AMR Files 1133 motion

[Buck]

When is the company going to use the court to recover from the DFW storm and the lost revenue the labor cost associated with it?

 

[WorldTraveler]

it sounds a lotlike they may not be able to emerge as a stand a lone from they way the link above was describing. Im not saying a merger or anything like that, but AMR should have known that emerging from CH11 and having the debvt most likely due to its orders of Airbus andBoeing aircraft would not disappear but then again keep onoperating the MD-80 gas guzzzlers compared to Boeing andAirbus fuel efficient planes has to be taking a toll on them. The mgmt always says labor labor labor well what about mgmt taking their flippin pay down to $1.00 a day instead of labor labor labor

you'll recall that I have said for some time that the size of AA's debt load necessary to turn the company around would put them at a disadvantage to their peers - and now AA confirms that.
So, yes, AA employees are being asked to fund the turnaround which isn't terribly uncommon in BK but what is different is that no other carrier has embarked on a spending spree the size of what AA is doing as part of their turnaround plan.

 

[strikeforce]

you'll recall that I have said for some time that the size of AA's debt load necessary to turn the company around would put them at a disadvantage to their peers - and now AA confirms that.
So, yes, AA employees are being asked to fund the turnaround which isn't terribly uncommon in BK but what is different is that no other carrier has embarked on a spending spree the size of what AA is doing as part of their turnaround plan.

and, you'll recall that I've said all along that AA was mis-managed before ch. 11, now it's confirmed, they're mis-managed during the restructuring, and they will continue to mis-manage the place once they emerge. Again, nothing will change at AA except for my reduced pay, benefits, and retirement. Good job!

and, there's people still willing to jump thru hoops to save the airline! good for them....

 

[Buck]

and, you'll recall that I've said all along that AA was mis-managed before ch. 11, now it's confirmed, they're mis-managed during the restructuring, and they will continue to mis-manage the place once they emerge. Again, nothing will change at AA except for my reduced pay, benefits, and retirement. Good job!

and, there's people still willing to jump thru hoops to save the airline! good for them....

Or the TWU ?

 

[BoeingBoy]

here is the document referenced... it is always worth reading for yourself what the company is giving to the judge to read.

As well as remembering why the document was filed with the court. In this case, the purpose is to support the 1113 motions so it should be no surprise that it says AA will have difficulty restructuring if it doesn't get it's 1113 motions approved. In theory everything in these motions is factual, but there's plenty of presenting selected facts to make a case from all sides.

Jim

 

[Birdman]

In theory everything in these motions is factual, but there's plenty of presenting selected facts to make a case from all sides.

Jim

True, and hopefully they will include:
-The cost savings from the continued concessions from the 2003 contract beyond 2008 amendable date.
-The cost savings from the failed M&R t/a.

 

[Bob Owens]

That's not what the court ruled. The only part of the opinion that mentions "never existed" is in this portion of the concurring opinion:


Neither the majority opinion nor the concurring opinion said that abrogation means the contract "never existed."


Nope. The court didn't claim that the NW AFA FA contract never existed.

Prior to 1113, bankrupt airlines had summarily rejected labor agreements under section 365. Generally, bankruptcy law permits debtors to reject all executory contracts (except certain railroad labor agreements). Congress enacted section 1113 in an attempt to make it slightly tougher to reject labor agreements. Under the holding of the NW AFA appellate opinion, abrogation is not a unilateral action - and employees are not free to exercise self-help. Although there's some appeal to the notion that abrogation should permit the employees to strike, that would make it difficult (if not impossible) for a bankrupt airline to reduce its labor costs. Of course, affected employee groups would obviously prefer that bankrupt employers not be able to abrogate labor agreements, but other creditors would obviously prefer that everybody (including employees) share in the cost reductions.

Depends on which "court" you are talking about.
Gropper ruled that the AFA could strike because when he abrgoated the contract and NWA imposed new terms it amounted to "unilateral action in changing the status quo that in turn frees the employees to take jobs action", just as it did when Continental did the same thing in BK back in 1983. NWA didnt like the decision so they went to another court and got Judge Marrero to issue an injunction because he said that because they went through BK its as if the contract never existed so there is no Status quo to violate, the Appelate court disagreed with that reason for obvious reasons (and to save him embarrassment did not include details) but they decided to uphold the injunction on the strike by citing RLA and NLRA cases where injunctions were issued against strikes but none where a contract under the RLA was abrogated, new terms imposed and the workers enjoined from excercising self help.

