Q&A from the APA

Aug 20, 2002
664
50
Interesting stuff. It seems to address many things being stated on this board.



APA TA Q&A

“Unknown Unknowns”

Based on the large number of SoundOff messages the APA leadership has received in recent days, it’s evident that our members have a variety of questions about the tentative agreement, the impact of“yes” vote on a potential American Airlines-US Airways merger, what happens in the event of a “no” vote, and other issues associated with the TA.

One common thread that has emerged from members’ messages: there is some resistance to the use of terms such as “could,” “might,” “likely” and other qualifiers by APA’s subject-matter experts. Many of you have expressed skepticism about this sort of noncommittal verbiage and have asked why the attorneys and other advisers representing our interests have been qualifying their statements in this manner. The fact is, we really don’t know what may happen in the event of a “no” vote. The legal process we are subject to in Chapter 11 restructuring doesn’t lend itself to predictability, and no pilot union has ever opted for potential contract abrogation versus ratifying a deal on the table. As former Secretary of Defense Donald Rumsfeld famously stated, “There are known knowns… There are known unknowns… But there are also unknown unknowns—there are things we do not know, we don’t know.”

The situation we find ourselves in contains a large number of unknowns, including those of the “unknown unknowns” variety. If our members vote to ratify the TA, we’ll never know for certain how the judge would have ruled in our case. (That noted, attorneys for APA, APFA and TWU employed similar legal theories in the bankruptcy hearing, so the rulings would likely be consistent for all three.) Conversely, if our members vote against ratification and the judge proceeds to rule in management’s favor, we won’t be able to predict how management will choose to proceed.

In an effort to shed some light on issues associated with the TA, the following questions and answers represent the beginning of a new series of Q&As specifically pertaining to the TA and potential contract abrogation that we’ll be publishing in the coming days in response to messages we’re receiving from members at large. We encourage you to continue sending the APA leadership your questions and views via SoundOff. By doing so, you’ll enable us to continue providing new Q&As that address your information needs. We will post TA Q&As in the “Rumor Control” section of alliedpilots.org and also in the “Tentative Agreement” section, both accessible via the members’ home page.

Q(1): If we vote no on the TA, I’ve heard that after the judge abrogates our contract, he will tell management that the “Last, best final offer” will supersede the original 1113 term sheet for future contract negotiations.

A: The judge doesn’t actually abrogate our current contract. Instead, if he were to rule in favor of management’s motion, he would be granting AMR management the legal authority to reject our collective bargaining agreement.Management would then decide what terms to implement, and they would probably implement their April 19 1113(c) term sheet. The terms of the “last, best final offer,” (LBFO) which represent a significant improvement over the term sheet, will not be taken into consideration by the court. Management’s LBFO is technically a section 408 “settlement offer” and separate from the 1113 process. The judge will not direct management as far as what specific changes to make to our current wages and working conditions once the contract is abrogated. That would be at management’s discretion.

Q(2): If we just vote no on the TA and take our chances with an abrogated contract, we should be able to get a shorter-term deal than the six-year deal duration in the TA, right?

A: In a post-abrogation scenario, management doesn’t create a new contract, they simply impose terms unilaterally. The “duration” of those terms would be until management decides to agree to a new contract with APA. Management would be free to impose pay, work rules and benefits that serve their needs. Once they have imposed below-market labor rates, it is unlikely that management would make significant improvements in pay and work rules that would increase their costs. They will have established a de-facto contract that solves their “cost” problem without having to bother with the collective bargaining process. In that environment, given the current state of the Railway Labor Act, it could be years before we could reach an agreement with management on another TA.

Q(3): Doesn’t management need a contract in place in order to get exit financing?

A: There is no statutory or administrative requirement in the bankruptcy process that states that management must have a contract in place in order to exit bankruptcy. AMR’s cash position has actually improved since their Nov. 29 filing and currently stands at more than $5 billion.As such, there is no need to obtain exit financing as most other carriers had to due to their poor cash position.

Q(4): If we vote yes on the TA, doesn’t that just empower the current management team and lessen the chances for a merger with US Airways?

