DALLAS (Reuters) - Flight attendants at American Airlines on Tuesday voted against a concession agreement, paving the way for an imminent bankruptcy filing by the world's largest carrier, a local news radio station reported.
The airline has said that if its three major union groups do not ratify deals that will help save the carrier $1.8 billion a year in labor costs, American, a division of AMR Corp. (NYSE:AMR - News), would be forced to file for bankruptcy.
News radio station KRLD reported that the union had narrowly rejected the deal and was in talks with the airline to see if they could quickly poll their members again. The two other major unions at American had approved concession deals earlier in the day.
The Association of Professional Flight Attendants voted against a deal that would cut annual pay and benefits for flight attendants collectively by $340 million.
It's a new day. Every moment matters. Now, more than ever.
N79969 From , joined Dec 1969, posts, RR: Reply 3, posted (10 years 8 months 1 day 4 hours ago) and read 3878 times:
If I were UA, I would be scared. Guess who is getting out of paying a lot of leases and interest payments ? Actually now Delta, NWA, and CO will have compounded problems as well. If I were an AA employee, I would also be very, very concerned.
KUGN From United States of America, joined Jul 2000, 615 posts, RR: 6 Reply 4, posted (10 years 8 months 1 day 4 hours ago) and read 3842 times:
Mixed bag of news for Chicago O'Hare airport today - Sen. Peter Fitzgerald announcing that he will not seek the reelection, then news of AA on the brinks of bankrupcy. They lost the opposition to the expansion, but financiers as well.
Boeingfan From United States of America, joined Aug 2001, 385 posts, RR: 1 Reply 5, posted (10 years 8 months 1 day 4 hours ago) and read 3812 times:
AMR halted after attendants reject cuts
Pilots, mechanics earlier approved labor concessions
By August Cole & Jennifer Waters, CBS.MarketWatch.com
Last Update: 3:35 PM ET April 15, 2003
NEW YORK (CBS.MW) -- American Airlines flight attendants have reportedly voted to reject labor concessions, paving the way for the bankruptcy of the industry's largest airline.
NEWS FOR AMR
AMR halted after attendants reject cuts
Stocks jostle near flat line in earnings tug-of-war
The pilots union and mechanics union earlier approved historic labor concessions to help the No. 1 carrier stave off bankruptcy. American had said that just one union voting against the cuts would bring about a bankruptcy filing, possibly as soon as Tuesday.
AMR Corp. shares (AMR: news, chart, profile) were halted for trading as of 3:06 p.m. ET. Shares, which had been the most active on the New York Stock Exchange, last traded at $3.40, up 32 cents, or 10 percent.
APFA: Reject concessions
The Association of Professional Flight Attendants have rejected labor concessions, according to the Wall Street Journal, in a last-minute vote. The vote was narrowly rejected, the paper said.
A recorded message indicates the leadership of the union will hold a conference call to discuss the vote results.
On Monday, American's flight attendants asked for more time to consider the rank-and-file impact of the cost reductions, according to the union's Web site. American wants about $340 million in concessions from the union members.
Union leaders have already suggested that members approve the cost cuts because it's expected that the airlines lenders would impose much harsher conditions in the event of a Chapter 11 bankruptcy.
The Allied Pilots Association said 69 percent of its membership voted to approve the new contract. About 95 percent of eligible pilots voted, the union said. The airline was looking for $660 million in savings from the group.
"Clearly, the gut-wrenching decision our pilots have had to make will have a major impact on their lives in terms of additional furloughs, pay cuts and retirement savings," said APA President John Darrah.
Transport Workers Union members voted to approve labor concessions with American Airlines, the second union to announce Tuesday that its membership accepted new terms to keep the carrier out of bankruptcy.
According to the union's Web site, 53 percent of the members approved the new concessions. The TWU, whose members work as mechanics, technicians and in other roles, had been asked by the airline to approve considerable cuts of more than $600 million.
In total, AMR executives have said they want to save a total of $4 billion. $1.8 billion was to come from the carrier's workers, including ticketing agents and management.
"The bloodletting here is not just in labor, it's the entire system. Being a supplier to an airline today is not much more fun than being an employee," said Bill Alderman, president of aerospace investment bank Alderman and Co.
In comparison with low-cost operator Southwest Airlines, AMR's cost per available seat-mile is about 46 percent higher, according to data from Alderman and Co.