What you failed to mention in your comment on creditors is that other than Labor no other creditor is forced to continue to provide their product under terms they did not agree to. If AA were to argue that their business plan, the one thats necissary for it to successfully reorganize, required that oil companies give them fuel at $2/gallon or that JFK only charge them $400 to land a 777 at JFK could the courts force them to continue to do business with AA under AA's terms? Sure your response may be that the workers can quit, however the Union is a collective of workers organized as one just as a corporation is a collective of investors acting as one, just as workers can quit if they dont like the court imposed terms shareholders of those corporations could sell the shares if they didnt like the imposed terms.

 

[Barfbag]

It's all about pricing..lowest airfares wins that it..

Any profits come out of the employees pockets.

There's nothing else left in this airline game anymore.

Passengers bid your jobs and contracts away on the internet every minute.

The winners are in the lifeboats, the employess stuck in steerage, on the ship TiTAANIC...

 

[Bob Owens]

As well as remembering why the document was filed with the court. In this case, the purpose is to support the 1113 motions so it should be no surprise that it says AA will have difficulty restructuring if it doesn't get it's 1113 motions approved. In theory everything in these motions is factual, but there's plenty of presenting selected facts to make a case from all sides.

Jim

Well some of it is not factual, such as their demand to take away another week of vacation. They claim it would put them in line with industry standards, Thats simply not factual, AA gives the least amount of vacation, for the first 30 years of employment TWU members get a week less than pretty much everyone else.. So for the first 30 years AA workers would get a total of 30 less weeks than their peers, so even if some carriers topped out at 25 days we would have to work 60 years before we would have recieved more vaction than our peers under current terms.

 

[BoeingBoy]

Should be simple to prove at the hearing then...

Jim

 

[Bob Owens]

Should be simple to prove at the hearing then...

Jim

if we ever get there.

 

[FWAAA]

Depends on which "court" you are talking about.

My post is a discussion of the Court of Appeals decision, so the word "court" in that post above refers exclusively to the Court of Appeals.

Gropper ruled that the AFA could strike because when he abrgoated the contract and NWA imposed new terms it amounted to "unilateral action in changing the status quo that in turn frees the employees to take jobs action", just as it did when Continental did the same thing in BK back in 1983. NWA didnt like the decision so they went to another court and got Judge Marrero to issue an injunction because he said that because they went through BK its as if the contract never existed so there is no Status quo to violate, the Appelate court disagreed with that reason for obvious reasons (and to save him embarrassment did not include details) but they decided to uphold the injunction on the strike by citing RLA and NLRA cases where injunctions were issued against strikes but none where a contract under the RLA was abrogated, new terms imposed and the workers enjoined from excercising self help.

You make it sound like NW went judge-shopping, but all they did was appeal Judge Gropper's denial of their injunction to the District Court, where Judge Marrero issued the injunction. Recall that the NW FAs also appealed the decision to abrogate to the District Court as well. Appeals from bankruptcy courts go to the District Court - so all NW did was appeal. The FAs then appealed that decision to the Court of Appeals.

What you failed to mention in your comment on creditors is that other than Labor no other creditor is forced to continue to provide their product under terms they did not agree to. If AA were to argue that their business plan, the one thats necissary for it to successfully reorganize, required that oil companies give them fuel at $2/gallon or that JFK only charge them $400 to land a 777 at JFK could the courts force them to continue to do business with AA under AA's terms? Sure your response may be that the workers can quit, however the Union is a collective of workers organized as one just as a corporation is a collective of investors acting as one, just as workers can quit if they dont like the court imposed terms shareholders of those corporations could sell the shares if they didnt like the imposed terms.

AA's labor agreements are analogous to a long-term agreement by AA to pay $4.50/gal for fuel when they're pretty sure the market price is more like $3.50/gal. Assume that AA then files a notice of rejection to that $4.50/gal long-term contract and the court approves the contract rejection. Is the now-mad fuel supplier permitted to picket AA's operations in an attempt to prevent AA from acquiring any fuel (can the fuel company attempt to disrupt AA's flights)? Of course not. The pissed-off fuel suppler is free to sell fuel to AA at the "abrogated" price of $3.50/gal or it is free to sell its fuel to someone else. But it won't be permitted to disrupt AA's operations just because it's pissed that it can no longer get $4.50/gal.

Sadly, AA's labor agreements are that $4.50/gal contract (except for M&R - I realize that the mechanics are the odd exception to AA's near industry-leading wages). So if the court abrogates the contracts, AA is free to impose its terms, which is the last offer made by AA to the unions. The court abrogates the contracts if the court finds the requirements of 1113 are met, which are essentially "either the labor costs are cut or the company would liquidate." I realize that you frequently advocate liquidation, but in bankruptcy, that decision is made by the debtor and the court, along with the unsecured creditors committee, not just the union representing mechanics. And yes, just like the fuel supplier, the pissed off mechanics are free to sell their labor to anyone they want. The only thing they can't do is exercise self-help in an attempt to force AA to meet their demands.

