pilots going to merger talks wheres the TWU

[Super FLUF]

cont.


Simply put, the plan just doesn’t make good business sense, and carries with it a very high risk.

On the other hand, there has been no shortage of airline management, analysts and media comments regarding future airline consolidation involving American Airlines.


 Dahlman Rose, Helane Becker: “American’s cornerstone strategy (focusing on New
York JFK, Miami, Chicago, Dallas/Ft. Worth, and Los Angeles) has not worked for the
past five years, and frankly, we do not see how it works going forward. In our view,
American has a revenue problem that will probably best be solved through a merger.”
 Rodman & Renshaw, Dan McKenzie: “From a network perspective, USAir/AA
combined are much more powerful than either as a standalone airline. AMR is at risk of
reporting weak profitability upon exiting Ch. 11. And it’s why we’re arguing AMR needs
to merge sooner rather than later – in Ch. 11.”
 JP Morgan, Jamie Baker and Mark Streeter: “We are underwhelmed with AMR’s
standalone restructuring plan, insofar as it fails to adequately address the decade-long marginalization of its domestic network, in our view. For this reason, we now ascribe a higher probability that AMR ultimately engages in industry consolidation – and whether or not this happens in court or post exit is likely dependent on whether the creditors’ committee (notably labor and the PBGC) can be won over by potential suitors. As an update to our early January piece, we believe the merits and regulatory challenges of an USAir-AMR combination warrant further consideration.”


A Combined AA-US Airways Makes Good Business Sense

After US Airways management approached APA to explore the possibilities of a merger, the APA leadership worked with APA Legal and the union’s professional advisers to thoroughly analyze the possibility and research each airline’s business facts.


US Airways has become an efficient, profitable carrier that is near industry-leading in
operational performance. In 2010, the airline ranked first among the big five network carriers in the annual Airline Quality Rating (AQR) report, which benchmarks airline reliability and service. In the recently released 2011 AQR report, US Airways ranked No. 2 when compared to network carrier competitors.

US Airways management is primarily comprised of the former America West team. They’re lean and entrepreneurial in nature. US Airways is a proven survivor that has found a way to adapt and thrive in a very difficult competitive environment, in marked contrast to what has transpired at American Airlines under the current management team.

US Airways has a reported cash balance of $2.3 billion and in 2011, the airline had record yearover-year passenger revenue per available seat mile (RASM) and yield improvements in every month.

US Airways has successfully used revenue strategies to overcome external economic pressures. For example, in 2008, US Airways lost $856 million — in part because of a fuel cost increase of $1.3 billion. In 2011, the carrier had the same year-over-year increased fuel cost, but it recorded a $111 million profit – a $967 million turnaround.
Although it lacks a deep international network, the US Airways network has a substantial presence in the lucrative East Coast, along with a notable presence in the Midwest and Western U.S.

American Airlines, meanwhile, is currently a distant No. 3 in New York, and has minimal
presence in the Northeast-Southeast region. AA is currently NOT No. 1 in three of five its cornerstones — a critical shortcoming.

 

[Super FLUF]

cont.

Just a few short years ago, American Airlines commanded a unit revenue premium relative to competitors — that AA unit revenue premium is gone and the carrier is now trailing competitors. AA’s share of the high-yielding corporate travelers has also sharply declined as increasing numbers of corporate clients choose our competitors’ superior networks and product. AA’s network has clearly become a distant third to post-merger Delta and United. AA has completely withdrawn from markets that it previously dominated or capitulated when competitors showed signs of intrusion.

AA ranks as one of the worst airlines in America. In 2008, American Airlines ranked dead last in the industry for on-time performance and in 2009 when compared to network competitors, AA maintained its last-place ranking. Even over the last 12 months, when compared to our network competitors, AA continued its last-place ranking for on-time arrivals. This is in stark contrast to the days when AA’s advertising slogan was “The On-Time Machine.” (In comparison, in 2008 and 2009, US Airways’ network carrier on-time performance ranking was first and second place,
respectively.)


Furthermore, for the years 2010 and 2011, AMR has racked up $33 million in Federal Aviation Administration fines for safety violations — compared to no fines for US Airways.

So how would an American Airlines/US Airways merger make for a stronger network?
 AA and US Airways networks are complementary — they are better together than they
are apart. An American Airlines-US Airways merger would create a comprehensive
network that could compete with both Delta and United.
 The combined carrier would be the No. 1 carrier in the key East Coast and central regions
of the United States.
 The New York-Boston and New York-Washington, D.C. markets feature some of the
country’s highest-yield traffic. US Airways has 50 percent of the shuttle seats in those
two markets and captures 40 percent of the corporate business.
 The combined carrier can be a leader in not only large cities but also in small cities that
complement each other.
 The combined carrier would close network gaps and create a competitive and
comprehensive alternative to Delta and United.
 The combined carrier’s strong network will attract corporate customer and other
travelers.