Playing in part off the activity in AMR's shares, the Amex Airline Index (XAL: news, chart, profile) was last up 5.5 percent. See full story.
August Cole is spot news editor at CBS.MarketWatch.com in Chicago
Jennifer Waters is the Chicago bureau chief for CBS.MarketWatch.com.
Hopefully a re vote will be approved for the APFA, as this narrowly missed approval. It will be approved the 2nd time around, staving off a Ch. 11 filing at AA.
If they restructure under the shelter of the Bankruptcy Court, all other carriers should be very aware, as AA will have lower costs, and will come out of bankruptcy in Fall to end 2003, lean, mean, and ready to expand in all markets, hiring back all those who were furloughed. This may be a good thing in the long run? Hope so. Bf
Drdivo From United States of America, joined Feb 2003, 118 posts, RR: 0 Reply 8, posted (10 years 8 months 1 day 4 hours ago) and read 3777 times:
I believe that, if AA/AMR files, and then works to modify aircraft leases using bankruptcy rules, NW/CO/DL have no choice but to approach their lessors with demands that their own aircraft financing terms be modified to meet the new market.
This would then shift some of the burden of the current bloodbath to the aircraft lessors.
To remain competitive, in the event of an AA/AMR bankruptcy, the other majors will have to gain modification of their financing terms. If the lessors refuse to play ball, the other major carriers may go through Chapter 11 just so as to force lease modifications on them, just as Hawaiian did a few weeks back.
Has anyone noted that we have three airlines that are in or recently out of bankruptcy, plus AA/AMR? If/when AA/AMR files, it will put half of the total number, and well more than 60% of the capacity through Chapter 11 in the past year, plus the small carriers that didn't make it - Vanguard and National being among them.
Things have never been this rough for the airline industry.
Braniff727 From United States of America, joined Sep 2000, 686 posts, RR: 1 Reply 10, posted (10 years 8 months 1 day 3 hours ago) and read 3736 times:
Northwest said in a special newsletter to employees a while back that everytime an airline renegotiates deals with a vendor, NW will demand the same deal. I'm sure they are already in negotiations. NW is a well run airline.
Boeingfan From United States of America, joined Aug 2001, 385 posts, RR: 1 Reply 11, posted (10 years 8 months 1 day 3 hours ago) and read 3695 times:
Poor planning, saving, and awarding very lucrative contracts in good times in a very historically cyclical industry.
Labor, does not get all the blame for their "asking" and "receiving" the lucrative contracts. Both sides share in the burden of poor planning, in efficient lease terms, and while the party rolled in the late '90's to 2000, no one kept an eye out on risk for the future. Market share and ego's played too large a part in this out come.
This event hopefully, will bring a new focus on fiscal conservation, responsibility, and may open the doors to new ways of operating an airlines cash flow, managing assets, and spending habits. Learning, and moving forward, with accountability will improve this industry in the long run.
CASM (cost per available seat mile) is more important now, then ever before.
Kevi747 From United States of America, joined Apr 2001, 1057 posts, RR: 13 Reply 14, posted (10 years 8 months 1 day 3 hours ago) and read 3640 times:
This is exactly what I worried would happen. The pilots and ground workers would ratify their TA's and we wouldn't. Now we look like the jerks. I wish they'd say how many of us voted yes. Anyway, it doesn't matter. I didn't agree with it, but the membership made this decision and now we'll all have to live with it. Oh well, I'm off to SJU. Last trip? Hope not. See ya.
PS: Did I mention this sucks?
"Reality has a well-known liberal bias." --Stephen Colbert
Searpqx From Netherlands, joined Jun 2000, 4343 posts, RR: 11 Reply 15, posted (10 years 8 months 1 day 3 hours ago) and read 3605 times:
When the announcement came out the APFA board was meeting to 'discuss the vote' after voting had ended I had a sneaking suspicion that it had failed, it was close, and everyone, the company included, was scrambling to find a way out. The fact that AA hasn't yet filed, despite having everything in line to do so indicates that there may be at least a chance for a re-vote.
If the union can figure out a way to do it, and the company agrees, hopefully y'all will get another chance. Either way, good luck to everyone involved. Its going to be a rough ride.
