How much is AA really asking from Maintenance?

Bob Owens

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Sep 9, 2002
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This week in court during the companys rebuttal their Lawyers and experts were comparing AAs Labor CASMS to competitors. Then they made a huge blunder as far as maintenance is concerned.
They claimed that AA had to get their labor CASMS at around the same as their competitors. Then they claimed that it was improper to include or factor in what competitors pay to Vendors who do work that used to be done in house. That they had to compare "Apples to Apples and Oranges to Oranges". They repeated it several times.

The company stated that they were seeking 20% across the board from all creditors.

The company has also stated in the past that none of the raises, 401k etc would be given in the Mar 22 ASK if the court allowed them to impose it.In other words they were increasing the concession. So in addition to punishing us for not ratifying their proposal by taking stuff off and increasing the "ASK" they are asking the court to allow them to:
Cut 4600 heads -thats a 40% reduction right there in Labor costs (apples to apples)
Eliminate the Pension-thats another 10% (remember they said no 401k Match Apples to apples)
Eliminate Retiree Medical-figure around 5%
Increase costs for Medical coverage-Figure another 5%
Eliminate System Protection(which would allow them to eliminate far more than 4600 heads)-anywhere from 0% to another 50%
In addition to scores of other changes.

So in reality how much are they really seeking from us? The numbers will be off a little due to compounding but these are roughly about right.
40% just in headcount
10% Pension
10% in benefits workrules etc.
So in reality the company is seeking to lower maintenance labor costs from the TWU by roughly 60%or more. Sure they may not net 60% in total savings after paying others to do what we used to do but thats still what we are being asked to give up. The same is not being asked of any other creditors. We are being asked to give up more than triple what anybody else is being asked give up. The value of the TWU contract would be cut by at least 60% not 20% and it could be much more than that.*


The company also testified that during previous bankruptcies it was not uncommon for workers to go from being" the top paid to at or near the bottom". I know of no cases where workers went from the bottom to a new, much deeper bottom.

To me those are just two "good reasons" to reject the companys terms. Its an unfair burden to tell mechanics that they need to give up 60% of the value of their contract in order to cut 20% off the companys total maintenance costs (based on their best guess "estimates") when we control what we charge for our labor not what vendors charge. They didnt tell the pilots they need to cut 20% of the cost for operating the aircraft, that would be absurd, its just as absurd for them to expect that from us.

If the company wants to match competitors labor CASMS to ours (Apples to Apples) and not factor in what they pay to vendors (Oranges) fine, but they cant turn around and say we need to cut our total costs by 20% and meet others Casms because the Oranges have an effect on the cost of Apples. If they were able to achieve a certain cost for Apples by substituting Oranges then that has to part of our recipie as well to achieve the same labor Casms.


* The company testified that A-320s maintenance be done at market rates and when speaking as to how they would expand regional service and right gauge the fleet they said they would replace MD-80s with large RJs and also described three ways of reaching their goal aquiring more regional feed;
1-Existing Aircraft and contracts in the market
2-Buy Aircraft and keep on the books
and;
3-Buy aircraft but keep them off the books and assign them to regional feed.

I read this as when the MD-80s go away we will not see A-320s being OH by TWU, As they go away more jobs go away, which explains why they want to get rid of System Protection even on the April 26th proposal.


Interestingly enough the company argued to introduce into evidence what they offered on April 26th, the Judge allowed it despite the fact on several occasions he admonished the Union that the only thing that mattered was the Mar 22 Term sheet. Dont bring up the past or the future. He didnt want to hear what happened in the past or how the terms would affect us going forward but he accepted into evidence for him to review what the company offered on April 26th. In a sense it was like the company was saying "let us punish them for not submitting". Throughout the hearing the Judge gave wide lattitude to the company but very little to the Unions. He allowed the company to do a little bit of propagandizing by giving an hour long dissertation about Allegheny-Mohawk and how the workers from the BK carrier in mergers get screwed as far as seniority, I guess there are two ways of reading this;

A) The Judge had his mind made up, he was just waiting for the company to say the right things so he could plug them into his written decision and grant the motion. It was clear that he only took notes when the company was speaking.
or

B) The Judge wanted to make sure that he gave the company every opportunity to say whatever they wanted to thwart any chance of an appeal by the company when he rules against the motion.

