Interesting AMR insider (non) activity.

[Hopeful]

http://finance.yahoo.com/q/it?s=AMR+Insider+Transactions

Maybe bankruptcy IS imminent for AMR....Loos like the AMR fat cats have SOOOOOOOO much faith in their company that NONE have them have bought any AMR stock in quite some time!

Hmmmmmmmmmmmm!

 

[Buck]

http://finance.yahoo.com/q/it?s=AMR+Insider+Transactions

Maybe bankruptcy IS imminent for AMR....Loos like the AMR fat cats have SOOOOOOOO much faith in their company that NONE have them have bought any AMR stock in quite some time!

Hmmmmmmmmmmmm!

Quite interesting, However I wonder if they are purchsing or are these shares being granted?

 

[FWAAA]

Hopeful:

Every April or May, Arpey gets the vast majority of his annual compensation paid to him in AMR stock. As the table you linked indicates, on May 18, he "acquired" 611,000 shares (PSP distibution) and two days later transferred about 5% of them, perhaps to his kids or a revocable trust or some other disposition not an open market sale. Arpey currently holds almost 2.5 million shares of AMR. Exactly how much more do you think he should buy?

It is clear that AMR may very well file a Ch 11 peition in the future, meaning the stock would become worthless. Since May 20, the value of AMR has fallen by about two-thirds, making Arpey's AMR stock worth only about one-third what it was worth less than six months ago. No need to cry for Arpey, as he has plenty of other wealth (he's not going to end up homeless), but he's seen over $11 million of paper wealth evaporate in those six months.

As an executive, under federal law, he's prohibited from selling his stock to avoid having it be wiped out in Ch 11, so if there is a bankruptcy filing, he's going to lose the remaining $5 million his AMR stock currently represents. I don't know about you, but I'd say that a loss as of today of more than $11 million (and a potential loss of another $5 million) would represent at least some "shared sacrifice." I realize that it won't be enough for you, but even high-paid execs notice the loss of $16.5 million.

 

[Mach85ER]

Well, since they were granted a significant number of shares in the last 2 years when the company lost money,(under their underachieving goalposts for bonuses) I'd call it poetic justice that those shares are near worthless.

 

[Bob Owens]

I don't know about you, but I'd say that a loss as of today of more than $11 million (and a potential loss of another $5 million) would represent at least some "shared sacrifice." I realize that it won't be enough for you, but even high-paid execs notice the loss of $16.5 million.

I wouldnt. Did he have to sell his plane? Is he worried about being able to afford to send his kids to college? Has retirement become a questionable objective?Will he lose his home? Like you said these are "paper losses" he didnt shell out any money for these shares or cut his pay and benefits for them. The $16.5 million is something he never really had, what he did have, all his shares, he still has, they can go up in value just as they have gone down in value, so he hasnt lost anything yet, he is still ahead of the game.nd they werer given to him in addition to his more than adequate $600,000 salary. We were given shares now worth $2.00 share in exchange for millions in concessions.

 

[FWAAA]

Well, since they were granted a significant number of shares in the last 2 years when the company lost money,(under their underachieving goalposts for bonuses) I'd call it poetic justice that those shares are near worthless.

I agree that there's some poetic justice if much of his variable, at-risk compensation becomes worthless. That's the whole point of variable compensation. Bonuses? AA hasn't paid those in over 10 years.

I wouldnt. Did he have to sell his plane? Is he worried about being able to afford to send his kids to college? Has retirement become a questionable objective?Will he lose his home? Like you said these are "paper losses" he didnt shell out any money for these shares or cut his pay and benefits for them. The $16.5 million is something he never really had, what he did have, all his shares, he still has, they can go up in value just as they have gone down in value, so he hasnt lost anything yet, he is still ahead of the game.nd they werer given to him in addition to his more than adequate $600,000 salary. We were given shares now worth $2.00 share in exchange for millions in concessions.

By that logic, you didn't give "concessions," you gave up illusory, paper compensation that you never actually had.

Yes, Bob, Arpey's stock could go back up in value. And monkeys could fly from everyone's butt. The reason the stock is currently trading at the same values it was at in February and March of 2003 is because rational people see a replay of that time period all over again. Only this time nopody expects any voluntary concessions; rational people see the bankruptcy filing taking place this time.

"More than adequate $600,000 salary." 😀

I really wish the unions had bought AMR and run it like a worker-owned cooperative. I would pay money to be in the room when the candidates for CEO were told that their salary of $600k, less than three times the current pay for a 777 captain, was "more than adequate." Equally funny would be watching the struggles of the company following its decision to hire the person willing to be CEO for just $600k.

