Summary of Judge Lane's Ruling

[Bob Owens]

I would think that if a yes vote gets you more than what the judge/company is going to ram up your bum, then a no vote would be more like digging it. The question really comes down to:
1. how quickly section 6 negotiations will be settled, in the event of abrogation,
and
2. can you get any more than you will lose during the period of abrogation/imposement.

if the answer is not very quickly and no, then i would think a no vote would actually be more like the company digging a hole for you 6 feet deep, and you jumping in and digging it another 4.

10 year contract.

 

[Bob Owens]

Abrogation probably is inevitabel unless either the APA leadership can approve an agreement without membership vote (I have no idea) of an agreement is reached and AA doesn't abrogate pending a membership vote on an agreement. Remember that the Judge only approve/disapproves abrogation - it's AA's decision when to abrogate after getting the Judge's approval. But time for a consensual agreeement definitely is getting short.

Jim

Are you saying that consentual agreements are not possible after abrogation?

 

[BoeingBoy]

Only a fool would say that. Just look at the years of consensual contracts reached by the CO pilots after Lorenzo threw their contract out and they struck. Yes, I know that that was a different time and BK law was different, but the principle is the same.If you'd pay attention to what I quoted I was replying only to hopeful's statement that abrogation is inevitable. It probably is although there's a short window for the APA to reach a consensual agreement and escape abrogation, assuming that AA is willing to negotiate.

Jim

 

[riceweevil]

10 year contract.

Hey, Bob, it might only be a 6 year contract when the IBT gets elected and re-opens it early.

 

[eolesen]

In at least one other bankruptcy, a conditional abrogation took place, with implementation of the order was deferred until after the voting concluded. Assuming AA and APA get back to the table next week, it's possible they could have a new TA before the next hearing.

 

[BoeingBoy]

Slightly different, but in US' bk2 the company asked the Judge for temp cuts subject to ratification of a consensual agreement with the pilots, which was approved by the Judge. The consensual cuts were ratified and that agreement went into effect without temp cuts being imposed.

Jim

 

[Super FLUF]

August 17, 2012​

VIA EMAIL AND FIRST CLASS MAIL​

Dennis A. Newgren​

Managing Director, Employee Relations -Flight​

American Airlines, Inc.​

PO Box 619616 MD 5235​

DFW Airport, TX 75261-9616​

Re: American Airlines' August 16, 2012 Proposal Under Section 1113

Dear Denny:​

[indent=1.525]I have received your August 16, 2012, letter along with the Company's accompanying[/indent]

Section 1113 proposal.​

The APA fully intends to consider, in good faith, the Company's August 16 proposal. To do so, we needcertain up to date information from the Company in order to evaluate that proposal and the current necessity of thecontract modifications it now seeks. As you know, our labor negotiations always take place against the background ofchanging conditions, and this is all the more true today given the significant changes at American Airlines and in theairline industry more broadly during the past several months.​

In particular, in order to fully and fairly evaluate the Company's August 16 proposal, the

APA requests that the Company provide us the following information:​

[indent=1.075]1) Any and all updates (whether formal or informal, whether within the Company or communicated to others) to theCompany's Business Plan and/or Business Model (including any changes in targeted or projected cost savings andrevenue increases, whether in the aggregate or as to any components thereof) since April6, 2012. Please includethe state of the Business Plan and Business Model as of June 26, 2012, and August 16, 2012.[/indent]

2) Any and all analyses of American's current and projected pilot labor cost gap with respect to​

[indent=1.075]American's competitors, with specific reference to:[/indent]

[indent=1.975]a. The collective bargaining agreement between Delta and ALPA that became effective in July 2012, and '[/indent]
b. The tentative joint collective bargaining agreement between United, Continental, and
[indent=1.95]ALPA that was announced in August 2012.[/indent]

Dennis Newgren​

August 17, 2012​

Page2​

3) Any and all analyses of the impact on American's labor costs, Business Plan, Business​

Model, and overall financial picture following:​

[indent=1.025]a. The ratification of the collective bargaining agreements by the members of the TWU[/indent]
[indent=1.025]in May 2012 and August 2012 and any subsequent changes to those agreements. b. The Company's "LastBest Final Offer" ("LBFO") to the APFA (as submitted to[/indent]
[indent=1.475]membership ratification vote in July 2012).[/indent]
[indent=1.45]c. the Company's June 26,2012 LBFO to the APA (as submitted to membership ratification vote in July2012).[/indent]