We were told that every case is different and that the odds for rejecting the companys motion are slim (although a Judge recently denied Hostess) but if granted we have a great case to present to the public to explain why we have resorted to lawlessness and left thousands of passengers stranded at airports across the country.
-Its only lawless when Airline workers do it, every other group is free to strike under similar conditions
-AA came into this with over $4 billion, AA isnt broke and they have 500 new airplnes on order
-We are at the bottom of the industry and they want to push us even lower-many people can relate to that.
-We offered to make changes on the terms where what we had was not what others had, but we needed it to go the other way around as well.
-The company admitted the proposal was "Riduculously bad"
-The company admitted that if they got what they wanted that AA would be a "Very Healthy Airline" (has such a thing ever existed?)
-AA is demanding $990 million from its unions not so it can survive or compete but because they are looking to make $3billion a year in profits. In other words if they left all our contracts as is they would still be the most profitable carrier ever under their secret BP.
This is corporate greed run amuck.

We will find out June 22. Well if it goes bad at least its good weather for walking a picket line!
 
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Bob Owens

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Sep 9, 2002
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What AA is trying to pull off is use select metrics that suit their objectives, They must think the Judge is dumb, or doesnt care. They dont want to be competative, they want to be invincable. They want to achieve lower labor CASMs not through outsourcing, which is how our competitors achieved it, which merely shifts the costs elsewhere on the balance sheet, they want to achieve it without the shift to vendor costs which would net them a much lower total CASM and they want to do it through cutting us down to nothing.

As the Company testified, "its not unusual to go from the top to at or near the bottom in BK" but nobody has gone from the bottom and given up another 60% plus.
 
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My take is that the company is just arrogant. They know full well the judge will grant their wish list. Anyone who believes we can get a fair shake from this or any judge is living in a land of unicorn farts and pixie dust. For the record I believe our case is strong and we were absolutely right in voting NO. I voted NO and will continue to do so until such time the company decides to show us the mutual respect that they preach.Just sayin`
 

olderguyAMT

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Jun 12, 2010
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My take is that the company is just arrogant. They know full well the judge will grant their wish list. Anyone who believes we can get a fair shake from this or any judge is living in a land of unicorn farts and pixie dust. For the record I believe our case is strong and we were absolutely right in voting NO. I voted NO and will continue to do so until such time the company decides to show us the mutual respect that they preach.Just sayin`

I am with you on this.
But, following your logic, the Judge Peck is there to help the Co. get its demands pushed through.
If that is true, I will vote with a big NO, once again.
Hope springs eternal, am hoping for some justice here.
 
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I believe Judge Peck is just part of the show. All smoke and mirrors.
 
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OgieJFK

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May 28, 2010
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Walmart Air, you are cleared to take off.Great post Bob. I think the judge just doesn't care. Kinda reminds me of the first judge in the movie the rainmaker.
 
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Frank Szabo

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Aug 21, 2010
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Broken Arrow, Okiehoma
I am with you on this.
But, following your logic, the Judge Peck is there to help the Co. get its demands pushed through.
If that is true, I will vote with a big NO, once again.
Hope springs eternal, am hoping for some justice here.
If you're really interested in justice, don't expect it from a judge/venue picked by shopping prior to AMR filing their Chapter 11 petition.
 

olderguyAMT

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Jun 12, 2010
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What is AA asking from us? 6 segma, Lean Manuf.,
Continuous Improvement. They all depend on employee engagement and empowerment.
So for those concepts to work, what would have to happen at AA with a pissed-off workforce?
Give mgmt their walking papers and replace Hortoon with old Herb from SouthWest Airlines.
 
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paul1

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Mar 11, 2010
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What ever happens I'm glad I voted NO!! If nothing else, look at are case our lawyers put forth before the court at least we have been heard! And don't forget the fricken me too clause, how can we lose?

I think are lawyers did a fine job, and I think AA has some real concerns about what came out in the trail.

