God you talk so much crap ..
US Long-term Standalone Prospects
- Thread starter ChockJockey
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Crash Pad DCA
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Mr. Horton put American’s parent, AMR, into Chapter 11 bankruptcy protection in November. Since then, US Airways has sought to merge with American to no avail...
Virtually everyone in the industry believes that American, the third-largest airline in the country, and US Airways, the fourth-largest, will eventually have to merge to stand a chance of competing against United and Delta...
Yet Mr. Horton hasn’t budged, beyond nodding to the overture by saying it will be considered as part of the company’s fiduciary duty to its creditors...
But there potentially is another reason — one that would be a perverse incentive — that Mr. Horton may be shunning a deal with US Airways before emerging from bankruptcy: a giant payday...
Mr. Horton and his management team stand to receive somewhere between $300 million and $600 million if he can make it through bankruptcy court without merging first with a rival like US Airways.
In an odd twist of the bankruptcy process, airline management teams have typically managed to extract 5 percent to 10 percent of the company’s shares for themselves upon exiting Chapter 11, with the C.E.O. often getting 1 percent.
This happens, oddly enough, despite some of the same management wiping out shareholders (including themselves) by filing for Chapter 11 in the first place.
AMR is expected to be valued at as much as $6 billion if it exits bankruptcy independently, analysts estimate. (That's $60 million to Horton at 1% payout)
Over the last several decades in the airline business, this is where C.E.O.’s have gotten rich.
Take a look at United’s bankruptcy back in 2005: Glenn Tilton, who was then the airline’s chief executive sought 15 percent of the company’s equity for management from creditors; after pushback from creditors, management lowered its request to 11 percent. After some back and forth, management was awarded 8 percent of the company. Mr. Tilton received a pay package worth nearly $40 million in new shares and other compensation in the company’s first year after emerging from bankruptcy.
A similar story played out when Northwest went through Chapter 11. Its former chief, Doug Steenland, received a package worth some $26.6 million in new shares when the company emerged from bankruptcy in 2007.
Lest there be any question that compensation is clearly now on the minds of Mr. Horton and the rest of American’s management, just two weeks ago they inserted a special clause in the airline’s most recent tentative contract proposal with American’s pilot union preventing labor leaders from challenging any deal management plans to seek for itself in the bankruptcy process.
The contract reads: “APA agrees not to object to or contest the issuance of equity or other consideration in the bankruptcy cases to the company’s nonunion and management employees, in respect of the sacrifices made by them in furtherance of the company’s effort to restructure or as incentive for the nonunion and management employees’ future service to the company.”
That language is unusual, bankruptcy lawyers said...
Mr. Horton put American’s parent, AMR, into Chapter 11 bankruptcy protection in November. Since then, US Airways has sought to merge with American to no avail...
Virtually everyone in the industry believes that American, the third-largest airline in the country, and US Airways, the fourth-largest, will eventually have to merge to stand a chance of competing against United and Delta...
Yet Mr. Horton hasn’t budged, beyond nodding to the overture by saying it will be considered as part of the company’s fiduciary duty to its creditors...
But there potentially is another reason — one that would be a perverse incentive — that Mr. Horton may be shunning a deal with US Airways before emerging from bankruptcy: a giant payday...
Mr. Horton and his management team stand to receive somewhere between $300 million and $600 million if he can make it through bankruptcy court without merging first with a rival like US Airways.
In an odd twist of the bankruptcy process, airline management teams have typically managed to extract 5 percent to 10 percent of the company’s shares for themselves upon exiting Chapter 11, with the C.E.O. often getting 1 percent.
This happens, oddly enough, despite some of the same management wiping out shareholders (including themselves) by filing for Chapter 11 in the first place.
AMR is expected to be valued at as much as $6 billion if it exits bankruptcy independently, analysts estimate. (That's $60 million to Horton at 1% payout)
Over the last several decades in the airline business, this is where C.E.O.’s have gotten rich.
Take a look at United’s bankruptcy back in 2005: Glenn Tilton, who was then the airline’s chief executive sought 15 percent of the company’s equity for management from creditors; after pushback from creditors, management lowered its request to 11 percent. After some back and forth, management was awarded 8 percent of the company. Mr. Tilton received a pay package worth nearly $40 million in new shares and other compensation in the company’s first year after emerging from bankruptcy.
A similar story played out when Northwest went through Chapter 11. Its former chief, Doug Steenland, received a package worth some $26.6 million in new shares when the company emerged from bankruptcy in 2007.
