Machinists Union Update

[PITbull]

Burghlaw1:

If the company enters bankruptcy, the intent will be to not seek a debtor-in-possession financier. The company is currently preparing S.1113/S.1114 motions and argument to support its desire to have an order to set aside labor contracts and aircraft leases. These two items are some of highest cash drains and the court has a responsibility to the debtor and creditors.

US Airways’ Legal Department and its advisors from Arnold and Porter are currently working on the “judicial restructuringâ€￾ filing, motions, argument, and the POR.

Each individual union should attempt to preserve as much of their current contract as possible, but that is widely expected to only happen with an agreed upon settlement between the parties before the filing. Without an agreement, the relative impact on the CBA’s will be decided for the employees. Many union leaders believe that the decisions regarding the contracts going forward should be made by the rank-and-file with the company and not ones that should be made by the company unilaterally or with the help of a Bankruptcy judge.

It’s up to each union to decide if they want to participate in the new business plan or face the court because unless all unions agree to participate in the new business plan, this airline will likely be in bankruptcy this fall. Moreover, let's not forget David Bronner said this restructuring will go forward "with or without employees".

Respectfully,

USA320Pilot

USA320,

So, then, am I to take it that there is no profit sharing??????

 

[USA320Pilot]

Without agreements from all of the labor groups, which cold help the the company avoid bankruptcy, Lakefield said there would be no profit sharing.

However, that could change in the new labor accords for individual unions.

Respectfully,

USA320Pilot

 

[burghlaw1]

Burghlaw1:

Just one more point...

Your legal opinion is not shared by ALPA's Legal and Financial Advisors. In fact, the MEC is holding a special MEC meeting on Monday, August 9 with the agenda to decide whether or not to release the unions investment banker and financial adviors report to the membership. The report illustatres the risks of entering bankrutpcy without a new agreement and S.1113 letter. It's my understanding the advisors have not painted a pretty picture for labor.

Respectfully,

USA320Pilot

[post="166301"][/post]​

USA320Pilot--I don't necessarily disagree with what you have said in this post or the last. I made two principal points: (1) how a bankruptcy court will rule is not a foregone conclusion and ultimately depends on the quality of the evidence presented at the hearing and how it's presented; (2) I didn't offer any opinion as to the likely outcome of such a hearing. I believe, and continue to believe, based upon what I have read, that a weakness in the company's position is that it hasn't outlined the $700 million in "non-labor" savings that they claim to need. Am I missing something? is the pull-down of PIT as a hub worth $700 million? These savings, which are already in the control of the company, should already have been implemented. Seeking to abrogate the CBA's should be a last resort. To be sure, there are weaknesses in the union positions as well. The fact that the industry has changed so substantially is evidence of the need for restructuring to be competitive. It is a bitterly harsh reality. Anecdotal industry evidence will not be enough though, and in any hearing UAIR will have to present evidence of its own unique financial circumstances of the need to reject the CBAs. The flip side is that in order to preserve the contracts, the unions will have to poke holes in the company's case, and demonstrate how and why UAIR can reorganize successfully with contracts intact. As in any litigation, it's an all or nothing proposition: There will be a clear-cut winner and a clear-cut loser. As I read the case law concerning section 1113, it is structured so that every effort to negotiate a settlement is exhausted to avoid the brinkmanship. In order to reject, the debtor must prove:

1. The debtor must make a proposal to the union to modify the collective bargaining agreement;

2. The proposal must be based on the most complete and reliable information available at the time of the proposal;

3. The proposed modifications must be necessary to permit the reorganization of the debtor;

4. The proposed modifications must assure that all creditors, the debtor and all the affected parties are treated fairly and equitably.