A: Our advisers and experts have told us that the Unsecured Creditors’ Committee is focused on a resolution to the labor cost issue above all other issues, including merger offers. Until the issue of labor contracts has been settled, consideration given to an offer by US Airways or any other potential suitor is on the back-burner. While it may seem like reverse logic, our advisers believe that the shortest path to a merger with US Airways will be through a ratified agreement with AMR management. This will allow the focus to be shifted from the labor cost issue to the revenue and network issue, which the stand-alone plan fails to address.

Q(5): Isn’t it correct that we’ll be able to strike if our contract is abrogated or at least once we exit bankruptcy? Then we can force management to agree to an industry-leading contract on our terms.

A: In a 2007 decision by the court in Northwest’s bankruptcy, the Second Circuit made it clear that an order from the bankruptcy court authorizing a contract rejection does not in itself give the union the right to launch a strike in response to the carrier imposing new work rules and pay cuts. Upon exit from bankruptcy, with no contract in place, we will again fall under the auspices of the National Mediation Board and Railway Labor Act and begin a new round of negotiations.

Q(6): Isn’t this just a 2003 “bum’s rush” all over again? Why aren’t we following our normal requirements for a ratification vote?

A: Whatever your view of the events of 2003, the key difference is that a federal bankruptcy judge is determining our timetable in the current ratification process. Our members will be voting on the tentative agreement against the backdrop of a broader legal proceeding, which is AMR’s Chapter 11 restructuring. Federal judges have wide discretion and their direction takes precedence over our internal governance policies.

Q(7): Just a few weeks ago 7,500 AA pilots expressed “no confidence” in AMR management. How can we turn around and do a deal with them now?

A: A “yes” vote doesn’t represent an endorsement of AMR management or their stand-alone plan. Instead, a “yes” vote secures better terms of employment versus what we would end up with in a contract abrogation scenario. Despite what some may claim, the two choices we currently face are 1) the TA or 2) the unknowns associated with contract abrogation. The only certainty about contract abrogation is that we would be facing considerable uncertainty with respect to our terms of employment.
__________________
 
OP
W
Aug 20, 2002
664
50
I am surprised nobody has had a comment on this as it seems to directly contradict some commonly held views here.
 

AV1

Advanced
Oct 12, 2010
135
31
Interesting stuff. It seems to address many things being stated on this board.



APA TA Q&A

“Unknown Unknowns”

Based on the large number of SoundOff messages the APA leadership has received in recent days, it’s evident that our members have a variety of questions about the tentative agreement, the impact of“yes” vote on a potential American Airlines-US Airways merger, what happens in the event of a “no” vote, and other issues associated with the TA.

One common thread that has emerged from members’ messages: there is some resistance to the use of terms such as “could,” “might,” “likely” and other qualifiers by APA’s subject-matter experts. Many of you have expressed skepticism about this sort of noncommittal verbiage and have asked why the attorneys and other advisers representing our interests have been qualifying their statements in this manner. The fact is, we really don’t know what may happen in the event of a “no” vote. The legal process we are subject to in Chapter 11 restructuring doesn’t lend itself to predictability, and no pilot union has ever opted for potential contract abrogation versus ratifying a deal on the table. As former Secretary of Defense Donald Rumsfeld famously stated, “There are known knowns… There are known unknowns… But there are also unknown unknowns—there are things we do not know, we don’t know.”

The situation we find ourselves in contains a large number of unknowns, including those of the “unknown unknowns” variety. If our members vote to ratify the TA, we’ll never know for certain how the judge would have ruled in our case. (That noted, attorneys for APA, APFA and TWU employed similar legal theories in the bankruptcy hearing, so the rulings would likely be consistent for all three.) Conversely, if our members vote against ratification and the judge proceeds to rule in management’s favor, we won’t be able to predict how management will choose to proceed.

In an effort to shed some light on issues associated with the TA, the following questions and answers represent the beginning of a new series of Q&As specifically pertaining to the TA and potential contract abrogation that we’ll be publishing in the coming days in response to messages we’re receiving from members at large. We encourage you to continue sending the APA leadership your questions and views via SoundOff. By doing so, you’ll enable us to continue providing new Q&As that address your information needs. We will post TA Q&As in the “Rumor Control” section of alliedpilots.org and also in the “Tentative Agreement” section, both accessible via the members’ home page.

