AAR90
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RE: AMR Bankruptcy Court Thread

Thu Apr 05, 2012 11:55 pm

Quoting crAAzy (Reply 199):
Do the pensions fall under the CBAs that AA is trying to reject or do the still plan on freezing but keeping most of them intact for now?

Yes, the retirement plans for unionized employees are within the CBA's; however, management's position with the court will be its Term Sheet with latest modifications. Those modifications will be to freeze the DBP pensions for all but pilots (to be terminated). That provides management with one more piece of "evidence" that it "bargained in good faith." The unions basically have.... "we tried" (demanding binding arbitration and law suits don't sit well with bankruptcy judges).
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KarlB737
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RE: AMR Bankruptcy Court Thread

Tue Apr 10, 2012 8:37 pm

Just saw a report showing a picket line of American Eagle Flight Attendants. The Union President of American Eagle was interviewed on WFAA-TV. Some of the issues he mentioned was the term sheet and vacation & wage cuts. He says they just want what is "fair and equitable".

Courtesy: WFAA-TV - Video Report At Link

Flight Attendants Protest Outside DFW International Airport

http://www.wfaa.com/news/business/Fl...ternational-Airport-146869535.html

[Edited 2012-04-10 13:39:17]
 
ckfred
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RE: AMR Bankruptcy Court Thread

Tue Apr 10, 2012 11:56 pm

Quoting KarlB737 (Reply 201):
Just saw a report showing a picket line of American Eagle Flight Attendants. The Union President of American Eagle was interviewed on WFAA-TV. Some of the issues he mentioned was the term sheet and vacation & wage cuts. He says they just want what is "fair and equitable".

Some at mainline claim that it wasn't fair and equitable that mainline had to agree to wage cuts in 2003, but there weren't any cuts at Eagle.
 
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RE: AMR Bankruptcy Court Thread

Wed Apr 11, 2012 12:43 am

Quoting FlyASAGuy2005 (Reply 140):

Read today that AMR will be taking a $713M charge on their 2011 earnings to write down and properly reflect the true value of assests, mostly aircraft.

wow...How much of that overvalue was collateral for loans? Hey, loan me a billion, this is worth 2.5 billion... errr... 500 million post default.  
Quoting LAXintl (Reply 154):
Agreed to keep
737-800 - 159
757-200 - 37
767-300ER - 20
777-200 - 47
MD-80 - 40

Still negotiating, and covered on the 60-day extension request
737-800 - 6
757-200 - 36
767-200 - 11
767-300ER - 13
MD-80 - 70

It amazes me that anyone would hold an MD-80 as lease collateral (or did for such a long time...).

Quoting LAXintl (Reply 163):
For the month of December it saw a $904mil loss ($728mil loss excluding reorganization costs and special items).

How is the cash doing?

Lightsaber
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LAXintl
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RE: AMR Bankruptcy Court Thread

Thu Apr 19, 2012 2:35 pm

An update on next week’s hearings. It seems a few of the items from April 10th, are back on the 23rd and 25th.


April 23
o Extension to negotiate regarding leases on 4 MD-80s. N584, 587, 587, 589
o Acceptance of leases and cure outstanding liabilities on 7 MD-80s. N9401, 9402, 9403, 9404, 9405, 9406, 9409
o Objection to “Former TWA Pilots" motion to be represented separately then their authorized collective bargaining agent.
o Response and objection to motion by 117 of 172 pilots covered by 1983 “supplement B” pay agreement to be heard separately from other aspects of bargaining agreement between AA and APA.

April 25
o Approving assumption of certain credit card and trade payment agreements
o Authorizing Issuance of subpoenas for testimony by the Pension Benefit Guaranty Corporation
o Motion rejecting 11 MD-80 aircraft and engines – N556, N557, N558, N559, N560, N561, N573, N574, N575, N7532, N9414
o Automatic Stay on Litigation Pending in the United States District Court in Illinois by former AA employee
o Motion by Committee of Passenger Service Agents (“PSAs”) to restrain AMR from making unilateral changes in the terms and conditions of employment pending certification of union vote by the NLRB.
o Rejection of various facility lease agreements and guarantees at Dallas/Fort Worth International and Ft Worth Alliance Airport
o Setting hearing date and objection deadline in rejecting various executory contracts by AMR Corp.
o Authorizing AA to make payments to Airbus and Boeing accordance with pre-delivery payments schedules in associated purchase agreements
o Authority to employ and retain Brinks Hofer Gilson & Lione as Corporate Counsel
o Rejection of various leases, use agreements and contracts at Boise, Burbank, Pittsburgh and Spokane.
o Motion rejecting 5 B757 aircraft and engine – N610, 611, 616, 620, 650


Of course the major news for next week will be the hearings on the motions to reject the union CBA’s. They get under way on the 23rd with 5-days worth of presentations and witnesses by AMR.
Full hearing schedule was posted back in Reply 195.

