AA94
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Bankruptcy Judge Voids APA AMR Contract

Tue Sep 04, 2012 9:58 pm

A bankruptcy judge just granted American the right to cancel the APA Pilots contract. The APA represents around 8,000 AA pilots.

Specific details are spotty, but an explanation of today's hearing agenda can be found here: http://aviationblog.dallasnews.com/2...ith-american-airlines-pilots.html/

UPDATE with link: http://aviationblog.dallasnews.com/2...toss-out-its-pilots-contract.html/

[Edited 2012-09-04 15:10:36]
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SonomaFlyer
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Bankruptcy Judge Voids APA AMR Contract

Tue Sep 04, 2012 10:15 pm

An expected result. So now AA will impose a contract consistent with its renewed application. Is it safe to assume this would be considered a "temporary" contract with no fixed term while the sides try to reach a long term deal?
 
LAXdude1023
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Bankruptcy Judge Voids APA AMR Contract

Tue Sep 04, 2012 10:35 pm

Just when you thought things at AA couldn't get more cuddly.
It is what it is...
 
Mir
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Bankruptcy Judge Voids APA AMR Contract

Tue Sep 04, 2012 10:55 pm

I assume this means that if things turn around at AA and the company is doing really well several years down the road, the pilots can go to a judge to get their contract voided and have newer conditions more favorable to them imposed?

Rhetorical question, of course.

Quoting LAXdude1023 (Reply 2):
Just when you thought things at AA couldn't get more cuddly.

Yeah, it's going to get pretty ugly over there.

-Mir
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BlueDanube
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Bankruptcy Judge Voids APA AMR Contract

Tue Sep 04, 2012 11:01 pm

Quoting Mir (Reply 3):
I assume this means that if things turn around at AA and the company is doing really well several years down the road, the pilots can go to a judge to get their contract voided and have newer conditions more favorable to them imposed?

If only....
 
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Tugger
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Bankruptcy Judge Voids APA AMR Contract

Tue Sep 04, 2012 11:20 pm

Quoting Mir (Reply 3):
I assume this means that if things turn around at AA and the company is doing really well several years down the road, the pilots can go to a judge to get their contract voided and have newer conditions more favorable to them imposed?

Rhetorical question, of course.

Hey, if the pilots actually take an ownership option in AA then they absolutely could do that. Of course they would have to declare bankruptcy again which would destroy their investment but they could do it! Because it is just such an easy option....

Quoting Mir (Reply 3):
Yeah, it's going to get pretty ugly over there.

There? How about here!

Tugg
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aluminumtubing
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Bankruptcy Judge Voids APA AMR Contract

Wed Sep 05, 2012 12:54 pm

Things are in chaos right now. The APA has notified management that they will not meet with them to discuss the 1113 terms. AA must now manage 8000 pilots independently with whatever terms they decided to impose. That alone could prove entertaining. I have no clue what is going to happen. I do know for sure, that the UCC wants a mutually agreed upon contract, as their attorney stated as much during the proceeding. So, this is all temporary. How long, I honestly don't know. But either something happens or AA slowly dies on the vine. That's it in a nutshell.
 
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Revelation
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Bankruptcy Judge Voids APA AMR Contract

Wed Sep 05, 2012 1:00 pm

Seems like this thread has a few hours priority over the one I started:

Judge Allows AMR To End Pilot Contract (by Revelation Sep 4 2012 in Civil Aviation)

Might I suggest the title include AA or AMR in the title as well as APA?
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XFSUgimpLB41X
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RE: Bankruptcy Judge Voids APA AMR Contract

Wed Sep 05, 2012 4:53 pm

The operation could (and should) spiral into a train wreck. Everyone knows that the best way to run a company is to make your employees absolutely miserable!

AA pilots gave a lot to keep the company out of bankruptcy almost a decade ago, and the management team has been completely inept at running a viable company. Ridiculous that this came to court ordered ability to abrogate a contract... If terms are actually imposed, the pilots need to send a sharp reminder on the things they do to help the operation speed along every day.
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PHX787
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RE: Bankruptcy Judge Voids APA AMR Contract

Wed Sep 05, 2012 4:57 pm

So given the fact that the APA approved the US proposal, is this more or less an open door, as far as pilots are concerned, for DP's ambitions? Or am I mistaken?
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commavia
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RE: Bankruptcy Judge Voids APA AMR Contract

Wed Sep 05, 2012 5:03 pm

Quoting PHX787 (Reply 9):
So given the fact that the APA approved the US proposal, is this more or less an open door, as far as pilots are concerned, for DP's ambitions? Or am I mistaken?

My understanding is that the APA MEC has approved a term sheet with Parker. It is now, yet, however been voted on by the APA membership.
 
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Stitch
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RE: Bankruptcy Judge Voids APA AMR Contract

Wed Sep 05, 2012 5:29 pm

Quoting tugger (Reply 5):
Hey, if the pilots actually take an ownership option in AA then they absolutely could do that. Of course they would have to declare bankruptcy again which would destroy their investment but they could do it!

If they're on the BoD, they can just attempt to vote in a more lucrative contract. UA's labor groups successfully did so with their BoD spots when they had partial ownership of the company.
 
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TVNWZ
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RE: Bankruptcy Judge Voids APA AMR Contract

Wed Sep 05, 2012 7:17 pm

Quoting Stitch (Reply 11):

Good example. And how did that work out?
 