4) Any and all analyses since April19, 2012, by American of its current and projected revenue and fmancial performance,including detail on American's operating and fmancial performance (including revenue) since April19, 2012, together withany industry comparable data or analyses of American's performance relative to the industry.​

5) Any and all analyses of American's current and future needs to enter codesharing agreements, including, but not limitedto, revisions to the Business Plan or Business Model reflecting such needs. In particular:​

a. Please explain how such analyses reflect the impact of the Delta-ALPA CBA and the​

United-Continental-ALPA JCBA referenced above on those needs.​

[indent=1.025]b. Indicate whether the Company has engaged in talks with Domestic Air Carriers regarding codesharing since April19,2012.[/indent]

c. Indicate whether the Company has acted on any of the RFPs for commuter flying since​

April19, 2012.​

6) Information sufficient to demonstrate the impact that concluded restructuring initiatives, including but not limited toaircraft fmance restructurings and the settlement with Hewlett Packard, have had on American's Business Plan andBusiness Model.​

7) Any and all updated proposals or analyses relating to planned rights offerings and/or exit financing.​

8) Any and all revisions or refmements to restructuring savings estimates since February 2012.

9) Any and all analyses since April19, 2012, of potential consolidation scenarios, including:​

a. Their potential impact on American's (or a consolidated American's) Business Plan or​

Business Model.​

b. Their potential impact on American's (or a consolidated American's) overall costs, labor costs, and/or pilot labor costs.​

c. Their potential impact on American's (or a consolidated American's) revenue.​

Dennis Newgren​

August 17, 2012​

Page 3​

I would like to meet with you within three (3) business days of APA's receipt of tills information, so that the APA canunderstand how American's August 16 proposal reflects the Company's current needs, measured against recent changes in ourindustry. As noted above, the APA will consider, in good faith, the Company's August 16 proposal and any other proposals thatthe Company has made. I have difficulty, however, understanding how the Company could have made its August 16 proposalin good faith, in light of the far more favorable proposal the Company made in June after months of bargaining.​

Accordingly, when we meet after receiving the information requested above, I will also look forward to yourexplanation of how the Company's August 16 proposal is consistent with its obligations under the Bankruptcy Code and theRailway Labor Act to bargain in good faith.​

Sincerely,​

Neil Roghair​

[indent=5.5]Chairman, Negotiating Committee[/indent]
[indent=5.475]Allied Pilots Association[/indent]

 

[eolesen]

Points for trying to gain some leverage, but didn't the Frontier ruling already address the "changing landscape" defense during a prolonged abrogation proceeding?

If i recall, the judge in that case ruled against the backdrop of what was presented during the original hearings, and said changes in the interim would not be taken into account. In that context, the APFA and TWU might be fair game, but DAL and UAL wouldn't.

 

[MCI transplant]

Hey, Bob, it might only be a 6 year contract when the IBT gets elected and re-opens it early.

riceweevil------ Reality check here! It take "two" to tango!!!

 

[TWU informer]

