Rummor Control:

[strikeforce]

I have no doubt that you are up against liars and manipulators, but sometimes your post make me go "huh".

Managers and soups' are paid to lie. People that are sincere would have packaged a T/A that recognizes AMT's contributions to saving this company from the brink, and it would've been presented to us on 5/01/2008, right?

Trust goes a long way to friendly labor/management relations.

That goes for member/union relations, as well. Do you trust Jim Little and his secret society cronies?


2015???? The 2020 Flightplan may have our T/A incorporated somewhere in the fine print. Read it carefully.....you just might find it!!!!

 

[Bob Owens]

Do you spend the week in arguements with AA Management using facts or speculation?

When you make statements here like:
"So yes it may be Cash positive in that the company gets more cash now but it probably adds more to AA debts and costs, figures they use in Negotiations to try and claim they dont have the money to pay us."

And then admit that your complete scenario leading up to that statement is speculation, it makes me wonder what is actually taking place and being said in negotiations. I would hope that negotiations are based more on facts and less on this type of speculation. I have no doubt that you are up against liars and manipulators, but sometimes your post make me go "huh".

Also, this type of unknown spending and cash flow is exactly why I suggested the profit sharing formula be modified to pay out on the same "success" formula management uses for bonuses. Using the management formula we get shared gain regardless of profit/loss which may be negatively impacted by such manipulation. I would love to see the management response to the suggestion that our profit sharing plan be based on their own success measuring tools. And there would be no argument that it isn't a FAIR measurement, at least not from those that having been reaping the benefits of the formula for years now.

The post was in reply to FWAAA, which was clearly speculation as well. I assumed that when I say "lets say" it indicates continued speculation as I used FWAAs figures.

As I've said management doesn't reveal how the numbers they throw out there are determined.

I was speculating on how the company could inflate costs and their debt, a figure that has been widely used by the company and some ATD officials in the past to try and lower expectations. I look to see how they could be spun from the limited info we are given. I suspect that most of the figures are manipulated to show what they want to show, and posting factual figures in a way that paints an overly pessimistic picture isnt something that the SEC looks for. Doing the opposite is. Thats why the company got upset and will no longer allow me to see their cost outs. Because on the one hand they are putting out all this pessimistic information that we can all see, even people like FWAAA, and Eoleson who cheerlead for the company but then they include $5.1 million a year in profit sharing for the next four years into the cost out to try and offset the regressive nature of the proposal. So on the one hand they are saying that we cant expect any money because they dont have it yet on the other(cost out) they are saying that over the next four years they expect to make enough profits to give us $20 million in profit sharing.

 

[Bob Owens]

Yes, but if you read the text, the majority of those skilled workers won't be in the US, unless you are considering the guys like 787 who are building new airframes, components and engines:

Yes I'm counting them.

Why do you think that Pratt is pushing for duty time limits? Because by reducing the flexibility of the airline work schedule and the amount of OT we can work (which allows us to stay in the industry) it makes places like Pratt more appealing places to work and build all those new engines with the gearbox driven fans.

Recently management at AA decided to tighten up their CS policy for all the groups except maintenence. Why? Because they know that if they did that would be the straw that broke the camels back. The place would collapse.

 

[FWAAA]

Still sounds like a shell game to me.

OK AA buys the plane for $40 million, they put down $5 million, then on delivery pay the rest off. So AA spent $40 million, but they have a $40 million assett.

AA has that asset only momentarily, as they then sell the plane to the bank or other leasing company.

Now they sell the plane and get $40 million in cash, but this income is not from ticket sales. So they have the $40 million that they most likely borrowed and are paying interest on to the banks, now they sell the plane to a leasing company, likely owned by a Bank that would likely have to approve the sale, and sign a 20 year lease for lets say $3 million a year, adding $60 million in liability.

The liability on the financial statement would only include the present value of the lease payments, often expressed as about 7 times the annual lease payments, so the liability would equal only about $21 million, not $60 million.

So they are paying interest for the original $40 million plus paying lease payments for the same plane to the banks.

No, once the plane is sold to the leasing company, any loans to finance its purchase are paid off, so there are no interest payments and there is no $40 milion debt.

The banks get to collect interest for the purchase of a plane thats owned by the banks that they are also getting lease payments on.

