luvthe9
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Yo Pi, I think you need to realize that if the west accepts DOH or we accept the NIC you will still not get a decent contract, you can bank on that.
US Pilots Labor Discussion
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luvthe9
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12
Chief Pilot Meeting In Dallas
posted on November 12, 2011 12:06
Fellow Washington Pilots,
First, it should be clear to everyone that AMR management could have declared bankruptcy at any time in the last 10 years had they been so inclined.
Why havent they?
It is not in the best interest of the airline or management to do so. Still, a terrorist attack or other event could force the issue at any time, including tomorrow. We should all be prepared for that possibility.
AA, our airline, has problems.
We pilots did not create the problems. In fact, quit the opposite. We led the way in saving the company from bankruptcy in 2003. We sacrificed the most in terms of salary, work rules and benefits. Meanwhile, management and non-union employees pay and benefits have been fully restored and management bonuses have totaled over $350 million.
Whats different today? The problem is not terrorism, it is mismanagement. Management is responsible for our situation. Our airline has fallen from the worlds largest, and one of the best, to fourth in size and near the bottom in most measureable areas. Of the major airlines, AMR is the only one consistently losing money. One example of mismanagement, AA spent 1 billion dollars on the JFK terminal but allowed JetBlue to take our routes and slots.
In our opinion, the company has used every financial technique and tool available to make the financial situation appear worse than it truly is. Why? Poor financial performance is their best defense against our goal of restoring our contract.
Managements goal is complete control of employees and to gain a significant labor cost advantage over the competition. Management wants to have their cake, plus our cake, and they want to eat it too. AA management will do almost anything to achieve this. They will take a considerable amount of short-term losses to make long-term gains.
In our opinion, the company believes the current situation provides their best opportunity to leverage labor into concessionary contracts. Further delay could result in loss of leverage due to improvements in the economy or other events such as new aircraft deliveries.
Those who have observed AMR management for any length of time know that they cultivate adversarial rather than cooperative relationships. AMR management plays hardball with everyone, including it own offspring. Note that AMR management is currently suing its former subsidiary, SABRE. AMR treats its own employees worst of all. It is therefore a given that at some point in contract negotiations, they are going to play hardball with us by threatening to shrink the airline or threatening to declare bankruptcy in order to achieve their goals.
To that end, the chief pilots were called to DFW this week and given the other path sales pitch. Expect the chiefs to begin telling you that if we dont agree to the companys terms, theyll have no choice but to shrink or worse. The or worse part is bankruptcy. Of course, management wont actually say bankruptcy, for obvious reasons.
How then should we respond if the company makes such a threat?
There are options. Unfortunately, discussing them here could give management too much insight into our strategy.
Instead, wed like to provide you with a brief discussion of the pros and cons of bankruptcy for AMR.
AMR has $4.8b in cash at the end of the 3rd quarter 2011. $475m is restricted. AMR is expected to have completed repayment of about $2.5 billion in debt in 2011.
CapEx for the full year 2011 is expected to be about $1.7 billion.
Liquidity requirements (the potential for cash holdbacks) have been significantly lowered and AMR believes they are approximately in line with the industry. AMR has access to approximately $2b in capital, if needed, and will pay down $800m in aircraft loans in 2012.
Bankruptcy pros and cons
Reasons FOR declaring bankruptcy:
Debt relief. This may very be limited. Aircraft, real estate or other assets secure about 98% of AMRs debt. Therefore the percentage of AMR debt that could be shed in bankruptcy is relatively small.
Other labor contracts. While our contract is roughly equivalent to the bankrupt carrier pilot contracts, AMR desires to reduce costs associated with other labor groups that are not in line with the bankrupt carriers.
SCOPE. AMR wants larger jets for AE and codesharing with other airlines such as JetBlue, USAir and Alaska. More 70 seat and larger RJs (90-110 seat) or the Q-400 could be purchased for AE. Hundreds of AA pilot jobs would be eliminated.
Pilot pay rates would probably be cut to UAL or USAir levels.