 The combined carrier would maintain existing hubs and reverse the marginalization of American that happened as a result of the Delta and United mergers.
 The combined carrier will more likely reverse American Airlines’ relative revenue
decline and provide a deeper, more comprehensive network than a stand-alone AA.

The synergies of the two combined carriers are estimated to exceed $1.5 billion annually


Our Window of Opportunity is Closing

Your APA leadership strongly believes that when it comes to the possibility of American
Airlines merging with another carrier, it was always simply a question of not “if” but “when.”

However, we also realize that our window of opportunity to reach a deal that would benefit our members the most is only open for a short time – during bankruptcy.
Our concerns would be the same whether a merger was completed after bankruptcy or prior.

However, the ability to provide the highest level of benefit to the pilots is dramatically
different under those two scenarios. Prior to American Airlines exiting bankruptcy, we have the opportunity to craft an alternative to management’s 1113 contract termination – an opportunity to raise the bar to an industry competitive pilot contract.


Mr. Horton has said that any merger would be better addressed after exiting bankruptcy. There is a logical explanation for his position. Post-bankruptcy, any merger would be done on AA management’s terms, in an environment where we may be little more than a speed bump in the process.

After bankruptcy, management would remain in the driver’s seat, with a significant share of ownership in a newly reorganized company and with their positions protected by change of control clauses in the event of a merger. This would allow them to both dictate the terms of a merger and to potentially enrich themselves handsomely in the event of either a consensual consolidation or a hostile takeover.

There is an enormous financial incentive for senior management to resist merging while in bankruptcy, as their control over the corporation would be jeopardized by an agreement with US Airways, threatening their ability to “cash in” following American Airlines’ emergence from Chapter 11.

We can expect significant opposition to what your APA leadership believes to be the best course of action for our collective futures.

 

[amt66]

cont.

Just a few short years ago, American Airlines commanded a unit revenue premium relative to competitors — that AA unit revenue premium is gone and the carrier is now trailing competitors. AA’s share of the high-yielding corporate travelers has also sharply declined as increasing numbers of corporate clients choose our competitors’ superior networks and product. AA’s network has clearly become a distant third to post-merger Delta and United. AA has completely withdrawn from markets that it previously dominated or capitulated when competitors showed signs of intrusion.

AA ranks as one of the worst airlines in America. In 2008, American Airlines ranked dead last in the industry for on-time performance and in 2009 when compared to network competitors, AA maintained its last-place ranking. Even over the last 12 months, when compared to our network competitors, AA continued its last-place ranking for on-time arrivals. This is in stark contrast to the days when AA’s advertising slogan was “The On-Time Machine.” (In comparison, in 2008 and 2009, US Airways’ network carrier on-time performance ranking was first and second place,
respectively.)


Furthermore, for the years 2010 and 2011, AMR has racked up $33 million in Federal Aviation Administration fines for safety violations — compared to no fines for US Airways.

So how would an American Airlines/US Airways merger make for a stronger network?
 AA and US Airways networks are complementary — they are better together than they
are apart. An American Airlines-US Airways merger would create a comprehensive
network that could compete with both Delta and United.
 The combined carrier would be the No. 1 carrier in the key East Coast and central regions
of the United States.
 The New York-Boston and New York-Washington, D.C. markets feature some of the
country’s highest-yield traffic. US Airways has 50 percent of the shuttle seats in those
two markets and captures 40 percent of the corporate business.
 The combined carrier can be a leader in not only large cities but also in small cities that
complement each other.
 The combined carrier would close network gaps and create a competitive and
comprehensive alternative to Delta and United.
 The combined carrier’s strong network will attract corporate customer and other
travelers.

 The combined carrier would maintain existing hubs and reverse the marginalization of American that happened as a result of the Delta and United mergers.
 The combined carrier will more likely reverse American Airlines’ relative revenue
decline and provide a deeper, more comprehensive network than a stand-alone AA.

The synergies of the two combined carriers are estimated to exceed $1.5 billion annually


Our Window of Opportunity is Closing

Your APA leadership strongly believes that when it comes to the possibility of American
Airlines merging with another carrier, it was always simply a question of not “if” but “when.”

However, we also realize that our window of opportunity to reach a deal that would benefit our members the most is only open for a short time – during bankruptcy.
Our concerns would be the same whether a merger was completed after bankruptcy or prior.

However, the ability to provide the highest level of benefit to the pilots is dramatically
different under those two scenarios. Prior to American Airlines exiting bankruptcy, we have the opportunity to craft an alternative to management’s 1113 contract termination – an opportunity to raise the bar to an industry competitive pilot contract.