Nope. All AA has to pay is the $3 million a year hypothetical lease payment.

The company gets a $40 million increase in costs for the year of the transaction plus a $60 million addition to their long term liabilities. So before putting in the sale price the plane will cost them $100 million on the books. The $40 million they paid this year plus the $60 million long term liability for the lease back.

No, there is no $40 million "increase in costs for the year of the transaction." The only "costs" are the annual lease payments. The plane does not cost $100 million "on the books." AA's long term liabilities increase by the present value of the lease payments.

So yes it may be Cash positive in that the company gets more cash now but it probably adds more to AA debts and costs, figures they use in Negotiations to try and claim they dont have the money to pay us.

The delivery of each plane is "cash positive" because AA is able to borrow the down payment. So buy paying the remaining $35 million in my example, AA is then able to sell the plane for the entire $40 million price, adding the $5 million deposit back into its cash balance.

 

[odie01]

The delivery of each plane is "cash positive" because AA is able to borrow the down payment. So buy paying the remaining $35 million in my example, AA is then able to sell the plane for the entire $40 million price, adding the $5 million deposit back into its cash balance.

The only thing we know for a fact is that AA is making money off each aircraft purchased and adding to their cash balance. Your examples are no more credible than what I am hearing from AA pilots that actually work for the company.

 

[eolesen]

The only thing we know for a fact is that AA is making money off each aircraft purchased and adding to their cash balance. Your examples are no more credible than what I am hearing from AA pilots that actually work for the company.

I'm sure those AA pilots are about as knowledgeable on the finance side of the company as an AMT would be about the procurement process for getting docks, lift trucks, or tooling...

Bob, you claim that management tightened the screws on everyone except maintenance.

From what was said here, "they" only tightened the screws on the agents and fleet service clerks. Trip trading for pilots or flight attendants doesn't look like it was touched, nor do I see where it was touched for reservations or hourly clerical workers. My guess is the policy got locked down for the ones who were truly pushing the envelope farther than it should have been with things like three and four way CS's and overlaps on an overlap. But that's only a guess.

 

[Bob Owens]

I'm sure those AA pilots are about as knowledgeable on the finance side of the company as an AMT would be about the procurement process for getting docks, lift trucks, or tooling...

Bob, you claim that management tightened the screws on everyone except maintenance.

From what was said here, "they" only tightened the screws on the agents and fleet service clerks. Trip trading for pilots or flight attendants doesn't look like it was touched, nor do I see where it was touched for reservations or hourly clerical workers. My guess is the policy got locked down for the ones who were truly pushing the envelope farther than it should have been with things like three and four way CS's and overlaps on an overlap. But that's only a guess.

If you have ones that are abusing it why go after everyone?

 

[Bob Owens]

AA has that asset only momentarily, as they then sell the plane to the bank or other leasing company.



The liability on the financial statement would only include the present value of the lease payments, often expressed as about 7 times the annual lease payments, so the liability would equal only about $21 million, not $60 million.



No, once the plane is sold to the leasing company, any loans to finance its purchase are paid off, so there are no interest payments and there is no $40 milion debt.



Nope. All AA has to pay is the $3 million a year hypothetical lease payment.



No, there is no $40 million "increase in costs for the year of the transaction." The only "costs" are the annual lease payments. The plane does not cost $100 million "on the books." AA's long term liabilities increase by the present value of the lease payments.



The delivery of each plane is "cash positive" because AA is able to borrow the down payment. So buy paying the remaining $35 million in my example, AA is then able to sell the plane for the entire $40 million price, adding the $5 million deposit back into its cash balance.

The $40 million would get added to the costs of running the business for the year the "moment " took place, so would the sale, making the net impact ZERO. But the expense would still go up, along with the revenue, are you saying that the whole exchange goes completely unrecorded?

So the CASMs are brought up, as well as the RASMs through these exchanges even though the net impact to the balance sheet may be zero. But the company will cite the CASMs and then say that the Revenue should not be looked at since it was impacted by revenue generated from the sale of aircarft used to pay off debt. They would leave out the other half of the exchange, and they would demand that we sign a letter of confidentiality to keep us from poking around about it.