Happy AMT Day!!!!!!!!!!!!!!!!!! B)
 

amtide

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Mar 5, 2012
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Looking at all this info I ask my self; How come is possible that Mr. Little put us to vote on this? And behind doors push for a yes or at least pray for it so they do not have to spend money in lawyers.

Wake up, TWU does not look for our best interest. I voted NO and will again and again until we get a fair deal.

We need to get rid of TWU now.

Thanks, Bob
 
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Boomer

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Aug 20, 2002
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"...Interestingly enough the company argued to introduce into evidence what they offered on April 26th, the Judge allowed it despite the fact on several occasions he admonished the Union that the only thing that mattered was the Mar 22 Term sheet. Dont bring up the past or the future. He didnt want to hear what happened in the past or how the terms would affect us going forward but he accepted into evidence for him to review what the company offered on April 26th. In a sense it was like the company was saying "let us punish them for not submitting". Throughout the hearing the Judge gave wide lattitude to the company but very little to the Unions. He allowed the company to do a little bit of propagandizing by giving an hour long dissertation about Allegheny-Mohawk and how the workers from the BK carrier in mergers get screwed as far as seniority, I guess there are two ways of reading this;

A) The Judge had his mind made up, he was just waiting for the company to say the right things so he could plug them into his written decision and grant the motion. It was clear that he only took notes when the company was speaking.
or

B) The Judge wanted to make sure that he gave the company every opportunity to say whatever they wanted to thwart any chance of an appeal by the company when he rules against the motion..."

Bob,

Just wondering if the TWU, and their attorneys, were wrong when they posted the following...

http://www.twubkfacts.org/home/tabid/1494/ctl/detail/mid/3090/itemid/418/important-questions-and-answers-regarding-aas-last-best-offer.aspx

"...
[background=rgb(255, 255, 153)]1. If our contract is rejected by the Bankruptcy Court, what will be imposed, the Company’s “ask” before the proceedings began on the Company’s motion to reject, or the Last Best Offer (LBO) made after those proceedings began? [/background]
The law on rejection of collective bargaining agreements has evolved over the years in ways that are not favorable to unions or working people. In 2007, in the Northwest bankruptcy, the Court rejected the contract covering the flight attendants after they rejected the Company’s LBO. At that time, the Bankruptcy Court stated that the Company could only impose its LBO, not the Company’s prior Ask. That ruling, which I commented on in writing at the time, has since been superseded (as has my comment on it), and is no longer the binding law on the issue in the Bankruptcy Courts of the Southern District of New York. The superseding case is the Frontier Airlines case, which was ruled on in 2009. There, the Federal District Court for the Southern District of New York (the district we are in, and the court which reviews all the decisions of the Bankruptcy Court handling AA’s filing) ruled that proposals made after the beginning of the hearings on an 1113 motion are not admissible to establish the level of concessions necessary for reorganization. What the Court specifically held was that “under the regime established by Section 1113, proposals and supporting disclosures made by a party after the rejection hearing has begun may not form the basis for concluding whether the 1113 standard has been satisfied, except, perhaps, where the parties expressly agree they may be considered.” In other words, absent an agreement to the contrary, the LBO, if it was made after the rejection proceedings began, is not even admissible into the hearings to decide whether to abrogate the contract, much less to define precisely what terms and conditions of employment the company may initially impose.

The Company’s “ask” was made before the rejection proceedings began. The LBO was made after those proceedings began. The Company was obviously aware of the Frontier precedent and stated at all times that the terms of the LBO were without prejudice to its position before the Bankruptcy Court. Therefore, there was no agreement to allow the Court to consider the LBO. We, of course, will pursue all legal arguments should we face contract rejection, but the controlling precedent in New York is that the LBO is not even admissible into the 1113 proceedings and that the Company is not bound by the LBO and can impose its prehearing “ask” if the contract is rejected..."
______________________________________________

Another thing I was wondering about was the whole, "Me Too," clause:
1) All TWU groups were contractually obligated to a hard freeze on the DBP in both the term sheet and the LBO;
2) What is the value of a DBP to M&R and Stores given that we will not accrue any additional benefit and according to the last report from the company, the DBP is only funded to 81.09% using the unrealistic assumed rates of return?;
3) What is the value of termination of a DBP versus the hard freeze to M&R and Stores?
4) Since termination of an underfunded plan is cheaper than the hard freeze, wouldn't those savings fall beneath the, "Me Too," clause for M&R and Stores?