Q(1): If we vote no on the TA, I’ve heard that after the judge abrogates our contract, he will tell management that the “Last, best final offer” will supersede the original 1113 term sheet for future contract negotiations.

A: The judge doesn’t actually abrogate our current contract. Instead, if he were to rule in favor of management’s motion, he would be granting AMR management the legal authority to reject our collective bargaining agreement.Management would then decide what terms to implement, and they would probably implement their April 19 1113© term sheet. The terms of the “last, best final offer,” (LBFO) which represent a significant improvement over the term sheet, will not be taken into consideration by the court. Management’s LBFO is technically a section 408 “settlement offer” and separate from the 1113 process. The judge will not direct management as far as what specific changes to make to our current wages and working conditions once the contract is abrogated. That would be at management’s discretion.

Q(2): If we just vote no on the TA and take our chances with an abrogated contract, we should be able to get a shorter-term deal than the six-year deal duration in the TA, right?

A: In a post-abrogation scenario, management doesn’t create a new contract, they simply impose terms unilaterally. The “duration” of those terms would be until management decides to agree to a new contract with APA. Management would be free to impose pay, work rules and benefits that serve their needs. Once they have imposed below-market labor rates, it is unlikely that management would make significant improvements in pay and work rules that would increase their costs. They will have established a de-facto contract that solves their “cost” problem without having to bother with the collective bargaining process. In that environment, given the current state of the Railway Labor Act, it could be years before we could reach an agreement with management on another TA.

Q(3): Doesn’t management need a contract in place in order to get exit financing?

A: There is no statutory or administrative requirement in the bankruptcy process that states that management must have a contract in place in order to exit bankruptcy. AMR’s cash position has actually improved since their Nov. 29 filing and currently stands at more than $5 billion.As such, there is no need to obtain exit financing as most other carriers had to due to their poor cash position.

Q(4): If we vote yes on the TA, doesn’t that just empower the current management team and lessen the chances for a merger with US Airways?

A: Our advisers and experts have told us that the Unsecured Creditors’ Committee is focused on a resolution to the labor cost issue above all other issues, including merger offers. Until the issue of labor contracts has been settled, consideration given to an offer by US Airways or any other potential suitor is on the back-burner. While it may seem like reverse logic, our advisers believe that the shortest path to a merger with US Airways will be through a ratified agreement with AMR management. This will allow the focus to be shifted from the labor cost issue to the revenue and network issue, which the stand-alone plan fails to address.

Q(5): Isn’t it correct that we’ll be able to strike if our contract is abrogated or at least once we exit bankruptcy? Then we can force management to agree to an industry-leading contract on our terms.

A: In a 2007 decision by the court in Northwest’s bankruptcy, the Second Circuit made it clear that an order from the bankruptcy court authorizing a contract rejection does not in itself give the union the right to launch a strike in response to the carrier imposing new work rules and pay cuts. Upon exit from bankruptcy, with no contract in place, we will again fall under the auspices of the National Mediation Board and Railway Labor Act and begin a new round of negotiations.

Q(6): Isn’t this just a 2003 “bum’s rush” all over again? Why aren’t we following our normal requirements for a ratification vote?

A: Whatever your view of the events of 2003, the key difference is that a federal bankruptcy judge is determining our timetable in the current ratification process. Our members will be voting on the tentative agreement against the backdrop of a broader legal proceeding, which is AMR’s Chapter 11 restructuring. Federal judges have wide discretion and their direction takes precedence over our internal governance policies.

Q(7): Just a few weeks ago 7,500 AA pilots expressed “no confidence” in AMR management. How can we turn around and do a deal with them now?

A: A “yes” vote doesn’t represent an endorsement of AMR management or their stand-alone plan. Instead, a “yes” vote secures better terms of employment versus what we would end up with in a contract abrogation scenario. Despite what some may claim, the two choices we currently face are 1) the TA or 2) the unknowns associated with contract abrogation. The only certainty about contract abrogation is that we would be facing considerable uncertainty with respect to our terms of employment.
__________________

Seriously??? I don't have the time to read the whole article right now but the union who basically was the one holding out, leaving during lunch during negotiations, ice machines, etc. and basically threw us all into bankruptcy is now the first ones to cave into these ridiculous negotiations. The first few paragraphs started to make me sick. Seriously?
 

aapitbull

Veteran
Oct 4, 2002
725
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I am surprised nobody has had a comment on this as it seems to directly contradict some commonly held views here.