We know AA has higher labor costs in part because of the fact we employ around 5000 more workers than they would if we sent our work out like our competitors but our non-labor CASMs should be much lower than they are, sure our non-labor CASMs are a little lower but not nearly enough to offset our labor CASMs. UAL claimed that Purchased maintenance services made up 13% of their total operating costs(2007). Thats a huge expense. We did not see a 13% non-labor CASM advantage in 2007. WHY?

Exchanges like these, even though they have a zero net impact can be used to inflate the CASMs which is a figure the company repeatedly cites in negotiations, as they did in April.

We know for a fact that management spins the numbers to say what they want them to say. Sometimes they get sloppy, such as their cost out where they claimed that the profit sharing would be worth $5.1 million a year and they used it to add over $20 million to the offer.

So we can quibble over our theoretical numbers but the point is that the company uses transactions and shuffles money around for various reasons and then as a side benifit spins the numbers to paint whatever picture they want to paint to create a desired impact, at this time they want to decrease the expectations of their employees by somehow claiming that AA is in terrible shape. So if its buying and selling an airplane the same day so they end up with $5 million in borrowed money or adding $5.1 million in imagined Profit Sharing I'm going to look at how the company comes up with the numbers they throw in front of us.

 

[FWAAA]

The $40 million would get added to the costs of running the business for the year the "moment " took place, so would the sale, making the net impact ZERO. But the expense would still go up, along with the revenue, are you saying that the whole exchange goes completely unrecorded?

No, the expenses don't go up by any amount and neither does revenue. The transaction doesn't impact the income statement, so it does not contribute to annual income or loss. Airplane expense that does impact the income statement is either depreciation (for an owned airplane) or rent expense (for a leased airplane). Financing transactions like the sale/leaseback of brand new planes does not touch the income statement. I don't know how to make it any clearer than that.

So the CASMs are brought up, as well as the RASMs through these exchanges even though the net impact to the balance sheet may be zero. But the company will cite the CASMs and then say that the Revenue should not be looked at since it was impacted by revenue generated from the sale of aircarft used to pay off debt. They would leave out the other half of the exchange, and they would demand that we sign a letter of confidentiality to keep us from poking around about it.

No, the sale/leaseback transaction does not impact the CASM. The annual rent paid does affect CASM.

We know AA has higher labor costs in part because of the fact we employ around 5000 more workers than they would if we sent our work out like our competitors but our non-labor CASMs should be much lower than they are, sure our non-labor CASMs are a little lower but not nearly enough to offset our labor CASMs. UAL claimed that Purchased maintenance services made up 13% of their total operating costs(2007). Thats a huge expense. We did not see a 13% non-labor CASM advantage in 2007. WHY?

I have repeatedly posted that UAL did NOT pay 13% of its 2007 operating expenses in outsourced maintenance. You either mis-heard something or someone mis-spoke or someone just plane made it up. It's false, and your repeating of the nonsense stat makes me question your critical thinking abilities. UAL's total 2007 maintenance materials and outsourced repair expense was $1.166 billion; that equals just 6.1% of its 2007 total operating expenses. To compare, AMR spent $1.057 billion on maintenance materials and outsourced repairs in 2007, which equaled 4.8% of AMR's total operating expenses. The line item for AMR was less than for UAL because of the insourced heavy maintenance at AA.

Exchanges like these, even though they have a zero net impact can be used to inflate the CASMs which is a figure the company repeatedly cites in negotiations, as they did in April.

No, Bob, the financing of new airplanes does not "inflate" the CASM.

We know for a fact that management spins the numbers to say what they want them to say. Sometimes they get sloppy, such as their cost out where they claimed that the profit sharing would be worth $5.1 million a year and they used it to add over $20 million to the offer.

Ok, management added a hypothetical profit sharing number to the out-years. Call them on it.

So we can quibble over our theoretical numbers but the point is that the company uses transactions and shuffles money around for various reasons and then as a side benifit spins the numbers to paint whatever picture they want to paint to create a desired impact, at this time they want to decrease the expectations of their employees by somehow claiming that AA is in terrible shape. So if its buying and selling an airplane the same day so they end up with $5 million in borrowed money or adding $5.1 million in imagined Profit Sharing I'm going to look at how the company comes up with the numbers they throw in front of us.

I'm certain the company does paint as rosy a picture as it can. The financing of new airplanes like the 738s does not affect the numbers. Keep looking.