5. The debtor must provide the union such relevant information as is necessary to evaluate the proposal;

6. Between the time of the making of the proposal and the time of the hearing on approval of the rejection of the existing collective bargaining agreement, the debtor must meet at reasonable times with the union;

7. At the meetings the debtor must confer in good faith in attempting to reach mutually satisfactory modifications of the collective bargaining agreement;

8. The union must have refused to accept the proposal without good cause; and

9. The balance of the equities must clearly favor rejection of the collective bargaining agreement.
In re Walway Co., 69 B.R. 967

I hope that the ALPA releases its findings of the company's financial picture if it can. If it mirrors what you are saying, it adds legitimacy to why the union is negotiating a third round of concessions. Second, I expect that given the lack of precedent on section 1113 motions in airline cases, the union's advisors are saying that rejection is a distinct possibility.

 

[cavalier]

Burghlaw1:

Thanks for putting some creditable balance to the captain’s very unbalanced posts. He makes it sound like the union has zero leverage and management has absolute power to destroy everything and everyone unrestricted with the courts blessings. If that was the reality then why is it that we now a have fresh offer with the BOD's blessings of profit sharing IF BK is avoided. That clearly shows us that they really don't want to go down that path knowing as you have stated it's not a sure deal for them coming out ahead of the game. The constant posts of threats by the captain must have gotten to you considering your posts. This means you are normal. Like it has been stated on this forum, no one really has complete control, even out of court. The IAM is obviously willing to take it to the very brink because we all collectively believe with all that has happened, it's our only choice. On my last shift at work in one of the hangers as I was busy working on a part of the plane that was holding up 7 other mechanics until I finished that particular part. I listened to these mechanics talking about this situation. Every one of those 7 mechanics without one single word of my input stated they are ready to move on and therefore are happy and even pleased with the IAM's position. Yes, it's out of our control and watching the captain panic with his useless keystrokes trying to change fate is funny and sad at the same time.

 

[USA320Pilot]

Burghlaw1:

I understand your point, but here's where I disagree.

During the last "formal reorganization" the court ruled in favor of virtually every company motion.

When the company enters the involuntary bankruptcy, which I believe will occur probably in October, if not sooner, the company must maintain cash flow. Why? RSA wants to maintain control of the airline, which will require the security to be maintained (although a diluted levels) and no DIP financing. If the company can do that, then the ATSB is said to be on-board with the plan, which is likely why ATSB loan guarantee auditor Bill Warlick told the Charlotte Business Journal last week he believes the creditors will allow the company to restructure in Chapter 11.

Meanwhile, back to the S.1113 motion. What is going to be critical going forward is to maintain cash levels. Therefore, I expect the company to immediately seek to cut pay lower than LCC levels, set aside retirement plan payments (by the way, I believe the company will pull a United Airlines and not make pension contributions to the AFA and IAM plans in September), set aside the minimum fleet count, and possibly reject aircraft leases to rationalize the fleet so the airline does not have to do as much contractor heavy maintenance this winter. Furthermore, the company could reject more facilities such as the Charlotte maintenance center, Winston-Salem reservations facility, and airport gates to further save cash.

The company will prove it must have these new accords immediately to preserve cash, meet the new ATSB guidelines, and preserve cash flow. Moreover, I have a gut feeling the key creditors have already been briefed on this plan as US Airways' Legal Department and Arnold & Porter prepare the motions in anticipation of obtaining the courts order.

Respectfully,

USA320Pilot

 

[UAL_TECH]

During the last "formal reorganization" the court ruled in favor of virtually every company motion.

But wouldn't it be due to all parties’ agreement to the motion?
There was no 'contention' as all parties 'agreed' to be hosed!!!
(Self Hosed - What a concept!!!) :bleh:

Did I miss something here?

JMHO,
<_< UT

 

[hp_fa]

I hope Burghlaw1 starts telling the flyboy how to fly a plane.

 

[ClueByFour]

Burghlaw1:

I understand your point, but here's where I disagree.

During the last "formal reorganization" the court ruled in favor of virtually every company motion.

And, with the exception of your pension (and only then by the existing retirees who had a pair), almost none of the motions were contested.

The bankruptcy code was changed by Congress in the post-Lorenzo era to prohibit exactly the situation you describe.