Just asking...
 
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Bob Owens

Veteran
Sep 9, 2002
14,274
6,112
Bob,

Just wondering if the TWU, and their attorneys, were wrong when they posted the following...

http://www.twubkfact...best-offer.aspx

"...
[background=rgb(255, 255, 153)]1. If our contract is rejected by the Bankruptcy Court, what will be imposed, the Company’s “ask” before the proceedings began on the Company’s motion to reject, or the Last Best Offer (LBO) made after those proceedings began? [/background]
The law on rejection of collective bargaining agreements has evolved over the years in ways that are not favorable to unions or working people. In 2007, in the Northwest bankruptcy, the Court rejected the contract covering the flight attendants after they rejected the Company’s LBO. At that time, the Bankruptcy Court stated that the Company could only impose its LBO, not the Company’s prior Ask. That ruling, which I commented on in writing at the time, has since been superseded (as has my comment on it), and is no longer the binding law on the issue in the Bankruptcy Courts of the Southern District of New York. The superseding case is the Frontier Airlines case, which was ruled on in 2009. There, the Federal District Court for the Southern District of New York (the district we are in, and the court which reviews all the decisions of the Bankruptcy Court handling AA’s filing) ruled that proposals made after the beginning of the hearings on an 1113 motion are not admissible to establish the level of concessions necessary for reorganization. What the Court specifically held was that “under the regime established by Section 1113, proposals and supporting disclosures made by a party after the rejection hearing has begun may not form the basis for concluding whether the 1113 standard has been satisfied, except, perhaps, where the parties expressly agree they may be considered.” In other words, absent an agreement to the contrary, the LBO, if it was made after the rejection proceedings began, is not even admissible into the hearings to decide whether to abrogate the contract, much less to define precisely what terms and conditions of employment the company may initially impose.

The Company’s “ask” was made before the rejection proceedings began. The LBO was made after those proceedings began. The Company was obviously aware of the Frontier precedent and stated at all times that the terms of the LBO were without prejudice to its position before the Bankruptcy Court. Therefore, there was no agreement to allow the Court to consider the LBO. We, of course, will pursue all legal arguments should we face contract rejection, but the controlling precedent in New York is that the LBO is not even admissible into the 1113 proceedings and that the Company is not bound by the LBO and can impose its prehearing “ask” if the contract is rejected..."
______________________________________________

Another thing I was wondering about was the whole, "Me Too," clause:
1) All TWU groups were contractually obligated to a hard freeze on the DBP in both the term sheet and the LBO;
2) What is the value of a DBP to M&R and Stores given that we will not accrue any additional benefit and according to the last report from the company, the DBP is only funded to 81.09% using the unrealistic assumed rates of return?;
3) What is the value of termination of a DBP versus the hard freeze to M&R and Stores?
4) Since termination of an underfunded plan is cheaper than the hard freeze, wouldn't those savings fall beneath the, "Me Too," clause for M&R and Stores?

Just asking...

Got to remember to talk at Community college level for me to get what you are asking. I think you are saying that by presenting the terms of the LBO to the court that we have the arguement, based upon 1113 rules (fair and equitable, necessary, etc) to say that if the court does grant the motion that it would be under those terms(the LBO that was rejected) that never should have been admitted, not Mar 22. I dont know the answer to that and knowing that the attorneys would rather that we settle instead of go the distance, after all they work for the International, they dont have to live under it, I do not think they would want to encourage a another NO vate based upon the chance that may be true.

2) I have no idea, they never broke the value down to individual groups that I recall, but from 2003 I recall them saying it added between 9 & 10% for the full up cost of a worker. I do not believe that number changed.