Flaps
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RE: Bankruptcy Judge Voids APA AMR Contract

Wed Sep 05, 2012 8:10 pm

Quoting XFSUgimpLB41X (Reply 8):
AA pilots gave a lot to keep the company out of bankruptcy almost a decade ago, and the management team has been completely inept at running a viable company.

And they did that out of the goodness of their hearts and their concerns over the long term viability of the company and all of their fellow coworkers? Allow me to call bullsh@t on that. They did it to protect their own behinds and nothing more. AA took a gamble by staying out of bankruptcy as long as they did. They tried to protect their shareholders and their employees by not wiping out pensions and investments through the courts. This was a noble effort and well thought of at the time by those same groups that are now vilifying them for not doing so. AA took a chance and they lost. That is unfortunate but it is what it is. Had it been successful, no doubt the pilots would be claiming all the credit just as they are now dishing out the blame.
 
avek00
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RE: Bankruptcy Judge Voids APA AMR Contract

Wed Sep 05, 2012 8:44 pm

Quoting commavia (Reply 10):
My understanding is that the APA MEC has approved a term sheet with Parker. It is now, yet, however been voted on by the APA membership.

The US term sheet is effectively dead for the pilots now -- Parker would be a fool to stick to it now that the bankruptcy court has allowed AMR to alter the economic baselines sharply downward.
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Maverick623
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RE: Bankruptcy Judge Voids APA AMR Contract

Wed Sep 05, 2012 8:58 pm

Quoting Flaps (Reply 13):
And they did that out of the goodness of their hearts and their concerns over the long term viability of the company and all of their fellow coworkers?
Quoting Flaps (Reply 13):
They did it to protect their own behinds and nothing more.

First of all, it is silly to make financial decisions based purely out of the "goodness of your heart".... it is a quick way to lose everything.

The pilots took the pay cut to avoid having something like this happen. Unfortunately, instead of being pumped back into the operation, the money saved went straight into the executive's pockets.

Quoting Flaps (Reply 13):
This was a noble effort and well thought of at the time

Just shows how foolish those people were.

Quoting Flaps (Reply 13):
Had it been successful

It wasn't ever going to be successful, because it's not. But that's ok, we can let management take all the credit for all the good, and blame the pilots for trying to save their careers by giving up money, saying it actually hurt the company.
"PHX is Phoenix, PDX is the other city" -777Way
 
Flaps
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RE: Bankruptcy Judge Voids APA AMR Contract

Wed Sep 05, 2012 10:31 pm

Quoting Maverick623 (Reply 15):
It wasn't ever going to be successful, because it's not. But that's ok, we can let management take all the credit for all the good, and blame the pilots for trying to save their careers by giving up money, saying it actually hurt the company.

My point is this:

The pilots and management (and plenty of others) are all responsible here. The pilot group was not heroic when they took the cuts. They were trying to save their bacon nothing more nothing less. Very hypocritical to come back now and whine about their terrible sacrifices of the past. Even their own union came under suit during that fiasco. In acting this way now they come across as whiny and spoiled brats. I have been pilot, manager and consultant in this industry for 25 years and have been seated at every place around the table through these types of "negotiations". While there is plenty of blame to go around on all sides/parties to the AA debacle, from a public perspective the pilot posturing has been the most immature. The pilots' concerns about their future are real and valid. For that I have empathy. Their juvenile posturing however elicits no sympathy from me.
For the record, I too invested close to 100G for my education. When things turned south for the industry I (as well as many others) looked ahead and decided get out and invest those talents elsewhere. Others chose to gamble and stay with flying. Each of those groups made a choice and each much live with the consequences. I loved flying but when it no longer fed the kids I had to make a choice. I chose to feed the family and give up a lifelong passion. It was a painful choice. Others chose the risk and for some it worked great and others it didn't. That is now turning out for many to be a painful choice. If you want to work in the industry by all means do so. If you want to make big bucks by all means do so, good luck trying to make money in this business though, those days are OVER FOR GOOD.

Its long past time for finger pointing. It is time to put aside the egos and rationally try to salvage what is left of AA for the sake of all at AA and the industry itself. While another merger may be doable the loss of a combined AA/US would devastate the industry. I envision the failure of the combined entity due to weak management and poor labor relations at both companies. They cant get their act together as individual entities. They will never be able to successfully operate the combined franchise. Does anyone remember the Bonanza/Pacific/West Coast into Airwest debacle? Ok, Im off my soapbox, flame away!!!!!
 
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TVNWZ
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RE: Bankruptcy Judge Voids APA AMR Contract

Thu Sep 06, 2012 12:39 am

Quoting avek00 (Reply 14):
The US term sheet is effectively dead for the pilots now -- Parker would be a fool to stick to it now that the bankruptcy court has allowed AMR to alter the economic baselines sharply downward.

I'm afraid the investors would insist on the AMR deal. Parker would be out in a flash.
 
MaverickM11
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RE: Bankruptcy Judge Voids APA AMR Contract

Thu Sep 06, 2012 3:07 am

Quoting TVNWZ (Reply 17):
Quoting avek00 (Reply 14):
The US term sheet is effectively dead for the pilots now -- Parker would be a fool to stick to it now that the bankruptcy court has allowed AMR to alter the economic baselines sharply downward.

I'm afraid the investors would insist on the AMR deal. Parker would be out in a flash.


Why? Parker is a much more capable leader than Horton, who so far has been little more than tone deaf and hapless.

