Criteria for Rejection.
(1) The debtor must make a proposal to modify the CBA or obtain concessions from the union;
DONE put a check there
(2) The debtor’s proposal must be based on the most complete and reliable information available at the time the proposal is made;
Questionable, in that based on their information the companys proposal is not required for the company to achieve profitability, it may be necissary to achieve the level of profitability that the company seeks ($1.75 billion vs $3bilion) but is that the intended purpose of C-11?
(3) The proposal must be necessary to the debtor’s reorganization;
Once again, "Reorganization" must be defined, does it mean profitability to the extent they can avoid liquidation or any level of profitibility that the debtor seeks? , I asssumed that the intent of C-11 is that its employed as the only alternative to C-7 not to any arbitrary level of profitabilty, in this case 17%. If I'm wrong then is there really any reason fwhy a company would not file BK when doing so can give you such a huge advantage over competitors? Perhaps the Bankruptcy Court Judges in NY look to allow such usage as a means to provide job security for themselves?
(4) The proposal must treat fairly and equitably creditors, the debtor and all other affected parties; and
In the 2003 reorganization the company established the standard of fair and equitable as a measure that considers our standing among our peers, that was why management did not take the cuts union employees took, because the company determined that pay at AA lagged the industry for management. The same standard should apply now that we are at the bottom of the industry.
(5) The debtor must provide the union with relevant information as is necessary to evaluate the proposal.
After making a proposal and before the hearing:
(6) The debtor must meet at reasonable times with the union; and
(7) The debtor must negotiate in good faith with the union in an attempt to reach mutually satisfactory modifications of the CBA.
The companys standard reply during this process was "Thats our proposal." In other words take it or leave it.
After the above steps are satisfied, courts have the authority to grant a rejection motion only if:
(8) The union has refused to accept the debtor’s proposal without good cause; and
We have good cause for rejection;
The company proposal would lock is into concession for six years that are substandard to the rest of the industry in every measure.
The companys proposal is not required for the company to achieve even the highest level of profitability in the industry
We should not be required to agree to terms that are so drastic just so AA can achieve a level of profitability thats in excess of the other top seven carriers-combined.
(9) The balance of the equities clearly favors rejection of the CBA.
AA currently enjoys the lowest hourly average compensation rates for mechanics in the industry. The current contract includes even lower waged mechanics in the bases, which in talks the union was willing to expand, further reducing avergae hourly rate. In negotiations the Union was agreeable to freezing the pension, reducing costs, expanding the amount of outsoucing permitted to levels that competitors have, which may or may not reduce costs but its what the company sought, eliminating company paid retiree medical . Thes three items are the only substantial areas of the contract where AA did not have an advantage over most competitors. Currently TWU mechanics at all steps less than 30 years have one week less paid vacation, seven less paid sick days, five less paid Holidays and the rate paid to work the Holidays is at least half the rate paid at other carriers (1.5x vs 2x or 2.5X) In addition the company is demanding that current workers who are participants in the Retiree Medical Prefunding Trust agree to turn over half the value of the trust to the company and the 1114 committee. Active workers would likely lose as much as $50,000 that was intended to be set aside for these individuals to purchase alternate in the event of a Bankruptcy and termination of the Retiree Medical Plan. Clearly this demand is excessive, unprecidented in Bankruptcy settlements, which tend to grant some sort of equity or financial incentive instead of an additional financial penalty. During the course of negotiations the company representative even described the offer as "ridiculously bad". Clearly if the company describes the offer in such a way the workers have good cause for rejection .
One last thing you may want to consider before voting yes and denying rejecting the opportunity to even bring our story before the Judge, read this;
http://www.abiworld.org/committees/newsletters/pensionsbenefits/vol2num3/Decisions.html
"Judge Gropper’s decision makes clear that it is the terms of the last tentative agreement or if there is none, the debtor’s last proposal, that the debtor may impose."
So while you may be shown a side by side of what the company included with their motion, it is according to Sharon Leveine, what the company last offered that would be imposed, in other words the April 26 terms, not the March 22. So really they only reason to vote yes is that you want what you see for the next six years. If it gets voted down that the worst they can impose anyway but we could still negotiate.
If you look at the other agreements , from airlines that filed with much less than $4 billion and had much less ambitous plans as far as annual profits ($3billion), workers were at least given things to soften the financial impact of the concessions, in the NWA case they were given $182 million in unsecured claims, in UAL they were given Convertible Notes and shares of the new company, AA has offered none of that, in fact they want us to turn over half our Prefunding Trust for them to take to a committee that has no standing to claim any of those funds.