Supp CC elimination would greatly reduce or close the STL base. This eliminates deadheading costs to/from STL.
Retirement obligations. Some immediate savings would result from a freeze or termination of the A-Fund. Savings could be gained by not having to fully fund the A-Fund. The actual amount of savings here is known only to AMR.
Supp B and the Goetz award, which currently guarantee our lump sum, probably wont be upheld in bankruptcy court. B-Fund plan savings for the company are probably minimal and are discussed in the CONS section.
Retiree and current employee healthcare benefits. Its certain that AMR will try to make significant changes for all employees groups, active and retired.
Access to capital. Lenders that are currently hesitant to or unwilling to lend to AMR may be willing once AMR has eliminated debt and reduced costs. Eliminating the uncertainty of open labor contracts could reduce borrowing costs. This may be of little value to AMR as they have demonstrated the ability to raise significant funds even during difficult times.
Work rules and benefits. While many of our work rules are not far from the LCC and bankrupt carrier standards, there may be cost savings. Many parts of the contract such as Section 21 (discipline) have little dollar value but would be altered to the detriment of the pilot group. The biggest impact could be an increased monthly max and a PBS. Increased productivity could reduce the pilot workforce by several hundred.
Other/ Supplier contracts renegotiated. This is probably the least of the gains for the company as these contracts were renegotiated long ago.
The biggest immediate gains are in lower pay for employees, and elimination of scope restrictions.
Reasons AGAINST declaring bankruptcy;
First, bankruptcy is not a panacea. If it were, the carriers that went through bankruptcy would have quickly overtaken the non-bankrupt carriers.
Atititude. AMR management has repeatedly said they want to avoid bankruptcy. AMR president Tom Horton said bankruptcy is un-American. CEO Gerard Arpey said I think our past actions and statements have made it clear that, that has not been our preference or our goal.
Time. Bankruptcy could take many months or even years to complete. AMR is significantly behind our competition and playing catch-up. Time spent in bankruptcy would put AMR further behind.
Uncertainty. Corporations avoid risk and uncertainty. Bankruptcy is risky. Judges, even when well known, might not grant the company what it wants. The recent auto manufacturer bankruptcies have demonstrated the willingness of the federal government to take action in bankruptcy cases.
Pensions and the PBGC. The PBGC will resist a takeover of pensions. Our A-Fund would probably be frozen and converted to another plan. Significant savings going forward depends upon the new retirement plan that would be created during bankruptcy. UALs DC plan is 16%. SWA matches pilot 401k contributions up to 9.3% for a total of 18.6%. Our B Fund is 11% and the average annual cost of the A fund is estimated at 6-7%. However, in some years (2009-10 for example), AMR made no payments into the A-Fund. The ability to defer payments into the A-Fund gives AMR an advantage during lean times.
Reduced borrowing opportunities and higher borrowing costs over the long term. One reason AMR currently has better access to capital is the demonstrated desire and ability to avoid bankruptcy. If economic conditions deteriorate during or after bankruptcy, AMR may have difficulty gaining access to capital. Employee enthusiasm is already low and is already reflected in how much AMR pays to borrow money.
Training Costs. If there are significant reductions in pilot numbers or other employees, the short term training costs would increase dramatically.
Aircraft delivery delays. Buying aircraft for AE would take years. The savings associated with transferring flying to AE or other carriers would take years to realize.
Book away and loss of customer base. Frequent flyer programs could be modified in bankruptcy, which could erode customer loyalty and/or force AMR to improve the program to retain customers. Our corporate clients are already flocking to SKYTEAM and STAR.
Some of our OneWorld partners are already among the most troubled carriers in the world. JAL, BA, Qantas and Iberia have significant labor issues. Adding more labor problems to AMR could cause our business travelers to switch to other networks.
AMR executives might be replaced. Executives avoid risk, especially personal risk. AMRs managers have now been at the helm for over 8 years without positive results for the shareholders. The other airline bankruptcies were due to 9/11. AMR management bears responsibility for the current situation.
AMRs Board of Directors may be replaced.