 

[Bob Owens]

By that logic, you didn't give "concessions," you gave up illusory, paper compensation that you never actually had.

Wrong, we had a contract with set values, he had a contract for a certain number of shares which he recieved.

Yes, Bob, Arpey's stock could go back up in value. And monkeys could fly from everyone's butt. The reason the stock is currently trading at the same values it was at in February and March of 2003 is because rational people see a replay of that time period all over again. Only this time nopody expects any voluntary concessions; rational people see the bankruptcy filing taking place this time.

So those who sold in 2003 at those prices were irrational but those who are selling now are rational? What concessions do you expect to see? The fact is that most of our peers who went BK are better compensated than we are, have more vacation, more holiday pay, more sick time, more IOD time etc.

"More than adequate $600,000 salary." 😀

I really wish the unions had bought AMR and run it like a worker-owned cooperative. I would pay money to be in the room when the candidates for CEO were told that their salary of $600k, less than three times the current pay for a 777 captain, was "more than adequate." Equally funny would be watching the struggles of the company following its decision to hire the person willing to be CEO for just $600k.

My guess is a 777 pilot has a more risky job than a CEO, and I'd say that there are fewer people qualified to pilot 777s athn there are people qualified to be CEOs. Why should any employee of any company earn more than $600,000 a year? Nobody is worth that kind of money. We have more MBAs in this country than any other. Looking at the results the old boys club isnt really doing a great job, look at AA, workers slashed their pay in real terms by 40% and doubled their productivity yet the old boys club still cant show a profit.

You seem convinced that AA will file this time, if so then why should workers agree to concessions prior to them filing?

 

[damajagua]

Exactly!!!!

 

[BoeingBoy]

The only potential reason is that once the bankruptcy filing reaches the courthouse, the union loses any control. In bankruptcy, contrary to what Bob posted in the other thread, there are two stages to contract abrogation. The first is temporary and for all intents and purposes automatically granted - temporary changes to the contract as desired by the company. Negotiations can, and usually do continue. However, if no agreement is reached the company can ask the judge for permission to abrogate the contract (throw it out), replaced by whatever it wants until an amendable date. At that point negotiations are over unless the company wishes to continue negotiating - you or the union likely have absolutely no say in what's in the contract as long as the judge finds what the company wants to be necessary. I think it was either the UA or NW bankruptcy where a group's contract was abrogated. They threatened to strike but a district court ruled they couldn't. I don't know if that ruling was appealed, but the end result was that there wasn't a strike. In the US bankruptcy, the IAM contract was abrogated but the company kept negotiating to get a ratified agreement but that was before the court ruling in the UA or NW case and I think US was afraid of a strike shutting the doors and the company liquidating.

Jim

 

[Bob Owens]

The only potential reason is that once the bankruptcy filing reaches the courthouse, the union loses any control. In bankruptcy, contrary to what Bob posted in the other thread, there are two stages to contract abrogation. The first is temporary and for all intents and purposes automatically granted - temporary changes to the contract as desired by the company. Negotiations can, and usually do continue. However, if no agreement is reached the company can ask the judge for permission to abrogate the contract (throw it out), replaced by whatever it wants until an amendable date. At that point negotiations are over unless the company wishes to continue negotiating - you or the union likely have absolutely no say in what's in the contract as long as the judge finds what the company wants to be necessary. I think it was either the UA or NW bankruptcy where a group's contract was abrogated. They threatened to strike but a district court ruled they couldn't. I don't know if that ruling was appealed, but the end result was that there wasn't a strike. In the US bankruptcy, the IAM contract was abrogated but the company kept negotiating to get a ratified agreement but that was before the court ruling in the UA or NW case and I think US was afraid of a strike shutting the doors and the company liquidating.

Jim

It was appealed.
Thats not what the court said in its decision with the AFA at NWA. The court doesnt set an amendable date but they do tell the parties to continue to negotiate. The lower court had ruled that since the contract was abrogated under the RLA they could strike, then an injunction on the strike was granted by another court and the appellate court said the injunction was legal. The appellate decision basically said keep negotiating as if there never was a contract and I believe it allowed the company to impose the terms of a rejected TA, not just anything the company wanted. The AFA later ratified a third? TA and never challenged the lower courts unprecidented and contradictory interpretation of labor law with the Supreme Court.

In nearly all the other cases the Unions buckled and agreed to terms rather than find out where they would land. That was in 2003-05 with lots of unemployed airline talent out there, while there are plenty of unemployed there arent too many mechanics or pilots sitting around waiting for an airline job.