The Allied Pilots Association has asked for a lot of information from American Airlines so that the union can evaluate American’s revised contract proposal.
Under Section 1113 of the federal bankruptcy code, American has to “provide … the representative of the employees with such relevant information as is necessary to evaluate the proposal.”
As the union told members in a Monday night update, its response to American “requests updated information on the AMR business plan, which needs to reflect the current state of the industry, including recent pilot agreements at Delta and United airlines.”
To review the timeline:
– The union’s board by a 9-7 vote approved a tentative agreement on June 27 and sent it to members for a vote;
– In balloting that ended Aug. 8, pilots voted down the deal by a 61%-39% margin: 2,935 yes votes, 4,600 no votes;
– Last Wednesday, U.S. Bankruptcy Judge Sean Lane turned American’s motion under Section 1113 for permission to throw out its existing contract with the pilots;
– On Thursday, American revised its contract proposal to address the two areas cited by the judge, pilot furloughs and code-sharing with other airlines; and
– On Friday, American filed a revised motion with Judge Lane’s court with the proposed changes.
The judge has scheduled a Sept. 4 hearing in New York to hear arguments on the revised motion. Between now and the objections deadline of Aug. 29, American has to provide the information, and the union has to analyze it and make whatever written response it wants to make.
The union set out its request for additional information in a Friday letter from Neil Roghair, chairman of the APA negotiating committee, to Denny Newgren, American’s managing director of employee relations for flight.
“The APA fully intends to consider, in good faith, the Company’s August 16 proposal, To do so, we need certain up to date information from the Company in order to evaluate that proposal and the current necessity of the contract modifications it now seeks,” Roghair wrote.
“As you know, our labor negotiations always take place against the background of changing conditions, and this is all the more true today given the significant changes at American Airlines and in the airline industry more broadly during the past several months,” he wrote.
In a term sheet presented to pilots in March, American sought to cut pilot costs by $370 million. The contract proposal voted down would have reduced the cost cutting to $315 million. After pilots voted down the deal, American went back to its term sheet proposal.
Roghair in his letter said while the union will consider American’s revised proposal, “I have difficulty, however, understanding how the Company could have made its August 16 proposal in good faith, in light of the far more favorable proposal the Company made in June after months of bargaining.”
Here’s Roghair’s letter to Newgren. Roghair to Newgren letter, Aug. 17, 2012
Keep reading if you want an abbreviated description of the information being sought.
– American’s changes to its business plan and business model since April 6 and as of June 26, the day before the APA board vote, and Aug. 16, the day after the judge’s decision.
– American’s pilot costing estimates versus Delta and United Continental;
– The cost impacts of approved deals with the Transport Workers Union and Association of Professional Flight Attendants;
– Analyses done since April 19 of American’s revenue and financial performance, both real and projected, including comparisons with the industry; analyses of the need for code-sharing;
– Any talks it has had with other airlines about code-sharing since April 19, including requests for proposals from commuter carriers;
– Revised cost savings estimates since February
– Analyses done since April 19 of potential consolidation, including impacts on revenues and costs, pilot costs in particular.
April 19 was the last working day before Judge Lane began three weeks of hearings on American’s 1113 motions to toss out its TWU, APFA and APA contracts. The TWU and APFA motions became moot when members of those unions approved new contracts.

 

[Bob Owens]

Only a fool would say that. Just look at the years of consensual contracts reached by the CO pilots after Lorenzo threw their contract out and they struck. Yes, I know that that was a different time and BK law was different, but the principle is the same.If you'd pay attention to what I quoted I was replying only to hopeful's statement that abrogation is inevitable. It probably is although there's a short window for the APA to reach a consensual agreement and escape abrogation, assuming that AA is willing to negotiate.

Jim

During normal section 6 negotiations what is the status of the contract after the 30 day cooling off period, assuming no PEB?

 

[Bob Owens]

Points for trying to gain some leverage, but didn't the Frontier ruling already address the "changing landscape" defense during a prolonged abrogation proceeding?

If i recall, the judge in that case ruled against the backdrop of what was presented during the original hearings, and said changes in the interim would not be taken into account. In that context, the APFA and TWU might be fair game, but DAL and UAL wouldn't.

Sure but if they abrogate, then go back to Section 6 and land in a PEB the PEB would consider it and it would most certainly be setled in less than 6 years. I think the longest so far was 10 months.

 

[BoeingBoy]

During normal section 6 negotiations what is the status of the contract after the 30 day cooling off period, assuming no PEB?

It depends. The contract doesn't automatically disappear since the two sides can keep negotiating as long as both desire. Of course, the company or union can utilize self-help - from the company perspective that would be similiar to abrogation in bankruptcy since it can impose it's desired changes. On the other hand, the union could strike which relieves the company from the NMB "status quo" provisions.

Jim

 

[Overspeed]

You always tell the story in the most negative way. The judge ruled that the pilots were the highest in the industry not the M&R group. the important part of the message is that the judge did not abrogate the contract and that we would have had a chance with our arguements of being the bottom of the industry. But we will never know because of you and our experts. many of said all along the company was over reaching and going to far. i would have liked to have known what the judge thought about it. since he does reference those exact words as well in his decision.
spin it any way you want.....We were played wrong

Chuck you are arguing valuations not the actual costs of individual employees. I agree we are near the lowest paid in the industry however we have retained the most in-house work of any carrier. Overreach yes. Why? Because we disagree as a union that our members provide high quality which AA gains value on that offsets the higher cost of in-house labor. I do not see things negatively, in fact I believe our TWU labor provides high value to AA and I say value because that is where the issue is and what we argued in court. We argued it was an overreach because we strongly believe that our TWU labor provides lower operational costs but that due to AA's mismanagement of the maintenance program, scheduling, and lack of parts in the right places it drives higher labor costs. I strongly believe our TWU experts and attorneys made that clear to Judge Lane however, the counter by AA was that regardless that is the way AA operates and that operating costs are higher due to the labor hours are at a higher volume and therefore cost.