Acquisition or hostile takeover. AMR employees or some other entity could buy the company. With AMRs market value at approximately $950 million, the pilot pension plans alone could fund a buyout. There is little to stop another carrier or a private equity group from buying AMR. Much of current AMR management could be thrown out.
The Performance Share Plan is based on the price of AMR stock. It is very generous but the return depends on the rebounding of AMRs share price. The company execs would have to rely on the bankruptcy judge to grant a new performance plan for them which might not be as rewarding.
AMR executives currently own about 3% of the company stock. These shares are at risk in bankruptcy. Again, execs dont like taking unnecessary personal risk. Washington will take a dim view of large parachutes for AMR execs if the employees are thrown overboard, again.
Employees head for the exits. Bankruptcy could create another wave of departures. The loss of experienced pilots and other employees would require the hiring and training of thousands of replacements. Hundreds of pilots over 60 could leave.
Labor animosity created by bankruptcy. Animosity is already a drag on AMR. Contrast the potential animosity at AMR to the positive attitude and positive results at SWA.. Bankruptcy would be seen as another betrayal of the employees.
How bad would morale be if AA furloughed 1,000 pilots, pay is cut (again), work rules are gutted (again), benefits reduced (again), pensions terminated and flight hours are increased to 90+ hours a month?
While patriotism was largely responsible for the spirit of cooperation that returned our airline to health after 9/11, that patriotic spirit does not exists today. Management has destroyed any teamwork or spirit with broken and empty promises.
The bottom line.
We know that bankruptcy can occur at any time for our airline or the industry as a result of a terrorist attack or other major events. We live with that possibility every day.
The challenge is calculating the dollar value gained in bankruptcy vs the value lost. There are savings to be had but do the savings outweigh the costs and the risks? Its hard to calculate, even for management.
Given AMRs current profit trend, the airline can operate for at least another year before reaching our highest estimate of what AMR managements minimum cash threshold might be. That does not mean that management cant take AMR into bankruptcy, but does mean they dont have to.
The bottom line; management has chosen to avoid bankruptcy because the gains do not outweigh the costs and the risks.
Fly Safe,
Bill and Mike
Posted in: Washington D.C.
Home | About APA | Contact APA | Bidding/Scheduling | Benefits
12
Chief Pilot Meeting In Dallas
posted on November 12, 2011 12:06
Fellow Washington Pilots,
First, it should be clear to everyone that AMR management could have declared bankruptcy at any time in the last 10 years had they been so inclined.
Why havent they?
It is not in the best interest of the airline or management to do so. Still, a terrorist attack or other event could force the issue at any time, including tomorrow. We should all be prepared for that possibility.
AA, our airline, has problems.
We pilots did not create the problems. In fact, quit the opposite. We led the way in saving the company from bankruptcy in 2003. We sacrificed the most in terms of salary, work rules and benefits. Meanwhile, management and non-union employees pay and benefits have been fully restored and management bonuses have totaled over $350 million.
Whats different today? The problem is not terrorism, it is mismanagement. Management is responsible for our situation. Our airline has fallen from the worlds largest, and one of the best, to fourth in size and near the bottom in most measureable areas. Of the major airlines, AMR is the only one consistently losing money. One example of mismanagement, AA spent 1 billion dollars on the JFK terminal but allowed JetBlue to take our routes and slots.
In our opinion, the company has used every financial technique and tool available to make the financial situation appear worse than it truly is. Why? Poor financial performance is their best defense against our goal of restoring our contract.
Managements goal is complete control of employees and to gain a significant labor cost advantage over the competition. Management wants to have their cake, plus our cake, and they want to eat it too. AA management will do almost anything to achieve this. They will take a considerable amount of short-term losses to make long-term gains.
In our opinion, the company believes the current situation provides their best opportunity to leverage labor into concessionary contracts. Further delay could result in loss of leverage due to improvements in the economy or other events such as new aircraft deliveries.
