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On 4/21/2003 11:29:07 PM FA Mikey wrote:
Seek, but you may not find. Negotiating in good faith is something AA needs to work on. Prior to seeing a judge AA will be required thru 1113 to work out a fair deal. If given a choice of being screwed now or later, Why is so hard to understand someone wanting later?
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Because, Mikey, their "wanting later" is based upon the false assumption that bankruptcy will be a better deal.
The loan shark banks who will be loaning AA the money to get through bankruptcy have stated (yes, I know, according to the company they have stated... it's all the information we have, it's what we have to work with as a base assumption) that they will require AA to get concessions of $2.3 billion dollars from labor in order for AA to get the money it will need to operate during the Ch. 11 period. Those banks are like Bronner over at USAir for those of you following that situation. It's a very simple series of Reasoning and Critical Thinking arguments this places AA in:
"If we do not get $2.3 billion in concessions from labor, we do not get the money from the lenders."
"If we do not get the money from the lenders, this airline ceases to exist. (Chapter 7)"
Now, AA would rather avoid this chain of events. So they have come to the employees and said:
"We want to avoid having to take $2.3 billion in cuts from you guys. If we get $1.8 billion in cuts, we believe we can avoid bankruptcy."
The unions seem to be saying "No, we'd rather take our chances in bankruptcy."
Now, let's say AA files for bankruptcy and gets the DIP financing from the lenders. The company and the judge sit down with the DIP financiers (the loan sharks). The financiers say: "We need $2.3 billion in labor cuts to guarantee our investment." The judge says to the company: "Develop a set of cuts which will equal $2.3 billion." The company will then take those cuts to the union and say: "This is now what we need to survive." If the unions say "No" at that point (which you know they will), one of two things will happen, neither of them good.
1) The company will go back to the judge and say "We tried to negotiate, but the unions turned it down." The judge can then abrogate contracts, and impose new guidelines, to protect the investment of the DIP financiers.
2) The DIP financiers can pull their money and American dissolves as a company, everyone is put out of work, and the assets are sold off.
Now would someone please explain to me how $2.3 billion in cuts is better than $1.8 billion in cuts? Because that is the part of the argument "It would be better in bankruptcy." that I just don't get.
TANSTAAFL
