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The Association of Professional Flight Attendants, which represents American Airlines flight attendants, filed objections Friday to American's request to hire Rothschild Inc., SkyWorks Capital LLC, and Perella Weinberg Partners LP.
Those three groups were among more than a dozen that American and parent AMR are seeking to engage to help it restructure in bankruptcy court. Their monthly fees combined would be $870,000, and they would get other fees as well after AMR exits bankruptcy court..
Here's some info from AMR's filings:
• Rothschild will act as financial advisor and investment banker. Costs: $200,000 a month; a $15 million "completion fee"; and "new capital fees" equal to 1 percent of any senior debt raised or 3 percent of any junior debt. Part of the capital fees will reduce the amount of the completion fee.
• Perella Weinberg Partners LP would be used as financial advisors, specifically "to provide labor-related restructuring advice, which includes reviewing and analyzing the strategic alternatives available to the Debtors with respect to its labor agreements, costs and negotiations and its pension and other post-retirement plans." Costs: $225,000 a month; restructuring fee of $6.5 million, minus half the monthly fees paid.
• SkyWorks Capital LLC would be hired as "aircraft restructuring advisor." Costs: $445,000 a month for the first 15 months, $100,000 a month after that. SkyWorks would also get a "gross transaction fee" of $4.5 million or 2 percent of any aircraft savings identified, whichever is less. That transaction fee would be reduced by the amount paid in monthly fees.
In its pleading, APFA protested that the fees were too high:
"The multi-layered fee structures under which the Debtors propose paying Rothschild and SkyWorks, in particular, are impermissibly excessive and without boundaries necessary for the Court to properly exercise its supervisory role.
"Moreover, they include fees that are made payable without court review even if the airline does not emerge from a successful Chapter 11 reorganization.
"The Debtors also improperly seek approval to pay Perella Weinberg a $6.5 Million fee without regard to the outcome of this case."
The union cited sections of bankruptcy that consider "fairness and justice" in the process.
Those elements "are of particular relevance to the pending motions: the Debtors seek approval of fees which are neither capped nor tied to a successful reorganization; they do so when their mainline Flight Attendants have given up more than $3 billion in concessions over the past eight years; these employees continue to sacrifice at least 30 percent of their collective bargaining agreement's value; and the Debtors have made clear that they want to make even deeper cuts to the employees' wages and benefits," the union's filing stated.
Among other things, APFA urged U.S. Bankruptcy Judge Sean Lane to rule that Rothschild and Perella Weinberg won't get completion fees unless American Airlines emerges as a successful airline, and that he not pre-approve any of the variable contingent fees of Rothschild and SkyWorks.