Capt Concession Hale is spinning a yes vote because as they said in the begining there are unknown unknowns and the deal they got is not awful but the short answer should be, do you want to fight or fold and if you think it better to fight than there are risk involved and be prepared for any possible outcome but DAL would not exit BK without a consenual agreements and it is unlikely AA would either.but that is the Unknown Unknown.
 
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topDawg

Veteran
Nov 23, 2010
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Capt Concession Hale is spinning a yes vote because as they said in the begining there are unknown unknowns and the deal they got is not awful but the short answer should be, do you want to fight or fold and if you think it better to fight than there are risk involved and be prepared for any possible outcome but DAL would not exit BK without a consenual agreements and it is unlikely AA would either.but that is the Unknown Unknown.
One thing that has to be remembered with Delta/United and Northwest (and US and CO if you want to go back) is they are under the *old* BK rules. Delta could still be in BK right now had they wanted too. My understanding is AMR doesn't have this choice. My understanding is they have 18 months. Now, I'm not sure what happens after 18 months (can the judge add time? do they have to go to Chapter 7?) All i remember is DL/NW filled on the day before the rule change so they could stay in Chapter 11 as long as needed.

Of course, I have never seen an Airline going into BK and go from 4B in cash to 5B......
 

aapitbull

Veteran
Oct 4, 2002
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One thing that has to be remembered with Delta/United and Northwest (and US and CO if you want to go back) is they are under the *old* BK rules. Delta could still be in BK right now had they wanted too. My understanding is AMR doesn't have this choice. My understanding is they have 18 months. Now, I'm not sure what happens after 18 months (can the judge add time? do they have to go to Chapter 7?) All i remember is DL/NW filled on the day before the rule change so they could stay in Chapter 11 as long as needed.

Of course, I have never seen an Airline going into BK and go from 4B in cash to 5B......

The way I understand It and I will admit I have not read the law id the 18 months is the limit to their exclusive rights period the BK can go longer but the Judge has to let in competeing offers after 18 months.

My point was at Delta the Judge did abrogate the F/A's contract and they continued to negotiate for quite sometime before finally reaching a deal that gave the F/A's a stake in the new stock, and when it ratified the BK ended the next day. Now most people say that they will not leave BK without consenual agreements with all groups, because of the unknown unknowns as to what might happen at that point since no union has ever pushed it that far, my guess is the company would not chance it, but as you said I have not seen a company enter BK with 4B in cash offer pay raise's and watch the cash go up not down during the process.

I have said from the start this BK was a SHAAM and if all those unbelievers cannot see it now then there is no help for them.
 

topDawg

Veteran
Nov 23, 2010
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The way I understand It and I will admit I have not read the law id the 18 months is the limit to their exclusive rights period the BK can go longer but the Judge has to let in competeing offers after 18 months.

My point was at Delta the Judge did abrogate the F/A's contract and they continued to negotiate for quite sometime before finally reaching a deal that gave the F/A's a stake in the new stock, and when it ratified the BK ended the next day. Now most people say that they will not leave BK without consenual agreements with all groups, because of the unknown unknowns as to what might happen at that point since no union has ever pushed it that far, my guess is the company would not chance it, but as you said I have not seen a company enter BK with 4B in cash offer pay raise's and watch the cash go up not down during the process.

I have said from the start this BK was a SHAAM and if all those unbelievers cannot see it now then there is no help for them.
And it may be. I am still amazed that a judge would even think about dumping contracts for a company who is growing its cash on hand while in BK.

and you got the wrong airline. I think you mean NWA, as they were in the middle of a union change when the judge abrogated that contract. Delta's only big union is pilots (ALPA) ACS/Ramp/FAs and TechOps is all non-union.
 

Hopeful

Veteran
Dec 21, 2002
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Q(3): Doesn’t management need a contract in place in order to get exit financing?