"The two most common elements in the universe are Hydrogen and stupidity"
FLY777UAL From United States of America, joined May 1999, 4510 posts, RR: 3 Reply 16, posted (10 years 8 months 1 day 3 hours ago) and read 3576 times:
I'll bet American is actually very happy about this. There have been so many reports about how American may not have asked for enough cuts between the operating losses due to the economy, coupled with Iraq and now SARS. It works out well for AA so they won't have to piss anyone off even more down the road if they were to ask for deeper cuts to cover their asses.
M717 From United States of America, joined Dec 2002, 608 posts, RR: 5 Reply 17, posted (10 years 8 months 1 day 3 hours ago) and read 3562 times:
I won't tell you to mind your own business, but I will say you are WAY out of touch with reality if you think that AA is just another airline that was f*cked over by a union. All the "legacy" carriers have problems that go much deeper than union contracts.
I wonder why you weren't singing this same song duing the record profit years of the mid to late 90s? Those same unions had those same contracts then. What do you supposed happened? Perhaps you picked a bad time to invest in AMR and you're looking for a scapegoat? It's always easiest to point the finger at others, isn't it?
Sllevin From United States of America, joined Jan 2002, 3376 posts, RR: 6 Reply 19, posted (10 years 8 months 1 day 3 hours ago) and read 3530 times:
While the plan was rejected, still, it's close. It may well go through.
The reality is that the new contracts have a good premise at heart -- for everyone to be more tied to the performance of the company. When things are bad, everyone suffers, and when things are good, everyone will benefit. The various unions are just making sure that things are balanced so that when things DO get better, union members get the opportunity to join in.
Dalmd88 From United States of America, joined Jul 2000, 2447 posts, RR: 15 Reply 20, posted (10 years 8 months 1 day 3 hours ago) and read 3528 times:
I commend the FA's for voting down this terrible contract. Too bad the Pilots and Ground Workers didn't do the same. Carty is trying to make the work force carry the entire burden for the next SIX years. Why are these contracts soo long to fix a short term problem. Within two years travel may be back and the company making money. Do you think these contracts will be changed then? So make them a two year deal. If things haven't improved extend them.
Also how many cuts are comming out of management? So far all I've heard is Carty is forgoing his bonus and a pay cut. Have creditors and suppliers been included in the saving of AMR? How about fixing the revenue side of the equation? The employees should not be the only ones held at gun point.
Boeingfan From United States of America, joined Aug 2001, 385 posts, RR: 1 Reply 21, posted (10 years 8 months 1 day 3 hours ago) and read 3510 times:
The APFA is re voting or re counting the vote on the AMR contract concessions, they have until 17:00 CT 16APR2003, to get the results in. It looks like it will pass now, as the vote was so close. This just reported on local ABC news affiliate Channel 8, DFW / KDFW), USA - Texas">DFW.
So it is not over 'till its over, so there is still a chance that things could change for the better/or worse, depending upon if you are in finance, or working the ramp.
No Ch. 11 filing yet. The APFA still has time to approve the new contract. Now, this may spell more loses for AA (short term,) as it will be harder to renegotiate asset and service leases out side of bankruptcy protection.
Cross your fingers, the APFA will do the right thing, and approve the concession contract.
The stock will rise again, tomorrow. The sun will rise, and AA will fly a full schedule. See below:
American Flight Attendants Extend Voting
Tuesday April 15, 4:50 pm ET
By Angela K. Brown, Associated Press Writer
American Airlines Flight Attendants Given One More Day to Vote on Labor Concessions
FORT WORTH, Texas (AP) -- American Airlines flight attendants were given one more day to vote on whether to accept labor concessions the airline says it needs to avoid bankruptcy, a labor leader said.
The reprieve came after a union official said the flight attendants were on the verge of narrowly rejecting $340 million in wage cuts and other concessions.
The flight attendants' vote was hanging in the balance after unions representing pilots and ground workers said Tuesday that they had approved their portion of the proposed $1.8 billion cuts.
The flight attendants union had complained Monday that some members were having trouble casting votes by phone and the Internet and sought an extension.
Artsyman From United States of America, joined Feb 2001, 4745 posts, RR: 36 Reply 22, posted (10 years 8 months 1 day 3 hours ago) and read 3484 times:
Why are these contracts soo long to fix a short term problem
I dont think this is a short term problem, the days of old are long gone now. The industry needs restructured completely, and this is why most of the carriers are making moves to do so. I think passenger numbers will return, but the fares of old are gone