 

[FWAAA]

The only thing we know for a fact is that AA is making money off each aircraft purchased and adding to their cash balance. Your examples are no more credible than what I am hearing from AA pilots that actually work for the company.

Everyone's entitled to their opinion. Even uninformed pilots.

If you think AA's paying $60 million per copy, you gotta wonder why they're such lousy negotiators when it comes to Boeing but such amazing negotiators when it comes to Bob Owens and the rest of the worthless union (as well as the APA and APFA). AA execs allow the company to be rolled by airplane manufacturers yet is extremely stingy with the unions?

If you actually believe that any company will lend AA (or anyone else) $90 million for a brand new 738, then perhaps a drug test is in order. If AA could actually borrow $30 million more than it pays for a new plane, then AA would be buying a lot more new planes.

 

[Frank Szabo]

The only thing we know for a fact is that AA is making money off each aircraft purchased and adding to their cash balance. Your examples are no more credible than what I am hearing from AA pilots that actually work for the company.

The difference certainly isn't $30MM, but if the aircraft is sold to a leasing company for book and AA negotiates a better price than said book from Boeing the difference is, in fact, nearly free money to sock away after the sale/leaseback.

Divide what is shown on the balance sheet as income (in this regard) by the number of aircraft acquired to the date of the balance sheet and a few more additions and subtractions (assuming all are sold/leasedback) - you'll end up with approx. what AMR pays per aircraft. They do get a break from Boeing's list but won't advertise how much even though the numbers are plain to see if one wants to dig.

 

[toroshark]

Everyone's entitled to their opinion. Even uninformed pilots.

If you think AA's paying $60 million per copy, you gotta wonder why they're such lousy negotiators when it comes to Boeing but such amazing negotiators when it comes to Bob Owens and the rest of the worthless union (as well as the APA and APFA). AA execs allow the company to be rolled by airplane manufacturers yet is extremely stingy with the unions?

If you actually believe that any company will lend AA (or anyone else) $90 million for a brand new 738, then perhaps a drug test is in order. If AA could actually borrow $30 million more than it pays for a new plane, then AA would be buying a lot more new planes.

They are not negotiating. They are attempting to dictate with lies and deception. But they are NOT negotiating with labor.

 

[Bob Owens]

No, the expenses don't go up by any amount and neither does revenue. The transaction doesn't impact the income statement, so it does not contribute to annual income or loss. Airplane expense that does impact the income statement is either depreciation (for an owned airplane) or rent expense (for a leased airplane). Financing transactions like the sale/leaseback of brand new planes does not touch the income statement. I don't know how to make it any clearer than that.

I dont believe you. Basically the carrier is acting like a retailer. They buy something and resell it. Just because they dont make a profit doesnt mean that the transactions arent recorded and the figures arent used. I already agreed that the net impact is zero and doesnt contribute to annual income or loss.

I have repeatedly posted that UAL did NOT pay 13% of its 2007 operating expenses in outsourced maintenance. You either mis-heard something or someone mis-spoke or someone just plane made it up. It's false, and your repeating of the nonsense stat makes me question your critical thinking abilities. UAL's total 2007 maintenance materials and outsourced repair expense was $1.166 billion; that equals just 6.1% of its 2007 total operating expenses.

And I already told you that I would send you the documents if you send me someplace to send it to. I got the document from a UAL mechanic. Thats what UAL claimed during negotiations. My bet is UAL plays with the numbers they throw out there in negotiations as well.

No, Bob, the financing of new airplanes does not "inflate" the CASM.

To compare, AMR spent $1.057 billion on maintenance materials and outsourced repairs in 2007, which equaled 4.8% of AMR's total operating expenses. The line item for AMR was less than for UAL because of the insourced heavy maintenance at AA.

Ok, management added a hypothetical profit sharing number to the out-years. Call them on it.

Thats all you have to say?

I'm certain the company does paint as rosy a picture as it can. The financing of new airplanes like the 738s does not affect the numbers. Keep looking.

They paint a rosy picture for the banks and the opposite for us. They face severe penalties if they mislead the banks but no real penalty if they mislead workers. I would say the story the banks hear, the banks that keep dumping, (and extracting), billions into the carrier, is much more realistic.