The other thing which you fail to realize is that even if the company actually finds a judge who will abrogate contracts, the place closes when the workgroups in question walk. Like it or not, if the IAM-M walks, the doors shut.

There are now at least two majors vendors of important aircraft items that are charging U "net 0" (cash to carry) terms on parts. It's not sustainable in Chapter 11.

Finally, as was proven the last time, if U does enter chapter 11, that S1113 letter won't be worth the paper the AAA ALPA pension used to be written on.

 

[LGA Fleet Service]

XXXXXX

 

[cavalier]

And, with the exception of your pension (and only then by the existing retirees who had a pair), almost none of the motions were contested.

The bankruptcy code was changed by Congress in the post-Lorenzo era to prohibit exactly the situation you describe.

The other thing which you fail to realize is that even if the company actually finds a judge who will abrogate contracts, the place closes when the workgroups in question walk. Like it or not, if the IAM-M walks, the doors shut.

There are now at least two majors vendors of important aircraft items that are charging U "net 0" (cash to carry) terms on parts. It's not sustainable in Chapter 11.

Finally, as was proven the last time, if U does enter chapter 11, that S1113 letter won't be worth the paper the AAA ALPA pension used to be written on.

[post="166591"][/post]​

Denial is the word we always hear, well denial is the word to use here because you are 100 percent correct, if the IAM walks the doors close, it's over.

The mechanics hold the spark plug wires in their hands, no spark, no fly, no fly, no airline OR contracts to abrogate. FYI…The FAA would even help the IAM by looking over the shoulders of any scab mechanics causing even further and already massive delays and cancellations. Like the pilots, the mechanics are a necessary ingredient, like it or not. My prediction: If the bus work is won the IAM will at least sit down with zero promises, if lost, so is the airline.

 

[burghlaw1]

Burghlaw1:

If the company enters bankruptcy, the intent will be to not seek a debtor-in-possession financier. The company is currently preparing S.1113/S.1114 motions and argument to support its desire to have an order to set aside labor contracts and aircraft leases. These two items are some of highest cash drains and the court has a responsibility to the debtor and creditors.

[post="166298"][/post]​

One more point, USA320Pilot, I disagree with your statement above that the court has a responsibility to the debtor and creditors. When considering the 1113 motion, the court also has a responsibility to the employees. Per my August 7 post, this is set forth in Point 4 of the Court's standard:

4. The proposed modifications must assure that all creditors, the debtor and all the affected parties are treated fairly and equitably.

I would think that the unions, if they choose to litigate, might want to argue that preserving RSA's equity in the Company while abrogating the CBA's is inequitable Shouldn't all the stakeholders be sharing the misery? RSA's equity could be upwards of $500 million in savings to the company. Just a thought.

In the final analysis, the court will focus primarly on Points 3, 4, 8 and 9 as I previously outlined.

Finally, whether the court granted every motion of the company during the last bankruptcy stint is not indicative of what will happen this time around. The court might view UAIR with more suspicion, having arrived back in court so soon after the last time. There's also no guaranty that UAIR will get the same bankruptcy judge (although I am sure the company will try to). The judge is usually chosen at random by the court's computers, unless there is a pending related matter. It's possible that UAIR might not file in the same court. Finally, the only motion that I recall that was hotly debated last time concerned termination of the Pilots' pension. Did the Pilots object to the motion? I thought that the Pilots struck a deal with the Company to terminate the pension before the hearing. Unconested motions are usually granted without much thought.

VTY

Burghlaw1.

 

[robbedagain]

not only a return to ch.11 with suspicion due to a recent ch.11 filing but how about the 34 million profit from this past quarter? i'd like to think that that would draw more suspicion wouldnt it? as for fair and equal treatment, how about the way mgmt treats its employees--you know like garbage i dont think that will fly in the face of a ch.11 judge i could be wrong but who knows. also could the judge order us to get back most of the million dollar packages from the former clowns such as seigel and wolf and gangwal and cohen and the other dude?