Let's be honest here. AA may be cruel, may be greedy, may be evil. But AA ain't stupid. AA knows that the wages and benefits under the term sheets are still high enough to get most of the employees to keep showing up for work. By definition, the market prices for the employees' labor. It's not in AA's interest to propose terms (or impose terms in 1113) that are beneath the minimum necessary to get enough workers to show up for work. Bottom line: Whether or not the contracts are abrogated, no employee is required to show up for work against their will. All remain free to pursue better opportunities. I realize that doesn't please you, but look at it this way: bankrupt companies can force their vendors to continue doing business under agreements very favorable to the debtor bankrupt company (imagine a long-term contract to supply airplanes at a very favorable price, like AA's Boeing prices). Boeing can't do anything about that favorable contract even though it might like to raise the price. Your M&R contract is favorable to AA, right? Don't you say that AA's getting a good deal on its maintenance? Be glad that AA can't physically force you to provide maintenance at your previously agreed-upon rates. You remain free to tell them "No" and sell your services to Southwest or UPS or FedEx. Boeing is stuck - it has to keep selling AA planes at cheap prices.

 

[Bob Owens]

My post is a discussion of the Court of Appeals decision, so the word "court" in that post above refers exclusively to the Court of Appeals.


You make it sound like NW went judge-shopping, but all they did was appeal Judge Gropper's denial of their injunction to the District Court, where Judge Marrero issued the injunction. Recall that the NW FAs also appealed the decision to abrogate to the District Court as well. Appeals from bankruptcy courts go to the District Court - so all NW did was appeal. The FAs then appealed that decision to the Court of Appeals.


AA's labor agreements are analogous to a long-term agreement by AA to pay $4.50/gal for fuel when they're pretty sure the market price is more like $3.50/gal. Assume that AA then files a notice of rejection to that $4.50/gal long-term contract and the court approves the contract rejection. Is the now-mad fuel supplier permitted to picket AA's operations in an attempt to prevent AA from acquiring any fuel (can the fuel company attempt to disrupt AA's flights)? Of course not. The pissed-off fuel suppler is free to sell fuel to AA at the "abrogated" price of $3.50/gal or it is free to sell its fuel to someone else. But it won't be permitted to disrupt AA's operations just because it's pissed that it can no longer get $4.50/gal.

Sadly, AA's labor agreements are that $4.50/gal contract (except for M&R - I realize that the mechanics are the odd exception to AA's near industry-leading wages). So if the court abrogates the contracts, AA is free to impose its terms, which is the last offer made by AA to the unions. The court abrogates the contracts if the court finds the requirements of 1113 are met, which are essentially "either the labor costs are cut or the company would liquidate." I realize that you frequently advocate liquidation, but in bankruptcy, that decision is made by the debtor and the court, along with the unsecured creditors committee, not just the union representing mechanics. And yes, just like the fuel supplier, the pissed off mechanics are free to sell their labor to anyone they want. The only thing they can't do is exercise self-help in an attempt to force AA to meet their demands.

Let's be honest here. AA may be cruel, may be greedy, may be evil. But AA ain't stupid. AA knows that the wages and benefits under the term sheets are still high enough to get most of the employees to keep showing up for work. By definition, the market prices for the employees' labor. It's not in AA's interest to propose terms (or impose terms in 1113) that are beneath the minimum necessary to get enough workers to show up for work. Bottom line: Whether or not the contracts are abrogated, no employee is required to show up for work against their will. All remain free to pursue better opportunities. I realize that doesn't please you, but look at it this way: bankrupt companies can force their vendors to continue doing business under agreements very favorable to the debtor bankrupt company (imagine a long-term contract to supply airplanes at a very favorable price, like AA's Boeing prices). Boeing can't do anything about that favorable contract even though it might like to raise the price. Your M&R contract is favorable to AA, right? Don't you say that AA's getting a good deal on its maintenance? Be glad that AA can't physically force you to provide maintenance at your previously agreed-upon rates. You remain free to tell them "No" and sell your services to Southwest or UPS or FedEx. Boeing is stuck - it has to keep selling AA planes at cheap prices.