A: There is no statutory or administrative requirement in the bankruptcy process that states that management must have a contract in place in order to exit bankruptcy. AMR’s cash position has actually improved since their Nov. 29 filing and currently stands at more than $5 billion.As such, there is no need to obtain exit financing as most other carriers had to due to their poor cash position.

This is the big one for me.....The TWU believes there must be consenual agreements in place to exit BK....But this states otherwise.

If the company gets to impose "TERMS," then is not DURATION a "TERM?"
 

aapitbull

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Oct 4, 2002
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And it may be. I am still amazed that a judge would even think about dumping contracts for a company who is growing its cash on hand while in BK.

and you got the wrong airline. I think you mean NWA, as they were in the middle of a union change when the judge abrogated that contract. Delta's only big union is pilots (ALPA) ACS/Ramp/FAs and TechOps is all non-union.

You are correct it was NWA vs AFA/PFAA my mistake.
 

aapitbull

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This is the big one for me.....The TWU believes there must be consenual agreements in place to exit BK....But this states otherwise.

If the company gets to impose "TERMS," then is not DURATION a "TERM?"

That is one of the unknown unknowns the problem is if the BK ends then the judge is no longer in control and we are back in the hands of the NMB and there are a dozen possible outcomes,[ but no one has ever been there and which ever side gets the short end from the NMB will undoubtably turn to the federal court for relief and of course both side are keeping a eye on the election coming up each believe's one side favors them.
 

Hopeful

Veteran
Dec 21, 2002
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That is one of the unknown unknowns the problem is if the BK ends then the judge is no longer in control and we are back in the hands of the NMB and there are a dozen possible outcomes,[ but no one has ever been there and which ever side gets the short end from the NMB will undoubtably turn to the federal court for relief and of course both side are keeping a eye on the election coming up each believe's one side favors them.

How true!
But that's the issue here....Do we immediately return under the auspices of the NMB or does the company get to impose the six year term and we won't need the NMB for another 7-9 years?
If there is a six year duration..we are DONE!
I have no problem going all the way with this process and as long as it takes.
But if the duration term can be imposed, the gamble we are willing to take will have been worthless should the terms STILL be six years!
 

NYer

Veteran
Jun 4, 2010
4,169
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The way I understand It and I will admit I have not read the law id the 18 months is the limit to their exclusive rights period the BK can go longer but the Judge has to let in competeing offers after 18 months.

My point was at Delta the Judge did abrogate the F/A's contract and they continued to negotiate for quite sometime before finally reaching a deal that gave the F/A's a stake in the new stock, and when it ratified the BK ended the next day. Now most people say that they will not leave BK without consenual agreements with all groups, because of the unknown unknowns as to what might happen at that point since no union has ever pushed it that far, my guess is the company would not chance it, but as you said I have not seen a company enter BK with 4B in cash offer pay raise's and watch the cash go up not down during the process.

I have said from the start this BK was a SHAAM and if all those unbelievers cannot see it now then there is no help for them.

Are you talking about the Northwest Flight Attendants?
 

NYer

Veteran
Jun 4, 2010
4,169
923
How true!
But that's the issue here....Do we immediately return under the auspices of the NMB or does the company get to impose the six year term and we won't need the NMB for another 7-9 years?
If there is a six year duration..we are DONE!
I have no problem going all the way with this process and as long as it takes.
But if the duration term can be imposed, the gamble we are willing to take will have been worthless should the terms STILL be six years!

We are currently under the NMB, so that would continue. There would be no terms, since there isn't a deal. But AA would be able to impose their changes and working under their changes what incentive is there to make a deal? And how long would we be willing to live under terms AA dictates in trying to get something less than 6 years. We're almost coming up on 6 years since our last deal became amendable and we are no where near close to a deal. It seems we are even further apart.
 

Bogey

Senior
Dec 11, 2011
297
267
How true!
But that's the issue here....Do we immediately return under the auspices of the NMB or does the company get to impose the six year term and we won't need the NMB for another 7-9 years?
If there is a six year duration..we are DONE!
I have no problem going all the way with this process and as long as it takes.
But if the duration term can be imposed, the gamble we are willing to take will have been worthless should the terms STILL be six years!

It's a big gamble. And the question you have to ask yourself is, do you feel lucky?