Quoting Maverick623 (Reply 15):
The pilots took the pay cut to avoid having something like this happen. Unfortunately, instead of being pumped back into the operation, the money saved went straight into the executive's pockets.

False. AA simply lost *less* money than it would have otherwise. There was no "money saved" to divert.
E pur si muove -Galileo
 
Maverick623
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RE: Bankruptcy Judge Voids APA AMR Contract

Thu Sep 06, 2012 7:12 am

Quoting Flaps (Reply 16):
It is time to put aside the egos and rationally try to salvage what is left of AA for the sake of all at AA and the industry itself.

I really have a hard time following your logic. You say that the pilots took concessions to "save their bacon", then go after them when they still get screwed over and complain about it?

Quoting MaverickM11 (Reply 18):
False.

Erm, no. For starters, it's really no secret to us in the industry that directors and above get nice bonuses everytime they realize a cost savings. That's not a bad thing in and of itself, but as we've seen, the goal now has become getting the bonuses, everything else be damned.

BTW, you guys are aware that by steering the company into bankruptcy, Horton stands to make millions of dollars in bonuses? Hardly inspires confidence that any of the suits actually cares about anything other than their beloved bonuses.
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Rdh3e
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RE: Bankruptcy Judge Voids APA AMR Contract

Thu Sep 06, 2012 8:03 pm

Quoting Maverick623 (Reply 19):
I really have a hard time following your logic. You say that the pilots took concessions to "save their bacon", then go after them when they still get screwed over and complain about it?

Yes, he is saying that. I would say, given their completely uncompetive pilot agreement (even after their concessions) compared to the agreements of their peers, the pilots were completely unwilling to "give" more. Even though it would've just gotten them back to average. It's not just $/hour like you'll probably come back with, it's work rules and scope clauses that killed AMR.

Quoting Maverick623 (Reply 19):
BTW, you guys are aware that by steering the company into bankruptcy, Horton stands to make millions of dollars in bonuses?

Sorry, you're so wrong. Horton LOST millions the day they declared bankrupcy. He had millions on millions of dollars in stock options which were sent to zero by that decision. He personally will come out of this with a 7 figure negative without a doubt.
 
XFSUgimpLB41X
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RE: Bankruptcy Judge Voids APA AMR Contract

Thu Sep 06, 2012 8:46 pm

Quoting RDH3E (Reply 20):
Yes, he is saying that. I would say, given their completely uncompetive pilot agreement (even after their concessions) compared to the agreements of their peers, the pilots were completely unwilling to "give" more. Even though it would've just gotten them back to average. It's not just $/hour like you'll probably come back with, it's work rules and scope clauses that killed AMR.

AMR's work rules are hardly better than DLs, and their payrates and soft money (work rule bonuses and such) are considerably lower.
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Rdh3e
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RE: Bankruptcy Judge Voids APA AMR Contract

Thu Sep 06, 2012 9:00 pm

Quoting XFSUgimpLB41X (Reply 21):

AMR's work rules are hardly better than DLs, and their payrates and soft money (work rule bonuses and such) are considerably lower.

Like no ULH flying? And you conveniently ignored Scope...
 
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TVNWZ
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RE: Bankruptcy Judge Voids APA AMR Contract

Thu Sep 06, 2012 9:27 pm

Quoting MaverickM11 (Reply 18):
Why? Parker is a much more capable leader than Horton, who so far has been little more than tone deaf and hapless.

Because the cost differential would probably not work. Leadership to Wall Street is the fortitude to stick it to whomever to make the company more profitable. And I don't write that in a negative sense. If you are a leader who has great raport with the employees and they think you are a god, but you can not deliver the number, you're out. If you are a hard nosed, could care less about what people think of you and make an outstanding profit, you're in. And rewarded.
 
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Revelation
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RE: Bankruptcy Judge Voids APA AMR Contract

Thu Sep 06, 2012 9:58 pm

Quoting MaverickM11 (Reply 18):
AA simply lost *less* money than it would have otherwise. There was no "money saved" to divert.

And yet the bonuses got paid, but you knew that...

Quoting RDH3E (Reply 20):
Sorry, you're so wrong. Horton LOST millions the day they declared bankrupcy. He had millions on millions of dollars in stock options which were sent to zero by that decision. He personally will come out of this with a 7 figure negative without a doubt.

Potential gain is just that, potential.

Quoting TVNWZ (Reply 23):
Leadership to Wall Street is the fortitude to stick it to whomever to make the company more profitable. And I don't write that in a negative sense. If you are a leader who has great raport with the employees and they think you are a god, but you can not deliver the number, you're out. If you are a hard nosed, could care less about what people think of you and make an outstanding profit, you're in. And rewarded.

And that leads the execs to stuff their pockets as fast as they can, and when they bail out with their golden parachute or get kicked out, the next poor b*st*rd has to come along and deal with the mess.
Inspiration, move me brightly!
 
MaverickM11
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RE: Bankruptcy Judge Voids APA AMR Contract

Thu Sep 06, 2012 10:28 pm

Quoting Maverick623 (Reply 19):
Erm, no. For starters, it's really no secret to us in the industry that directors and above get nice bonuses everytime they realize a cost savings

It's possible they received bonuses as part of their compensation plan but a) that's fairly standard and b) it's small change compared to the cost wedge that separated AMR from the rest of the industry.