Mr. Horton has said that any merger would be better addressed after exiting bankruptcy. There is a logical explanation for his position. Post-bankruptcy, any merger would be done on AA management’s terms, in an environment where we may be little more than a speed bump in the process.

After bankruptcy, management would remain in the driver’s seat, with a significant share of ownership in a newly reorganized company and with their positions protected by change of control clauses in the event of a merger. This would allow them to both dictate the terms of a merger and to potentially enrich themselves handsomely in the event of either a consensual consolidation or a hostile takeover.

There is an enormous financial incentive for senior management to resist merging while in bankruptcy, as their control over the corporation would be jeopardized by an agreement with US Airways, threatening their ability to “cash in” following American Airlines’ emergence from Chapter 11.

We can expect significant opposition to what your APA leadership believes to be the best course of action for our collective futures.

I guess we shall see how it all plays out . A lot of people will be losing their jobs thanks to this merger but hey as long as the pilots are happy who cares right? We will teach AA management a lesson for taking our lump sum away we will show them!!

 

[Super FLUF]

OK, that's the end of the analysis.

I would like to see two things now from those who do not want a merger with US Airways.

1. Why the above financial analysis is wrong.
2. What YOUR plan is going forward.

If you can't give at least a ballpark intelligent answer to either one, you have no right to be coming on here bitching about the big bad pilots and these idiotic conspiracy theories and BS accusations.

 

[Super FLUF]

I guess we shall see how it all plays out . A lot of people will be losing their jobs thanks to this merger but hey as long as the pilots are happy who cares right?

WHAT IS YOUR ALTERNATIVE PLAN?

 

[1AA]

you are forgetting the 1 big thing that AA is broke and bankrupt

Broke? Where have you been residing over the past 12 months?
Broke? Now that is comical.

 

[amt66]

WHAT IS YOUR ALTERNATIVE PLAN?

I don't have one I'm just a mechanic just like your a pilot not our job to run the airline just work here. I will say in my opinion usair won't help us that's just my opinion . They are full of problems just like we are the only difference we know our problems but we don't know what is happening over there.

 

[Super FLUF]

I don't have one I'm just a mechanic just like your a pilot not our job to run the airline just work here.

That is why your union hires ADVISERS - people who DO know a thing or two about running a business. It is THEIR JOB to tell you what the best course of action is for you and your fellow union brothers moving forward. It does you no good to shut your eyes, cup your hands over your ears and go "la la la la la la la" and think all of these problems will just work themselves out.

The ironic thing is, I am looking at what the best plan of action is going forward to keep American Airlines viable as a going concern and a strong job provider. Your plan consists of "I just fix planes." And you accuse ME of not caring about anyone else's job.

That's rich.

 

[Super FLUF]

Our plan for this airline? We fix planes, you fly them.

Pretty weak Bob. I expect a little more.

If you were standing in front of the UCC representing your brothers, is THIS what you would tell the UCC?

The company is bankrupt, and there is a reason it is bankrupt. It will be bankrupt AGAIN unless the underlying problems get fixed and the idiots that got us into this mess get tossed to the curb.

Do I support Horton and his stand alone plan? Hell No!!

We still need a plan going forward. It is either Horton and the stand-alone, or Parker and the merger. You can't just say no to both. Nobody else has approached AA, and some of the airlines Horton has approached have told us to F off (I don't blame them).

So if we don't want Horton's plan, and we don't think US Airways will help us, what are we supposed to do?

I posted 2 very in-depth analysis that both list a number of reasons that this merger no only will work, but will also STRENGTHEN AA and give us the opportunity to grow even further. Are the analysts wrong? If so, how are they wrong?

 

[Overspeed]

OK, that's the end of the analysis.

I would like to see two things now from those who do not want a merger with US Airways.

1. Why the above financial analysis is wrong.
2. What YOUR plan is going forward.

If you can't give at least a ballpark intelligent answer to either one, you have no right to be coming on here bitching about the big bad pilots and these idiotic conspiracy theories and BS accusations.

I do not believe the financial analysis is wrong but I am concerned about the quality of the data. Looking at successes and failures in the airline industry as far as legacies I would like to see AA go the route of Lufthansa AG. They broke the company in to separate business units for better accountability. While it sounds scary, it proved out a LH AG to be vey beneficial to LH Technik.

LHT is now a stand alone business unit of LH AG that is profitable in its own right. There is a very strong labor presence there however I will admit that organized labor and the more socialized form of economy and government does help out unions.

The problem I see is that neither AA or US seems to have much to offer in the way of innovative management. That is a major impediment to any future success at AA, US, or a combined AA/US. There is an upside to a merger and a downside as well. Do nothing however and business as usual for labor and management is not a viable long term option.