Those who have observed AMR management for any length of time know that they cultivate adversarial rather than cooperative relationships. AMR management plays hardball with everyone, including it own offspring. Note that AMR management is currently suing its former subsidiary, SABRE. AMR treats its own employees worst of all. It is therefore a given that at some point in contract negotiations, they are going to play hardball with us by threatening to shrink the airline or threatening to declare bankruptcy in order to achieve their goals.
To that end, the chief pilots were called to DFW this week and given the other path sales pitch. Expect the chiefs to begin telling you that if we dont agree to the companys terms, theyll have no choice but to shrink or worse. The or worse part is bankruptcy. Of course, management wont actually say bankruptcy, for obvious reasons.
How then should we respond if the company makes such a threat?
There are options. Unfortunately, discussing them here could give management too much insight into our strategy.
Instead, wed like to provide you with a brief discussion of the pros and cons of bankruptcy for AMR.
AMR has $4.8b in cash at the end of the 3rd quarter 2011. $475m is restricted. AMR is expected to have completed repayment of about $2.5 billion in debt in 2011.
CapEx for the full year 2011 is expected to be about $1.7 billion.
Liquidity requirements (the potential for cash holdbacks) have been significantly lowered and AMR believes they are approximately in line with the industry. AMR has access to approximately $2b in capital, if needed, and will pay down $800m in aircraft loans in 2012.
Bankruptcy pros and cons
Reasons FOR declaring bankruptcy:
Debt relief. This may very be limited. Aircraft, real estate or other assets secure about 98% of AMRs debt. Therefore the percentage of AMR debt that could be shed in bankruptcy is relatively small.
Other labor contracts. While our contract is roughly equivalent to the bankrupt carrier pilot contracts, AMR desires to reduce costs associated with other labor groups that are not in line with the bankrupt carriers.
SCOPE. AMR wants larger jets for AE and codesharing with other airlines such as JetBlue, USAir and Alaska. More 70 seat and larger RJs (90-110 seat) or the Q-400 could be purchased for AE. Hundreds of AA pilot jobs would be eliminated.
Pilot pay rates would probably be cut to UAL or USAir levels.
Supp CC elimination would greatly reduce or close the STL base. This eliminates deadheading costs to/from STL.
Retirement obligations. Some immediate savings would result from a freeze or termination of the A-Fund. Savings could be gained by not having to fully fund the A-Fund. The actual amount of savings here is known only to AMR.
Supp B and the Goetz award, which currently guarantee our lump sum, probably wont be upheld in bankruptcy court. B-Fund plan savings for the company are probably minimal and are discussed in the CONS section.
Retiree and current employee healthcare benefits. Its certain that AMR will try to make significant changes for all employees groups, active and retired.
Access to capital. Lenders that are currently hesitant to or unwilling to lend to AMR may be willing once AMR has eliminated debt and reduced costs. Eliminating the uncertainty of open labor contracts could reduce borrowing costs. This may be of little value to AMR as they have demonstrated the ability to raise significant funds even during difficult times.
Work rules and benefits. While many of our work rules are not far from the LCC and bankrupt carrier standards, there may be cost savings. Many parts of the contract such as Section 21 (discipline) have little dollar value but would be altered to the detriment of the pilot group. The biggest impact could be an increased monthly max and a PBS. Increased productivity could reduce the pilot workforce by several hundred.
Other/ Supplier contracts renegotiated. This is probably the least of the gains for the company as these contracts were renegotiated long ago.
The biggest immediate gains are in lower pay for employees, and elimination of scope restrictions.
Reasons AGAINST declaring bankruptcy;
First, bankruptcy is not a panacea. If it were, the carriers that went through bankruptcy would have quickly overtaken the non-bankrupt carriers.
Atititude. AMR management has repeatedly said they want to avoid bankruptcy. AMR president Tom Horton said bankruptcy is un-American. CEO Gerard Arpey said I think our past actions and statements have made it clear that, that has not been our preference or our goal.
Time. Bankruptcy could take many months or even years to complete. AMR is significantly behind our competition and playing catch-up. Time spent in bankruptcy would put AMR further behind.