Quoting TVNWZ (Reply 23):

Because the cost differential would probably not work. Leadership to Wall Street is the fortitude to stick it to whomever to make the company more profitable. And I don't write that in a negative sense. If you are a leader who has great raport with the employees and they think you are a god, but you can not deliver the number, you're out. If you are a hard nosed, could care less about what people think of you and make an outstanding profit, you're in. And rewarded.

I'm not sure how any of that would support Horton, who I'm not sure a single sentient being has any faith in at this point.

Quoting Revelation (Reply 24):

And yet the bonuses got paid, but you knew that...

What are you referring to? The stock options? Or standard middle management bonuses?
E pur si muove -Galileo
 
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Revelation
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RE: Bankruptcy Judge Voids APA AMR Contract

Thu Sep 06, 2012 10:34 pm

Quoting MaverickM11 (Reply 25):
The stock options? Or standard middle management bonuses?

Bonuses can be made up of cash and/or stock options, and if they are indeed bonuses, they are tied to performance metrics.
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Tugger
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RE: Bankruptcy Judge Voids APA AMR Contract

Thu Sep 06, 2012 10:37 pm

Quoting Revelation (Reply 24):
And that leads the execs to stuff their pockets as fast as they can, and when they bail out with their golden parachute or get kicked out, the next poor b*st*rd has to come along and deal with the mess.

Weren't the pilots offered the same bonuses (they were based on stock performance I believe)?

TUgg
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MaverickM11
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RE: Bankruptcy Judge Voids APA AMR Contract

Thu Sep 06, 2012 10:51 pm

Quoting Revelation (Reply 26):
Quoting MaverickM11 (Reply 25):
The stock options? Or standard middle management bonuses?

Bonuses can be made up of cash and/or stock options, and if they are indeed bonuses, they are tied to performance metrics.

Why shouldn't they have been paid if they met the performance metrics?
E pur si muove -Galileo
 
HPRamper
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RE: Bankruptcy Judge Voids APA AMR Contract

Fri Sep 07, 2012 1:41 am

Quoting TVNWZ (Reply 23):
If you are a leader who has great raport with the employees and they think you are a god, but you can not deliver the number, you're out. If you are a hard nosed, could care less about what people think of you and make an outstanding profit, you're in. And rewarded.

Not always. At Fedex Express there is a policy of PSP which starts with taking care of your people first, which in turn results in better service, which brings and keeps customers driving profit.

The company continually reinvests in the employee group in various ways which is why the investor returns are not as high as they could be.
Wall Street knows this and doesn't really seem to vilify the company for it.
 
XFSUgimpLB41X
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RE: Bankruptcy Judge Voids APA AMR Contract

Fri Sep 07, 2012 2:30 am

Quoting RDH3E (Reply 22):
Like no ULH flying? And you conveniently ignored Scope...

The only reason there is no ULH flying is because negotiations stalled.

Scope is on par with CAL... they've done just fine the past 10 years, wouldn't you say?
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ldvaviation
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RE: Bankruptcy Judge Voids APA AMR Contract

Fri Sep 07, 2012 2:42 am

Quoting XFSUgimpLB41X (Reply 30):
Scope is on par with CAL... they've done just fine the past 10 years, wouldn't you say?

Nope... Scope was starting to squeeze them too. See what they tried to do at Newark once they could operate under United's scope clause.

Continental only did well because their pilots were among the lowest paid, but the most productive. AA pilots would know nothing about that.
 
XFSUgimpLB41X
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RE: Bankruptcy Judge Voids APA AMR Contract

Fri Sep 07, 2012 3:59 am

Quoting LDVAviation (Reply 31):
Nope... Scope was starting to squeeze them too. See what they tried to do at Newark once they could operate under United's scope clause.

Continental only did well because their pilots were among the lowest paid, but the most productive. AA pilots would know nothing about that.

Not really... what they tried to do at newark was just cheaper flying, so of course they would take advantage of it. CAL was doing just fine. Not because of their pilots productivity- which didnt hurt, nor their pay (their pay has been about mid range of the legacies the past decade), but because it was an exceptionally well run airline with a great network.
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SJUSXM
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RE: Bankruptcy Judge Voids APA AMR Contract

Fri Sep 07, 2012 5:52 am

Quoting Revelation (Reply 24):
And yet the bonuses got paid, but you knew that

The bonuses the APA was offered, and APA agreed to let management have. However wrong they may have been to most pilots, the APA agreed to it.

Quoting XFSUgimpLB41X (Reply 30):
Scope is on par with CAL... they've done just fine the past 10 years, wouldn't you say

Well, being that they are now United, no. Just like I would say AA is not doing well if US takes them over.

Plus a major component of how scope is hurting AA is how UA is employing their large regionals in ORD. CO didn't have that problem in fortress IAH, EWR or the RJ city that is CLE.
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Rdh3e
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RE: Bankruptcy Judge Voids APA AMR Contract

Fri Sep 07, 2012 2:25 pm

Quoting XFSUgimpLB41X (Reply 30):
Scope is on par with CAL... they've done just fine the past 10 years, wouldn't you say?
Quoting XFSUgimpLB41X (Reply 32):
what they tried to do at newark was just cheaper flying

They did fine, but were absolutely being squeezed. They had one of the highest CASM's in the industry. To your second comment, what they actually did was bring 70 seaters in where they could in order to better serve markets and simultaneously reduce casm. That's not "just cheaper flying" it's a strategic shift.

AA didn't have that luxury and thus whenever they faced direct Eagle vs UAX/DL CX/USX competition they were at an immediate disadvantage because their competitor COULD have brought in bigger jets, regardless of whether they actually did or not.
 