 

[amt66]

That is why your union hires ADVISERS - people who DO know a thing or two about running a business. It is THEIR JOB to tell you what the best course of action is for you and your fellow union brothers moving forward. It does you no good to shut your eyes, cup your hands over your ears and go "la la la la la la la" and think all of these problems will just work themselves out.

The ironic thing is, I am looking at what the best plan of action is going forward to keep American Airlines viable as a going concern and a strong job provider. Your plan consists of "I just fix planes." And you accuse ME of not caring about anyone else's job.

That's rich.

An advisor tells you to take a 50 % cut in pay will you do it?

 

[OldGuy@AA]

Nope, but 74% of Tulsa would obviously.

 

[Bob Owens]

Pretty weak Bob. I expect a little more.

If you were standing in front of the UCC representing your brothers, is THIS what you would tell the UCC?

The company is bankrupt, and there is a reason it is bankrupt. It will be bankrupt AGAIN unless the underlying problems get fixed and the idiots that got us into this mess get tossed to the curb.



We still need a plan going forward. It is either Horton and the stand-alone, or Parker and the merger. You can't just say no to both. Nobody else has approached AA, and some of the airlines Horton has approached have told us to F off (I don't blame them).

So if we don't want Horton's plan, and we don't think US Airways will help us, what are we supposed to do?

First step, fire the team thats in place and hire Herb Kellerher or Gordon Bethune, or even Crandall, people who have run profitable airlines.

Everyone who is favor of this cites that it will make us the biggest carrier, but is Southwest the biggest? Is Jet Blue the biggest? What valuable markets does USAIR bring to the table?

But the last carrier I'd like to see us merge with is USAIR and create a mega carrier with super low wages that will simply send the rest of the industry into another round of concessionary bargaining. There wont be big profits to provide us wage increases, those other people on the UCC will all make out, higher landing fees, higher lease rates, higher fuel costs, the money will go.

I didnt blast the pilots for pushing it, I'm simply not a fan of it. Certainly not willing to give Parker any more than Horton. Your situation is different, long progressions and the fact that you have to wait for vacanacies to move along the pay scale to that coveted left seat in a 777 certainly increases the hold AA has on you, for us the end of AA is simply not as bad as it once was, most really dont care anymore, surely you see that when you come across mechanics throughout the line. Most of the people we know who got fired from AA landed better jobs. We hear about people we know through out the system voluntarily leaving at a modest but unprecidented rate. Under our current agreement, if AA liquidated today, and the overall economy continued to grow, we could expect to be at another carrier making more than we would had AA survived. If we merge with USAIR it could be even worse as we could lose the three year wage adjustment provision and the paltry equity stake may be worth less. You guys are still looking at AA as a place for a career, many of us gave up on that, just showing up for a paycheck.

 

[Super FLUF]

What valuable markets does USAIR bring to the table?

This is the frustrating part. Did anyone here even look at the information I posted? Specifically, did anyone look at the numbers breakdown on the airline financials site? Nobody likes the yields in CLT? Nobody likes the market share numbers? Nobody likes the fact that US Airways serves MORE cities in Europe than AA?

What about the analysis of the combined networks and the much needed revenue bump we need?

Come on you guys. Your plans seem to revolve around emotion and feelings rather than pragmatic analysis of the alternatives we need to choose from.

But the last carrier I'd like to see us merge with is USAIR and create a mega carrier with super low wages that will simply send the rest of the industry into another round of concessionary bargaining.

You are wrong to assume this. This is the reason that all 3 unions are on board with this deal. When you look at the CLAs negotiated by all 3 groups, the final product will be equal or just slightly off carriers that have been out of BK for a few years. Interestingly enough, our CLA may even end up being better than "industry standard" in a few areas. I know for a fact the United MEC was delaying the release of their TA to the membership until ours was voted in. They did not want us getting a better contract in bankruptcy than they negotiated in regular Section 6. Although their TA (yet to be ratified) is superior to our latest offer, we may surpass them once the terms of the CLA kick in.

So much for being the whores of the airline industry.

 

[Bob Owens]

What about the analysis of the combined networks and the much needed revenue bump we need?

Our revenue has bumped up by around $7billion since we gave concessions in 2003, and the airline is 1/3rd smaller. What happened to all that extra revenue plus the savings? Yea fuel took a big chunk of it, but the rest of it went to the other 75% stakeholders, and thats where any increased revenues will go as well. AA cut 1/3rd of our flights but the total paid for landing fees didnt go down, they raised their rates.

Come on you guys. Your plans seem to revolve around emotion and feelings rather than pragmatic analysis of the alternatives we need to choose from

Thats just it, with 25% of the equity we are not the ones making the choice.

When you look at the CLAs negotiated by all 3 groups, the final product will be equal or just slightly off carriers that have been out of BK for a few years.

Not for mechanics, we would still be at the bottom, by a wider margin than before because USAIR would be gone.