Of course they went Judge shopping, why else would they file in NY instead of where their corporate headquarters are? just like AA. They file in the heart of Wall Street because the Judges there have a reputation of finding a way to give them whatever they want. Case in point the AFA-NWA decisions. Marerro made a dumb arguement so the appelate court essentially cited a bunch of bullshit and dressed up the decision to give the desired result. The message is clear "If you are a corporation and you want to screw over your workers dont worry about DC, come to Wall Street ". The fact is that Continental Pilots had already set the precedence back in 2003 when upon abrogation they struck. Our right to strike should not be subject to the strategies of the company at the time, we either have it or we dont. Under the RLA the only recognized way that terms can be imposed upon us and we could not strike would be if Congress, after consideration of all the parties, does so and Congress has never just taken the companies last offer and implemented it. To change that makes the courts a clear ally of the carrier against the interests of the workers, if thats the case then why should we obey the court if our needs are not given, never mind equal, but any consideration?
If the courts only allow us to strike when the company wants us to strike then its clear that striking is a right thats denied.

So you claim that the fuel supplier cant picket AA to get a higher rate, well thats not really true, recently when Cablevision and networks dissagreed they both took out ads and broadcast their position toi the public, which is pretty much the same thing. Workers at airports are severely restricted in their picketing activities at many airports. Often they are put a considerable distance away from the company such as a remote area near the parking lot. The fuel companies can excericise self help and simply refuse to sell their fuel to the company, they can direct their employees not to give AA any fuel, Unions can not direct their members to not give AA any labor. You break it down to individuals on the one hand and not the other. Like I said workers pool their labor leverage in unions just as investors pool their capital in corporations. So just as individual workers can quit and sell their labor somewhere else if they do not like the terms imposed on their Union investors can move their capital out of the company if they do not like the terms imposed on the company, and do so with more ease than someone selling their labor, a few clicks on a keyboard and its done.

Boeing is not being forced to supply planes at a price they did not agree to. They signed the contract and it was for a set number of planes, Boeing will not have to provide more planes than the contract stipulated at those prices. The Union never agreed to supply labor under the terms the court may allow the company to impose but the Union can be enjoined into telling their members not to coordinate any restrictions as far as supplying labor, thats what makes it different. AA will go to court if workers do not show up, even if we do that because they are imposing a deal we did not agree to. Show me where Boeing would have to supply more aircraft than the contract cites. Besides even if that did happen Boeing can make it up on the parts . Remember the $1000 toilet seats? Now if the courts were to tell Boeing to accept what ever AA wanted to pay now and that they must accept those terms then it would be the same.

Market rate has many definitions, clearly yours is just one of them. When it comes to regular working stiffs you say Market rate is the lowest price they can pay and get people to show up but when you talk about executives it becomes the rtaes that most executives get. So you even use two very different definitions of "Market Rates". Clearly with more MBAs than mechanics, more MBAs than any country in the world corporations could easily pay much much less to their executives than they do, but since its not in the best interests of the people making the decisions (generally other MBAs) the "Market Rtae" for executives remains much higher than the minimum needed to get people to show up for work. One more thing, getting people to show up and getting them to work are two completely different things.

To say I "advocate liquidation" is yet another one of your spins. I've made it clear that if AAs position is that it needs us to agree to a payscale that that is considerably lower than Market rates, in addition to outsourcing more than UAL, 4 sick days a year, less vacation, less holidays, the most costly medical and most deficient pension in order to not liquidate then we are better off to let them liquidate. Past experiences have shown that if a carrier is so weak that the only way they can compete is for their workers to subsidize them by accepoting less than Market rates that all workers, even those from the company the company that liquidates, fare better in the long run to allow liquidation rather than subsidize the failing operation and the sooner the better. Other companies expand their operations and pick up the assetts, as well as the workers and in less time than the proposed terms we would be at top rates at the other company.

 

[Hopeful]

rk are two completely different things.

To say I "advocate liquidation" is yet another one of your spins. I've made it clear that if AAs position is that it needs us to agree to a payscale that that is considerably lower than Market rates, in addition to outsourcing more than UAL, 4 sick days a year, less vacation, less holidays, the most costly medical and most deficient pension in order to not liquidate then we are better off to let them liquidate. Past experiences have shown that if a carrier is so weak that the only way they can compete is for their workers to subsidize them by accepoting less than Market rates that all workers, even those from the company the company that liquidates, fare better in the long run to allow liquidation rather than subsidize the failing operation and the sooner the better. Other companies expand their operations and pick up the assetts, as well as the workers and in less time than the proposed terms we would be at top rates at the other company.

Oh like Delta buying PANAM! Yea PanAM workers did well with that move...

 

[WorldTraveler]

Oh like Delta buying PANAM! Yea PanAM workers did well with that move...

Since Pan Am was carved up in pieces over a period of years, would you like to share with us how many employees UA hired from Pan Am since UA bought the Pacific operations and then a few years later the Latin America network as well?
DL bought the "inferior" continental Europe system and the Shuttle yet somehow still managed to hire 6600 employees.
.