TWA85
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RE: Bankruptcy Judge Voids APA AMR Contract

Fri Sep 07, 2012 4:57 pm

Quoting XFSUgimpLB41X (Reply 32):
Not really... what they tried to do at newark was just cheaper flying, so of course they would take advantage of it. CAL was doing just fine. Not because of their pilots productivity- which didnt hurt, nor their pay (their pay has been about mid range of the legacies the past decade), but because it was an exceptionally well run airline with a great network.



CO did fine with their scope agreements because they didn't have to compete with UA at ORD, DL at JFK and both UA and DL at LAX, with their limited scope agreements like AA did. In all three of the previously mentioned markets AA had the tough choice of allocating a higher cost mainline aircraft in a market where UA and DL were allocating a lower cost regional aircraft which would make it tough for AA to compete or allocate a smaller lower yielding regional aircraft in a market where UA and DL were allocating larger higher yielding regional aircraft which limit the amount of AA revenue growth vs UA and DL in those same exact market. Yes CO at EWR competed with both AA and DL at JFK, however CO had the dominant size at EWR to off set the lack of revenue that AA does not have at JFK or ORD. As for CLE, CO was able to remain marginally competitive due to the smaller market that CLE is, resulting in lack of demand for larger regional aircraft. Then the only remaining market where CO had to compete with their limited scope agreement was at IAH vs. AA at DFW, and CO was only competitive with AA in TX because AA had a similar scope agreement. As soon as CO merged with UA, they re-allocated ALOT of larger higher yielding regional aircraft from UA to EWR and IAH to take advantage of increased revenue opportunities and re-allocated the smaller lower yielding regional aircraft from CO to hubs like IAD, CLE and DEN, where there was not as much need for the larger higher yielding regional aircraft.

Long story short, CO only did OK with its limited scope agreements because their network didn't require the use of larger regional jets. Although as soon as larger regional jets became available, they jumped on the opportunity to use them. Just like AA would have.
 
toltommy
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RE: Bankruptcy Judge Voids APA AMR Contract

Fri Sep 07, 2012 5:25 pm

Quoting HPRamper (Reply 29):
At Fedex Express there is a policy of PSP which starts with taking care of your people first, which in turn results in better service, which brings and keeps customers driving profit.

Comparing Fedex to an airline of any kind is like comparing apples and bricks. Fedex doesn't face the cost pressures an airline does. As a frequent Fedex user, I can tell you that the price to ship an overnight letter only goes up, not down. There's no Orbitz type website to compare the price to ship a package via various companies. Airlines OTOH can be price shopped very easily, and fares continue to drop.
 
HPRamper
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RE: Bankruptcy Judge Voids APA AMR Contract

Fri Sep 07, 2012 5:30 pm

Quoting toltommy (Reply 37):
Comparing Fedex to an airline of any kind is like comparing apples and bricks. Fedex doesn't face the cost pressures an airline does. As a frequent Fedex user, I can tell you that the price to ship an overnight letter only goes up, not down. There's no Orbitz type website to compare the price to ship a package via various companies. Airlines OTOH can be price shopped very easily, and fares continue to drop.

Fedex is first and foremost an airline, before it is a delivery company. It faces margins that are every bit as thin as a passenger airline. And why should the financial habits of a company dictate or justify how they treat employees?
 
TWA85
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RE: Bankruptcy Judge Voids APA AMR Contract

Fri Sep 07, 2012 6:08 pm

Quoting HPRamper (Reply 38):

Fedex is first and foremost an airline, before it is a delivery company. It faces margins that are every bit as thin as a passenger airline. And why should the financial habits of a company dictate or justify how they treat employees?

Lets put it this way, comparing FedEx and AA is liking comparing BNSF and Amtrak. Yes FedEx and AA are both airlines, however the HUGE AND ONLY difference between them is, a pallet of freight doesn't complain where as a passenger does if they are not treated right. FedEx does not need to provide there customers with in flight WiFi and entertainment or Food and Beverages. The cost savings of not having to provide these services allows FedEx to invest more funds into its employees. Also FedEx does not need the use of many regional aircraft as anytime an aircraft that is not full leaves an out station, all FedEx needs to do is route that aircraft through other out station to pick up more freight on the way to FedEx distribution centers/hubs. It does not matter how many times a pallet of freight has to stop enroute to its final destination as long as it gets there safely in a timely mannor. The cost savings of much higher asset utilitazatin allows FedEx to further invest more funds in its employees. AA (and any other passanger airline) by far does not have anything close to either of these luxurays.
 
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RE: Bankruptcy Judge Voids APA AMR Contract

Fri Sep 07, 2012 6:14 pm

Quote:
(lots of fedex vs aa comparisons)

C'mon folks, aren't we dragging this too far off-topic?

Any updates on what APA and AMR are doing in response to the judge's decision?

Given how long the judge has given AMR to stay in BK, it seems the status quo just might drag on for quite a while, no?
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MaverickM11
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RE: Bankruptcy Judge Voids APA AMR Contract

Fri Sep 07, 2012 6:56 pm

Quoting TWA85 (Reply 39):
however the HUGE AND ONLY difference between them is, a pallet of freight doesn't complain where as a passenger does if they are not treated right

Well that and there are essentially only 2 major worldwide freight carriers, where as there are a few more than 2 worldwide network carriers.
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mcdu
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RE: Bankruptcy Judge Voids APA AMR Contract

Fri Sep 07, 2012 10:29 pm

Quoting Flaps (Reply 16):
I have been pilot, manager and consultant in this industry for 25 years and have been seated at every place around the table through these types of "negotiations".