Lest there be any question that compensation is clearly now on the minds of Mr. Horton and the rest of American’s management, just two weeks ago they inserted a special clause in the airline’s most recent tentative contract proposal with American’s pilot union preventing labor leaders from challenging any deal management plans to seek for itself in the bankruptcy process.
The contract reads: “APA agrees not to object to or contest the issuance of equity or other consideration in the bankruptcy cases to the company’s nonunion and management employees, in respect of the sacrifices made by them in furtherance of the company’s effort to restructure or as incentive for the nonunion and management employees’ future service to the company.”
That language is unusual, bankruptcy lawyers said...
Nothing in AA's offer to the pilots prevents other unsecured creditors or the court from objecting to the potential award of new stock to management. AA's offer to the pilots includes AA's promise not to contest the 13% claim; it makes sense to try to get that same promise from the pilots.
signals
Veteran
nuf sed
Crash Pad DCA
Senior
Wow! What a difference (half) a day makes...
Get out the dress. Call the minister and book the dance hall!
Looks like the groom no longer wants to "stand alone" at the altar.
AMR Will Explore Merger Options.
AMR CEO: We Are Evaluating Mergers. US Airways: Finally.
AMR's Tom Horton to Staff: Makes Sense to Evaluate Options
AMR CEO says it's time to weigh merger options
American to open its books to possible merger partners
I can hear the check being cut to Horton. I guess it "pays" to hold out (even if it's only for a month or two).
Boeing and the other creditors must have called Parker and gotten their assurances that the family will stay together (with cousin Airbus) despite the (impending) marraige.
This merger is still not a panacea. PHX will shrink and LAX will grow since US(AA) cant stay at No 2/No 3 in the LAX market. Nocella will have to grow it, but I doubt he will completely cede PHX to WN.
Wow. First the LAS people had to commute to PHX. Now everybody in PHX and the LAS people will have to commute to LAX! I guess the old PSA people will be happy! 🙂
I still think US could have stayed single....
God Bless US and God Bless the US(AA)!
signals
Veteran
So where does it specifically say with US?
signals
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BoeingBoy
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Hey Crash, why not quote this part:
It must also be noted that Mr. Horton has rejected two pay increases from American’s board and works without an employment contract. He is paid $660,000 annually while the company is in bankruptcy. Advisers close to the company say he is alert to the appearance of excessive compensation and may not seek an outsize compensation package upon exiting bankruptcy.
Or this part:
If you follow the money, you can see why Mr. Horton may want to avoid a deal, at least for now. On the other hand, if you follow the money, you can also see why Mr. Parker may want a deal. Surprise, surprise: there is a change-of-control provision in his employment contract that could kick-in if it is bought by another company and he is ultimately forced to leave. Depending on the structure of the deal, Mr. Parker could be paid more than $20 million.
Jim
Crash Pad DCA
Senior
Horton is stalling a merger to get more money
Parker is pushing a merger to get more money
Besides, what's $10-$20 million between (CEO) friends?
They BOTH want to get paid in this transaction and NEITHER is going to see his/her pension or health benefits cut....
As per Horton, I think with the spotlight on AA's past poor performance and its consistently bad behavior towards labor, Horton won't see anything near $60million to leave. I think it will between $10 million and probably closer to $20 million (plus lifetime health care, pension, and first class flight benefits).
As per Parker, if he is booted out -as you say- he will make close to $20million (not bad for a days worth of pay - and I bet he will also keep his first class space positive benefits for life, too). And if Parker stays in the US(AA) his CEO pay will will triple if not quadruple.
Both Horton and Parker are "in it to win it" and no matter how much blood letting occurs (and gnashing of teeth) and after everything is burned to the ground, both will be paid welll (no matter what the outcome) and both will gain (substantially) financially withought losing a cent of pension or healthcare benefits.
Please feel free to point out any other paragraphs I have forgotten to quote in this or any other article....
Have a great day!
God Bless US and God Bless the US(AA)
BoeingBoy
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I agree. Just wondered why you posted all the parts about Horton's potential payday and not the parts about Parker's potential payday...
Jim
The Bagfather
Senior
Couldn't Horton stand to make a lot of money from Parker as a deal in BK?
signals
Veteran
Where is the reptile expo?
The Bagfather
Senior
Now at last someones willing to talk about something of real import, gravitas etc.
That anouncement was in, I think, an Arizona newspaper which I found on a plane.
I don't remember where but it was about 4 yrs ago. It you or anyone else hears of another please post it. Now what's the topic?