3) Not using the companys math. IMO the only reason why the plan was not terminated was because the government was going to shred the whole filing if AA pursued it and the other creditors are licking their chops at the prospect of AA coming out of this with wages below what they were in 2001 in 2018. They stand to make a killing on their equity and they dont want to share it with the PBGC. I think that the Freeze was in the plan from the very start, they threw it in there for the effect, by going from termination to Freeze it looks like they moved.
 

Boomer

Veteran
Aug 20, 2002
1,139
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Got to remember to talk at Community college level for me to get what you are asking. I think you are saying that by presenting the terms of the LBO to the court that we have the arguement, based upon 1113 rules (fair and equitable, necessary, etc) to say that if the court does grant the motion that it would be under those terms(the LBO that was rejected) that never should have been admitted, not Mar 22. I dont know the answer to that and knowing that the attorneys would rather that we settle instead of go the distance, after all they work for the International, they dont have to live under it, I do not think they would want to encourage a another NO vate based upon the chance that may be true.

2) I have no idea, they never broke the value down to individual groups that I recall, but from 2003 I recall them saying it added between 9 & 10% for the full up cost of a worker. I do not believe that number changed.

3) Not using the companys math. IMO the only reason why the plan was not terminated was because the government was going to shred the whole filing if AA pursued it and the other creditors are licking their chops at the prospect of AA coming out of this with wages below what they were in 2001 in 2018. They stand to make a killing on their equity and they dont want to share it with the PBGC. I think that the Freeze was in the plan from the very start, they threw it in there for the effect, by going from termination to Freeze it looks like they moved.

Bob,

I'm only saying that if the TWU Attorneys were wrong by stating that the LBO would not be allowed in court during the Section 1113 hearings; what else could they be wrong about?

Read what the TWU Attorneys said was possible, the LBO, during Sect. 1113 hearings. LINK PROVIDED:
http://www.twubkfact...best-offer.aspx

IMHO: Is it more likely that the compAAny and the TWU thought they had a, "lock," on the overhaul bases; but, fundamentally MIS-understood the degree to which the union leader has separated themselves from their membership to the extent that the TWU M&R Leadership are giving the same bad information to Little that Crandall got when the APFA went out on strike?

OTOH: Is it possible that Little and the Politburo that represent every level of the TWU, only seek to maintain what they believe is thiers' despite the hardship they visit on those they claim to perform their fiduciary duty?


The company originally claimed that continuing the DBP for the union contracts would increase costs by some $800,000,000.00 per year. After the company decided to freeze the DBP, they claimed that they would not pursue those costs. What portion of that $800,000,000.00 is the cost of paying TWU Officers the DBP that is above the PBGC cutoff?

We really do not know that the DBP for TWU Representatives includes their AA salary and their TWU Pay; we also do not know that the company did not agree to the hard freeze for the TWU as a means of paying off grossly overinflated TWU Union officers’ a DBP that included their Union Pay.

We do not know what the financial value is attached to the company ask from the TWU M&R and Stores if they are allowed to terminate the DBP for the M&E and Stores groups versus an automatic match for base pay and a dollar for dollar match contractually negotiated or the M&E and Stores.

Given that the M&R and Stores Negotiations have now resulted in the TWU International stating that any decrease in the ask from AA must be equally matched for the other 5 groups that ratified their own rape: we have to improve the terms of any agreement that stay within the ask but result in quantifiable gains in the hours of work, wages and working conditions for those represented by the TWU M&R and Stores. We are still being raped, we just negotiated a, "little," upside after the deed was done.

We do know that a satisfactory automatic contribution and a dollar-for-dollar match that equaled that differential between the DBP funding requirements under a Hard Freeze and the 401(k) match in a DBP termination would not trigger the, "Me-Too," clause.

Let the company match 7% of gross pay and 5% dollar for dollar on the 401(k), and terminate the DBP given that both the ask and the LBO contain language that is HARD FREEZE which means that you will not accumulate additional benefits; and, is only a percentage below what the company has already offered another union group on the property.


My position is very simple: Push anything the company promises into the check the worker receives every payday. Remove empty TWU Promises that always end up as: “We’ll Get’em Next Time !”