Uncertainty. Corporations avoid risk and uncertainty. Bankruptcy is risky. Judges, even when well known, might not grant the company what it wants. The recent auto manufacturer bankruptcies have demonstrated the willingness of the federal government to take action in bankruptcy cases.
Pensions and the PBGC. The PBGC will resist a takeover of pensions. Our A-Fund would probably be frozen and converted to another plan. Significant savings going forward depends upon the new retirement plan that would be created during bankruptcy. UALs DC plan is 16%. SWA matches pilot 401k contributions up to 9.3% for a total of 18.6%. Our B Fund is 11% and the average annual cost of the A fund is estimated at 6-7%. However, in some years (2009-10 for example), AMR made no payments into the A-Fund. The ability to defer payments into the A-Fund gives AMR an advantage during lean times.
Reduced borrowing opportunities and higher borrowing costs over the long term. One reason AMR currently has better access to capital is the demonstrated desire and ability to avoid bankruptcy. If economic conditions deteriorate during or after bankruptcy, AMR may have difficulty gaining access to capital. Employee enthusiasm is already low and is already reflected in how much AMR pays to borrow money.
Training Costs. If there are significant reductions in pilot numbers or other employees, the short term training costs would increase dramatically.
Aircraft delivery delays. Buying aircraft for AE would take years. The savings associated with transferring flying to AE or other carriers would take years to realize.
Book away and loss of customer base. Frequent flyer programs could be modified in bankruptcy, which could erode customer loyalty and/or force AMR to improve the program to retain customers. Our corporate clients are already flocking to SKYTEAM and STAR.
Some of our OneWorld partners are already among the most troubled carriers in the world. JAL, BA, Qantas and Iberia have significant labor issues. Adding more labor problems to AMR could cause our business travelers to switch to other networks.
AMR executives might be replaced. Executives avoid risk, especially personal risk. AMRs managers have now been at the helm for over 8 years without positive results for the shareholders. The other airline bankruptcies were due to 9/11. AMR management bears responsibility for the current situation.
AMRs Board of Directors may be replaced.
Acquisition or hostile takeover. AMR employees or some other entity could buy the company. With AMRs market value at approximately $950 million, the pilot pension plans alone could fund a buyout. There is little to stop another carrier or a private equity group from buying AMR. Much of current AMR management could be thrown out.
The Performance Share Plan is based on the price of AMR stock. It is very generous but the return depends on the rebounding of AMRs share price. The company execs would have to rely on the bankruptcy judge to grant a new performance plan for them which might not be as rewarding.
AMR executives currently own about 3% of the company stock. These shares are at risk in bankruptcy. Again, execs dont like taking unnecessary personal risk. Washington will take a dim view of large parachutes for AMR execs if the employees are thrown overboard, again.
Employees head for the exits. Bankruptcy could create another wave of departures. The loss of experienced pilots and other employees would require the hiring and training of thousands of replacements. Hundreds of pilots over 60 could leave.
Labor animosity created by bankruptcy. Animosity is already a drag on AMR. Contrast the potential animosity at AMR to the positive attitude and positive results at SWA.. Bankruptcy would be seen as another betrayal of the employees.
How bad would morale be if AA furloughed 1,000 pilots, pay is cut (again), work rules are gutted (again), benefits reduced (again), pensions terminated and flight hours are increased to 90+ hours a month?
While patriotism was largely responsible for the spirit of cooperation that returned our airline to health after 9/11, that patriotic spirit does not exists today. Management has destroyed any teamwork or spirit with broken and empty promises.
The bottom line.
We know that bankruptcy can occur at any time for our airline or the industry as a result of a terrorist attack or other major events. We live with that possibility every day.
The challenge is calculating the dollar value gained in bankruptcy vs the value lost. There are savings to be had but do the savings outweigh the costs and the risks? Its hard to calculate, even for management.
Given AMRs current profit trend, the airline can operate for at least another year before reaching our highest estimate of what AMR managements minimum cash threshold might be. That does not mean that management cant take AMR into bankruptcy, but does mean they dont have to.
The bottom line; management has chosen to avoid bankruptcy because the gains do not outweigh the costs and the risks.