For relevance to the plight of the legacy airline pilots, which carrier did you work for as a pilot?

The armchair analyst that are more than willing to determine path and future for the AA pilots often have never been in the position the AA pilots find themselves.

The legacy pilots have been pulled down due to an industry that has dangled jobs at lower and lower wages with a never ending supply of pilots willing to work for less than the other group. Every time a startup entered the market the bar was lowered on wages and benefits. This became the barometer that the legacy management wanted to negotiate from.

Hardly has an airline manager set their own pay at the level of an upstart company. The greed by the mangers in this industry has been collassal. The unions didn't crater AA. Irresponsible leadership and their consultants have placed AA into CH11. The employees shouldn't be the fix for poor management decisions. Time for these so called mangers to be held accountable for what they have created.
 
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RE: Bankruptcy Judge Voids APA AMR Contract

Fri Sep 07, 2012 10:58 pm

Quoting mcdu (Reply 41):
The legacy pilots have been pulled down due to an industry that has dangled jobs at lower and lower wages with a never ending supply of pilots willing to work for less than the other group. Every time a startup entered the market the bar was lowered on wages and benefits. This became the barometer that the legacy management wanted to negotiate from.

Wages have NEVER been the issue. Each term sheet, including the 1113 implemented sheet has pay raises. It's all about scope and benefits. And it's not just a startup with lower benefits. It's United, Southwest, Delta, Spirit, US Airways, JetBlue, Virgin America, Frontier and every regional in the country. It's not the pilots fault that the industry has changed, but they do need to accept that it has changed. Every other employee at AA has figured this out, even the flight attendants with their harshly anti-management stance have accepted that their lot is better off by accepting the latest term sheet rather than let the judge impose the original proposal.
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RE: Bankruptcy Judge Voids APA AMR Contract

Sat Sep 08, 2012 3:43 am

Quoting mcdu (Reply 41):
Hardly has an airline manager set their own pay at the level of an upstart company.

Why limit to airlines? Typically CEOs of larger, established companies have higher compensation than CEOs of new entrants. I am not saying that is the way it should be, but was your expectation that airlines were going to be an exception? Why?

Quoting mcdu (Reply 41):
The unions didn't crater AA. Irresponsible leadership and their consultants have placed AA into CH11. The employees shouldn't be the fix for poor management decisions. Time for these so called mangers to be held accountable for what they have created.

Airlines are very low-margin businesses and labor costs are a significant share of expenses. If there is one thing that can sink an airline quickly, it is labor costs out of line with competitors. A well-run airline controls labor costs. It does look like that is what American is (finally) trying to do, albeit with a draconian measure. If we are to list bad decisions by American in the past, delaying labor cost reductions would probably be listed on top.
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RE: Bankruptcy Judge Voids APA AMR Contract

Sat Sep 08, 2012 4:04 am

Quoting mcdu (Reply 41):
The legacy pilots have been pulled down due to an industry that has dangled jobs at lower and lower wages with a never ending supply of pilots willing to work for less than the other group.

That's the law of supply and demand, not the "fault" of anyone.

Quoting mcdu (Reply 41):
This became the barometer that the legacy management wanted to negotiate from.

... because that became the barometer that investors used to measure legacy management.

Airlines are publicly-traded companies that exist to return value to shareholders, so if other airlines were returning more value to their shareholders by paying their people less, working their people more, and/or just having fewer people per unit of output to begin with, it's not management's "fault" and certainly not "greed" to expect their own labor groups to adjust to that new market reality. That is, after all, management's fiduciary responsibility.

Quoting mcdu (Reply 41):
The unions didn't crater AA.

Nor did management.

Both sides worked very hard to do the right thing. The 2003 deals were extremely painful and difficult, but they absolutely worked - in the short-run. In the period from 2004-2006, AMR was outperforming its legacy peers.

But, in the end, both sides were unwilling to do what was necessary to get AMR to where it needed to be. The AMR mainline unions were, for years, to one extent or another simply unwilling to recognize the new economic reality in which AMR found itself (see your own comment above re: new entrants, continually lower labor costs, etc.). Their denial ranged from the ridiculous (implying Arpey is a murderer) to the comical (implying the company must be cooking the books) to the downright stupid (implying AA's planes are unsafe). Similarly, AMR's management was unwilling, for years, to accept this reality and "pull the trigger" on bankruptcy earlier, after it had already become clear that the 2003 concessions - while real, tangible, and admirable - simply were no longer sufficient for the "new normal" post-Delta/Northwest/United/USAirwayx2 bankruptcies.

Both management and labor deserve blame for what went wrong, and both deserve enormous credit for what went right.

Quoting mcdu (Reply 41):
Irresponsible leadership and their consultants have placed AA into CH11.

Highly oversimplified, and false.

Looking back now in hindsight, it becomes clear from the experiences of Delta, Northwest, United and USAirways in bankruptcy that it ultimately all comes back to the union contracts - the pilots especially, and the mechanics to a lesser extent (FSCs, flight attendants and the other smaller groups were basically just along for the ride). The union contracts are the driver of so many facets of how an airline's business model operates.