For example, if you are sent out to do an AC you do it. You don't say, "Hey this AC is not due for 20 more flight hours. Why are we doing it now?" You do the AC which drives labor MHs and therefore labor cost. If CO, UA, WN, or DL schedules tighter (yield) they do less labor hours and therefore lower labor costs not by cutting pay, but by scheduling when the work is actually due, not because it is easier to do it now with HTG. Judge Lane can't fix or order that to be fixed. He can only look at how AA operates now and the associated costs (AA's argument) and if AA's request to abrogate is justified given that AA operates the way they do.

So Chuck, the past discussions about how the TWU should participate in CI or Lean events makes more sense now doesn't it. If we had helped reduce labor costs not by lowering wages and benefits but by developing ways to lean out maintenance to the right level we would be able to get WN wages. Were you not shown yourself by Don V that if we improved maintenance processes and procedures that it was worth close to $170M? Yes you were but your smart Local 562 President decided to go the, "Screw you, pay me." route which helped lead us to now. Inefficiencies funded by labor. Brilliant.

 

[Bob Owens]

Chuck you are arguing valuations not the actual costs of individual employees. I agree we are near the lowest paid in the industry however we have retained the most in-house work of any carrier. Overreach yes. Why? Because we disagree as a union that our members provide high quality which AA gains value on that offsets the higher cost of in-house labor. I do not see things negatively, in fact I believe our TWU labor provides high value to AA and I say value because that is where the issue is and what we argued in court. We argued it was an overreach because we strongly believe that our TWU labor provides lower operational costs but that due to AA's mismanagement of the maintenance program, scheduling, and lack of parts in the right places it drives higher labor costs. I strongly believe our TWU experts and attorneys made that clear to Judge Lane however, the counter by AA was that regardless that is the way AA operates and that operating costs are higher due to the labor hours are at a higher volume and therefore cost.

For example, if you are sent out to do an AC you do it. You don't say, "Hey this AC is not due for 20 more flight hours. Why are we doing it now?" You do the AC which drives labor MHs and therefore labor cost. If CO, UA, WN, or DL schedules tighter (yield) they do less labor hours and therefore lower labor costs not by cutting pay, but by scheduling when the work is actually due, not because it is easier to do it now with HTG. Judge Lane can't fix or order that to be fixed. He can only look at how AA operates now and the associated costs (AA's argument) and if AA's request to abrogate is justified given that AA operates the way they do.

So Chuck, the past discussions about how the TWU should participate in CI or Lean events makes more sense now doesn't it. If we had helped reduce labor costs not by lowering wages and benefits but by developing ways to lean out maintenance to the right level we would be able to get WN wages. Were you not shown yourself by Don V that if we improved maintenance processes and procedures that it was worth close to $170M? Yes you were but your smart Local 562 President decided to go the, "Screw you, pay me." route which helped lead us to now. Inefficiencies funded by labor. Brilliant.

BS. First of all you dont give away efficiencies and productivity improvements first then say lets negotiate what they are worth. Thats what Don did, and we got nothing for it. In negotaitions they brought up the $500 million they saved with the pulse line and other improvements and Burdette said "You get nothing".

You may want to commoditize our labor and say its worth it for us to sell ourselves cheaper so they can keep more of us on the payroll, but that just shows how out of touch you are with real unionism. You are a company unionist and your logic mirrors that of other anti labor forces who claim that we should abolish the minimum wage because if we allowed employers to exploit the crap out of the really desperate they could hire more people and we could have all our desperate people working for next to nothing instead of collecting unemployment. One of the flaws in their arguement is that demand for labor drives employment, not low wages. Just because the wages are low it does not mean that employers will hire more people if they dont need their labor.

Lets look at AA's behavior over the last 9 years since the concessions. Did they make any real serious attempt to increase outsourcing? No. Why do you suppose that is? And please dont try and say its our inronclad scope language, Prior to 9-11 we were the leader in outsourcing among the legacies. AA kept it in house, actually increased insourcing and not only exhausted the recall list but added 500 new mechanics, because it was cost effective. Now you just made it even more cost effective. Good for the company, bad for the mechanics.

We gave AA all the language they need to wipe out OH, but I doubt they will, but they have the stick to keep them jumping though hoops because the one good clear thing we had, System Protection, is gone.