasing minimums up to 90hrs is not the things that I think REALLY pisses off the APA. Its this other crap that is mentioned above. Heck, increased minimums would allow guys to make more, even with pay cuts. I think there must be fewer on reserves, SCOPE must go and there must be some other adjustments.

-I also think a guy in who lives near PHL should not be able to commute to ORD or MIA for work. Some of these guys I see on the plane commuting look tired, out of shape and beat up before they even start their sequence......not good, and a safety hazard in my eyes. Almost every other job makes you live where you office is or within driving distance, so if I pilot doesn't like living near a base, quit and find a new job.

-Total loss of E,F,G time is RIDICULOUS unless pilots are protected from the exact scenario described by Mach85ER above.

-As far as the calling out sick provisions, that is clear retaliation for the "sick out" years ago.......and NO ONE better claim THAT DIDN'T happen, cause we all know it did. But, two wrongs don't make a right. So, I think when you have a pencil pusher decide when a pilot can fly, hats when the birds start dropping from the sky.....and that, would get EVERYONE'S attention.


Cheers,
777 / 767 / 757

 

[amtide]

Yes, you gave one round of wage concessions in 2003. Nearly every other airline obtained multiple rounds of concessions and, in the case of US, two bankruptcies in quick succession. In 2003, AA merely cut wages but didn't tackle the more difficult part - productivity. The other airlines slashed wages and outsourced a lot of maintenance and fleet plus they obtained the productivity improvements from the flight crews. AA has shed jobs since 2003, roughly proportional to the reduction in fleet size from over 900 to just over 600 today. Unfortunately, it's now time to outsource (mostly affecting maintenance and fleet) and obtain those productivity improvements from pilots and FAs.

Who is to blame for this? the employees? Management run the airline, they take credit for the success and should take responsibility for the failures also.
UA AMT wages during bankruptcy were comparable with AA and beside the pension other benefits were better. AA wants to take us below industry wages and benefits and there is the big problem. If AA wants better productivity they have to pay as the other airlines, that probably will mean lay off but I think is easier to be recall than to try to get the wages and benefits back. Just look at us now we are worst than in 2003 and the lay off people are back already.

 

[BonTemps]

I'm no Union cheerleader, nor am I a Management cheerleader, but this description of the contract is DEAD ON.

-I also think a guy in who lives near PHL should not be able to commute to ORD or MIA for work. Some of these guys I see on the plane commuting look tired, out of shape and beat up before they even start their sequence......not good, and a safety hazard in my eyes. Almost every other job makes you live where you office is or within driving distance, so if I pilot doesn't like living near a base, quit and find a new job.

AMEN!! Flight Attendants either...No one else in this business gets to just decide they want to live in city X while they work in city Y. And then get excused from absence points because they couldn't get to work because of flights cancelled or weather..or are nonrevving/commuting and all of a sudden are "deadheading"..isn't deadheading to or from base or a trip? Since when is there an AA base in Houston, Orlando, Birmhingham, AL, El Paso, etc??? Many employees try to do the commuting thing and they have to pick up and drop shifts and then if they don't make it..they are screwed.