And in AMR's case, relative to their post-bankruptcy peers (to say nothing of the non-union and/or new entrant carriers), not only were direct labor costs higher (both because of higher wages, benefits and pension obligations, but also because of lower productivity and/or far less outsourcing), but AMR's revenue generation was also hampered by restrictions and limitations that prevented AMR from doing all the things Delta, Northwest, United and USAirways did post-bankruptcy to become competitive and successful. To name but a few: operating more large RJs, growing internationally, expanding domestic codesharing, reinvesting in their fleets (new and refurbished), and on and on.

Now, none of this is to say that AMR management didn't make plenty of bad decisions and stupid mistakes in the last decade - they absolutely did. I can provide a list of my own - and I'm sure any AA employee can provide their own as well, But even given that, no amount of brilliant leadership was going to change the fact that AMR's costs and revenue-generating capabilities were simply noncompetitive with their post-bankruptcy peers, unless of course you consider filing for bankruptcy to be "leadership." (And I doubt that even the unions, whatever their misgivings about management's decisions, would have called bankruptcy "leadership.")

Quoting mcdu (Reply 41):
The employees shouldn't be the fix for poor management decisions.

First off, again, "poor management decisions" alone did not get AMR where they are. Various forces conspired to put AMR in the financial position it finds itself in. But as to the solution, of course employees should be a part of it. Every single element of the business should. And labor is a big element of the business.

Quoting mcdu (Reply 41):
Time for these so called mangers to be held accountable for what they have created.

Well, the head "manager" the unions blame is now gone. So that's a start on the whole accountability thing.

[Edited 2012-09-07 21:16:52]
 
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RE: Bankruptcy Judge Voids APA AMR Contract

Sat Sep 08, 2012 3:17 pm

Quoting incitatus (Reply 43):
Why limit to airlines? Typically CEOs of larger, established companies have higher compensation than CEOs of new entrants. I am not saying that is the way it should be, but was your expectation that airlines were going to be an exception? Why?

Why? Because every time an airline like Vangaurd, AirSouth, Midway, JetTrain, Skybus, MaxJet etc enter a market with wages well below the industry average the management teams come to labor and tell them the labor cost must be reduced to compete. However, the managers are not willing to lower their compensation package to match those of the upstart to help reduce the cost disadvantage between the upstart and the established carrier.

This is the double standard that exist with management and labor at the airlines. A good leader is willing to make a sacrifice to support team. Lead by example and the rest will follow.

In the case of the AA employees, they gave significant concessions to help keep the airline out of bankruptcy previously. AA leadership squandered the good will and pocketed any financial gain these cuts provided while continuing to operate AA as their own personal piggy bank.

This is not about Regional Jets. AA has had the ability to fly the CR7 and they also chose the expensive option of owning Eagle. The slow footed and irresponsible AA management kept Eagle to a point that it had little value and could not be sold. Is that the fault of labor that AA brain trusts could not see what was happening in the industry? Also, I don't believe scope is the answer to solve the AA issues. While I abhor WN they have shown that an airline is not dependent on farming out ones own flying to commuter airlines to be profiable. Also, WN has one of the highest labor cost of any carrier.

The APA has been painted as the bad guy in this deal. However, the term sheet offered to them by AA leadership was so heinous the judge would not even approve it as being worthy of consideration. In fact this entire thread is the result of the AA being forced to modify the terms they presented to the judge. So AA leadership can't even enter a courtroom and present a solid plan. They must be sent back to fix errors and resubmit. How many "do-overs" does an inept leadership team get before the enterprise disappears?
 
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RE: Bankruptcy Judge Voids APA AMR Contract

Sat Sep 08, 2012 5:55 pm

Quoting mcdu (Reply 45):
The APA has been painted as the bad guy in this deal. However, the term sheet offered to them by AA leadership was so heinous the judge would not even approve it as being worthy of consideration. In fact this entire thread is the result of the AA being forced to modify the terms they presented to the judge.

My reading of public sources says all that was questionable was the policies on domestic code shares and on furloughs, and that AMR's spokesman has said it will impose most of the more-severe contract terms established in April.

Ref: http://www.washingtonpost.com/busine...-11e1-a93b-7185e3f88849_story.html

Ref: http://www.star-telegram.com/2012/09...udge-says-american-can-reject.html

Quoting mcdu (Reply 45):
So AA leadership can't even enter a courtroom and present a solid plan. They must be sent back to fix errors and resubmit. How many "do-overs" does an inept leadership team get before the enterprise disappears?

While I share your concerns about management salaries and bonuses, which aren't often mentioned when folks talk about how an airline is a business responsible to shareholders, it would have been impossible to predict what the judge would or would not accept, so getting some pushback is not at all unexpected. In fact the judge ruled most of the plan was "soild" (to use your word) and told them exactly what needed to be changed to get his OK.

It's clear to me that the union is now even more committed to toxic future relationships with management.

Add that to a potential merger with US, and AA will become the most toxic work environment of all the majors worldwide.
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MaverickM11
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RE: Bankruptcy Judge Voids APA AMR Contract

Sat Sep 08, 2012 6:27 pm

Quoting mcdu (Reply 45):
AA has had the ability to fly the CR7

A whole what, 50 shells? Whoopie.

Quoting mcdu (Reply 45):

The APA has been painted as the bad guy in this deal. However, the term sheet offered to them by AA leadership was so heinous the judge would not even approve it as being worthy of consideration. In fact this entire thread is the result of the AA being forced to modify the terms they presented to the judge. So AA leadership can't even enter a courtroom and present a solid plan.