 

[FWAAA]

My guess is a 777 pilot has a more risky job than a CEO, and I'd say that there are fewer people qualified to pilot 777s athn there are people qualified to be CEOs. Why should any employee of any company earn more than $600,000 a year? Nobody is worth that kind of money. We have more MBAs in this country than any other. Looking at the results the old boys club isnt really doing a great job, look at AA, workers slashed their pay in real terms by 40% and doubled their productivity yet the old boys club still cant show a profit.

Uh-huh. Nobody is worth more than $600k. Bob, there are union leaders who are paid $600k. You're worth what you can negotiate. Starting pay in the MLB is now more than $400k and the average annual pay for the 750 MLB players is in excess of $3 million. The average CEO compensation of the Fortune 500 is in excess of $10 million, far more than Arpey has been paid, for good reason - he hasn't delivered great results.

Mechanics at UPS have successfully negotiated for about $50 per hour. And yet the TWU is seeking even less than their counterparts at UPS. That's a worthless union for you.

You seem convinced that AA will file this time, if so then why should workers agree to concessions prior to them filing?

Who said anything about concessions? Might as well wait until the Ch 11 filing occurs to agree to concessions.

Of course, the worthless union isn't even seeking industry-leading pay for its mechanics - talk about tits on a boar. Your union and its ameteur negotiators are beyond worthless. Once again, in an attempt to deflect your membership's attention from the substandard representation they get for their two-hours of pay per month, you fixate on executive pay.

 

[eolesen]

dupe

 

[eolesen]

If you negotiate out of court, you have a lot more control over the process. The company is likely to meet you closer to a 50/50 split of what you're trying to obtain.

In a PEB, you might see something between a 60/40 and a 50/50, where either side might get a slight advantage.

In court, absent an agreement prior to filing, all this will shift in favor of the company.

Absent an agreement prior to a filing, my guess is that it would be anywhere from a 75/25 to 90/10 split in favor of the company. There's way too much comparative data out there to show what needs to be done to be contract competitive with the peer group of DL, US, UA, etc... I have little doubt they'd be able to extract the "best of breed" contract which makes AA's costs at or near the lowest of any >250 major airline in the US. The burden of proof will be on you guys to show how their proposals are clawing back too much.

If you do come to an agreement prior to a filing, yes, there is always the risk that the company will try to double dip. However, as I've said countless times, the burden of proof shifts onto the company to try and show why the contract they just agreed to prior to filing is no longer sustainable. That's the only key provision in the 2005 bankruptcy law which will benefit labor.


My opinion, and mine only (i.e. not influenced by or representing any conversations with airline management, consultants or lawyers):

1) Some union leaders have decided it's easier to blame a judge as opposed to bringing back an agreement that admits they were unable to deliver on promises made to rally support from the membership.

2) Many of those same union leaders drew a line in the sand that they knew was unrealistic, and have done a really crappy job of managing expectations of the membership.

I know, I'm a former management labor hating union buster. If you look at the rhetoric coming from both sides, and take out all the hyperbole, somewhere in the middle you'll find the truth.

 

[BoeingBoy]

the appellate court said the injunction was legal. The appellate decision basically said keep negotiating as if there never was a contract and I believe it allowed the company to impose the terms of a rejected TA, not just anything the company wanted.

Thanks for the clarification of the timeline. The court said keep negotiating, but the abrogation of the contract had already happened so which side has the leverage in those negotiations? Not the union since the company already has what it wants. Yes, the company has to put what it wants into a proposal. That proposal must pass muster with the judge so the company can't over-reach too much. But the union has little/no input to that proposal except for possibly any sections of the contract that had been already agreed to.
Which is basically what I said before.

Within reason, the bankruptcy judge is going to give the company what it wants.

Jim

 

[Bob Owens]

Uh-huh. Nobody is worth more than $600k. Bob, there are union leaders who are paid $600k. You're worth what you can negotiate. Starting pay in the MLB is now more than $400k and the average annual pay for the 750 MLB players is in excess of $3 million. The average CEO compensation of the Fortune 500 is in excess of $10 million, far more than Arpey has been paid, for good reason - he hasn't delivered great results.

Not really. If you negotiate with yourself is that really a fair negotiation? When executives "negotiate" their wages they negotiate with other executives, everyone at the table has an interest in seeing executive compensation go up. Thats the reason why executive pay has skyrocketed, no other reason. No supply and demand, no invisable hand, the game is rigged plain and simple. Years ago Executives were more cautious because they knew that outrageous compensation would be an invitation for trouble, trouble from the Unions and other workers. The tax rate was high so they focused on other ways of getting compensation.Todays Union leaders unfortunately aspire to be like them, so the criticism exists but its muted. There's some back scratching going on there as well.