Fly Safe,
Bill and Mike
Posted in: Washington D.C.
Home | About APA | Contact APA | Bidding/Scheduling | Benefits
Oh, I have. It take a pretty cohesive group to deliver a quality contract, and somehow I just don't see that here...........;-)
Show us a list on company letter head. Everybody in the west is saying that the nic is the accepted list so show us a copy. If the company has taken the list for use than they will have a list for crew skd. More simply "put up or shut up".
You? So, you mean me? Do you know me? As PHX said, what court decision have I ignored?
I was also pleasantly surprised to meet Move2Clt and hear the same. Separate ops seems to be the feeling of the westerners. Also nice to meet you Luvthenine. Maybe the separateness could actually work to the benefit of all. Move2Clt was not happy with the direction Lenidas was taking with Mr. Harper. I was not impressed with him at all.
Well said LS. Some will NEVER get over this. Most will. I don't get why we can't let the court settle the SLI and we stop fighting each other on everything else, but I guess it is just human nature.
I have had the good fortune to know many west pilots, so I know that most are not like some on here.
I think the key words there are "for use". The company has accepted the Nic. The question is does it have to be used? Can it be changed? Either Parker or Kirby said just that.
PI Brat you are correct. Even Move2Clt was a pleasant surprise. Looks nothing like the avatar except for the beard grown during the paid suspension. Much lighter in personality in person. Surprisingly not as toxic in person as the western image he portrays. The eastern element should invite the westerners overnighting in CLT to their homes over the holiday season. They might like my home in Dilworth as it is walking distance for them.
No Land Green
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Section 22 of the CBA is negotiable EVERY time you enter negotiations. It's NO different than any other section of the Contract when you enter negotiations. It's NEGOTIATED as is EVERY other section of the CBA. A Judge who KNOWS the RLA will NOT interfere with NEGOTIATIONS. The Nic WAS a bargaining position under ALPA........NOT with USAPA.
NLG out.
NLG out.
Black Swan
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All from the 9th below. Does the 9th answer your questions, or are you going to let a Leonidas member tell you this time????? The 9th is absolutely clear on the Nicolau, yet you ask the question to an audience that does not have ANY power to rule, yet the one that actually ruled on the question, is ignored. I don't get it!
We conclude that this case presents contingencies that
could prevent effectuation of USAPA’s proposal and the
accompanying injury. At this point, neither the West Pilots
nor USAPA can be certain what seniority proposal ultimately
will be acceptable to both USAPA and the airline as part of
a final CBA.
Not until the airline responds to the proposal, the
parties complete negotiations, and the membership ratifies the
CBA will the West Pilots actually be affected by USAPA’s
seniority proposal — whatever USAPA’s final proposal ultimately
is. Because these contingencies make the claim speculative,
the issues are not yet fit for judicial decision.
[7] Plaintiffs correctly note that certain West Pilots have
been furloughed, whereas they would still be working under
a single CBA implementing the Nicolau Award. It is, however,
at best, speculative that a single CBA incorporating the
Nicolau Award would be ratified if presented to the union’s
membership. ALPA had been unable to broker a compromise
between the two pilot groups, and the East Pilots had
expressed their intentions not to ratify a CBA containing the
Nicolau Award. Thus, even under the district court’s injunction
mandating USAPA to pursue the Nicolau Award, it is
uncertain that the West Pilots’ preferred seniority system ever
would be effectuated.
[8] Plaintiffs seek to escape this conclusion by framing
their harm as the lost opportunity to have a CBA implementing
the Nicolau Award put to a ratification vote. Because
merely putting a CBA effectuating the Nicolau Award to a
ratification vote will not itself alleviate the West Pilots furloughs,
Plaintiffs have not identified a sufficiently concrete
injury.2 Additionally, USAPA’s final proposal may yet be one
that does not work the disadvantages Plaintiffs fear, even if
that proposal is not the Nicolau Award.3
You taalkin' to me? ;-)
Binding arbitration is an arm of the court yet your side just doesn't get that.
Yet here you are... part of the show. Part of that "bunch of idiots".
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