The judge accepted pretty much 99% of the agreement. APA is delusional to begin with, but if they think that was a "win", they are getting to North Korean delusional levels.

Quoting mcdu (Reply 45):
they also chose the expensive option of owning Eagle.

It's interesting you're willing to throw Eagle to the whims of the market driving down wages to obscene levels at regionals, but don't see the same thing happening to mainline.

Quoting mcdu (Reply 45):
However, the managers are not willing to lower their compensation package to match those of the upstart to help reduce the cost disadvantage between the upstart and the established carrier.

I am sure AMR management is a special slice of hell, full of analysis paralysis, blindly chasing Harvard MBAs throwing money at them to gate aircraft that a high school grad could do, running regressions no one needs, stuck in a rut of AMR's proud history but doing nothing for the future, and hiring consultants to do the work their own employees should be doing in the first place, but there is a place for good compensation packages to find and retain good employees, and reward them when they meet or exceed their metrics. AMR could probably lose a third of its employees and no one would miss them, but again that's a drop in the bucket compared to labor rates, scope, and work rules.
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93Sierra
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RE: Bankruptcy Judge Voids APA AMR Contract

Sat Sep 08, 2012 7:28 pm

Make the pilots unhappy...deal with the results. AA is going to have a lot of MX write ups and the worlds slowest taxi times
My heart goes out to the pilots and hope somehow this gets resolved with the pilots getting what they deserve. Shame on this whole situation.

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RE: Bankruptcy Judge Voids APA AMR Contract

Sat Sep 08, 2012 8:45 pm

Quoting mcdu (Reply 45):
Because every time an airline like Vangaurd, AirSouth, Midway, JetTrain, Skybus, MaxJet etc enter a market with wages well below the industry average the management teams come to labor and tell them the labor cost must be reduced to compete.

... because every time one of those airlines entered the market, Wall St went to management teams at the legacy airlines and said, "why are you paying your people more for doing the same job?"

Quoting mcdu (Reply 45):
In the case of the AA employees, they gave significant concessions to help keep the airline out of bankruptcy previously.

Significant, yes, along with painful, difficult and admirable. But, in the end, also insufficient.

Quoting mcdu (Reply 45):
AA leadership squandered the good will and pocketed any financial gain these cuts provided while continuing to operate AA as their own personal piggy bank.

An oft-repeated by entirely false meme perpetuated largely by AMR's unions to try and divert attention from their own complete and entire complicity with the incentive-based (stock option) compensation scheme they have become so dead-set against in the last few years.

I'm not here to defend the efficacy of the stock option incentive compensation AMR management received in the last several years, but one thing is certain - the unions knew about it, understood it, and indeed supported it from the outset.

To say that somehow AMR management "pocketed" the concessions of union members is to simply ignore basic accounting. The "cuts" the unions agreed to were cash costs, that started reducing AMR's expenses the instant they were put into place. The stock options granted to management was non-cash, and in fact had no value unless AMR management was able to steer the stock price upward.

And, of course, that was the thinking from the beginning - it would align management's incentive's with those of the thousands of AMR employees who also received stock options in 2003. Stock price goes up, and both management and employees saw their stock options gain value.

Quoting mcdu (Reply 45):
This is not about Regional Jets.

You're right - it's about way, way more than that.

Quoting mcdu (Reply 45):
AA has had the ability to fly the CR7

Yep - all 47 of them. Meanwhile, Delta operates 250+ of that class of jet, United over 150, and USAirways over 200.

I don't understand how anybody looking at those numbers could think AMR's mainline scope clause was competitive. It was not.

If you don't like that AMR wanted to replace mainline jets with large RJs, that's perfectly fine and understandable. But don't hate the player, hate the game - AMR is just being competitive with what their peers already "got away" with doing five years ago.

Quoting mcdu (Reply 45):
The slow footed and irresponsible AA management kept Eagle to a point that it had little value and could not be sold.

I agree AMR management were stupid to wait so long to sell Eagle. But, then again, Eagle would probably be a somewhat more attractive opportunity for a potential buyer today if it had been allowed, 5 years ago, to ramp up its flying of more economic 70- and 90-seat jets like its competitors largely did.

Quoting mcdu (Reply 45):
Is that the fault of labor that AA brain trusts could not see what was happening in the industry?

Both sides missed lots of trends of "what was happening in the industry." Management certainly did. But so did the unions.

Quoting mcdu (Reply 45):
Also, I don't believe scope is the answer to solve the AA issues.

Neither do I, but it is still one of several major union-contract-driven competitive disadvantages AA has to contend with.

Quoting mcdu (Reply 45):
While I abhor WN they have shown that an airline is not dependent on farming out ones own flying to commuter airlines to be profiable.

True.

AA could emulate the Southwest model. Eliminate 95% of international flying, park everything that isn't a 737, outsource heavy maintenance, and eliminate all flying to small cities.

Quoting mcdu (Reply 45):
Also, WN has one of the highest labor cost of any carrier.

... which, as their CEO recently as much as admitted, are sooner or later going to be "addressed."

Quoting mcdu (Reply 45):
the term sheet offered to them by AA leadership was so heinous the judge would not even approve it as being worthy of consideration

You're right. He only approved 95% of it, and gave AMR a blueprint for how to get his approval for the other 5%.

I'm not saying I'm happy about it, but to say that the Judge's ruling on the company's APA 1113 motion was anything but a near-entire success for the company is entirely out of touch with reality. The unions themselves have concluded as much already.

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