[Edited 2012-04-19 08:32:04]
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flyfree727
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RE: AMR Bankruptcy Court Thread

Fri Apr 20, 2012 2:21 pm

Quoting lightsaber (Reply 203):
How is the cash doing?

Ended 1Q with 5.6 billion.

AA ORD
 
SonomaFlyer
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RE: AMR Bankruptcy Court Thread

Fri Apr 20, 2012 2:31 pm

Quoting flyfree727 (Reply 205):

I thought they entered this process with 4 billion in cash. Is this 5.6 billion figure just cash or cash and equivalents? I'm surprised at this big a jump though.
 
strfyr51
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RE: AMR Bankruptcy Court Thread

Fri Apr 20, 2012 2:35 pm

Quoting aaexecplat (Reply 16):

I think that's an outcome of the UAL Bankruptcy where throwing the Pensions on the PBGC is no longer tolerated. Were AMR to face Liquidation? Then the PBGC might agree to step in but NOT UNTIL.. The AMR employees are OWED their pensions and should recieve fair market value for them for as MUCH as they can GET! AMR Management should have stayed current on the rule changes after UAL, DAL and NWA hit CH-11 but NOOO!!!! they were busy "trumpeting" We're the ONLY USA carrier NEVER to have declared Bankruptcy. (like that made their Theiving that much better.) Well LOOK at them NOW! AMR Management is to blame for this "messup" after having given themselves BONUSES after the employees made concessions. Why not go ask Don Carty??
 
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RE: AMR Bankruptcy Court Thread

Fri Apr 20, 2012 5:45 pm

Quoting LAXdude1023 (Reply 12):

Pay, Pensions ok But flight benefits?? Obviously He DOESN'T know that flight benefits are Free Gratis to the bottom line and United has reaped $10-30M a year profit from seats that would otherwise go out EMPTY and generate NO revenue whatso ever..
 
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LAXintl
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RE: AMR Bankruptcy Court Thread

Tue Apr 24, 2012 10:48 pm

Well the first 2 days of hearings on the 1113 motion to dump the contracts has passed.

No surprise AMR has brought out witness after witness with the conclusion that AA needed to desperately lower its labor cost to survive and seeking the BK court 1113 motion was its best immediate chance in doing so.
AA VP and Treasurer VP Beverly Goulet also testified today stating that the inability to reach new agreements with its unions after years of negotiations "substantially inhibited" AA ability to offer a network equipped with the right sized planes and partnerships to compete with the likes of DL-NW and UA-CO, to a tune of $1 Bil in lost revenue opportunity annually.

All told AMR plans to have 10 witnesses scheduled over five days.


In other news there seems to be a mini-hearing scheduled for next week, April 30th to cover some late aircraft business.
o Order approving extension to continue negotiations over 3 777 aircraft – N760, 761 and 784.

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RE: AMR Bankruptcy Court Thread

Thu Apr 26, 2012 1:55 pm

Quoting strfyr51 (Reply 208):
Pay, Pensions ok But flight benefits?? Obviously He DOESN'T know that flight benefits are Free Gratis to the bottom line and United has reaped $10-30M a year profit from seats that would otherwise go out EMPTY and generate NO revenue whatso ever..

Flight benefits are not "Free Gratis to the bottom line". Every step of the way there are costs. The buddy pass software didn't write itself. The servers that process them aren't free, and don't run on free electricity in free buildings. The plane takes longer to board and unboard, so it ties up other employees longer. The planes carry more people and their luggage so they weigh more and thus burn more fuel and tires wear out faster. More consumables (free sodas, more tissues and TP) etc. It'd be interesting to see what those "free" flights actually end up costing.
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PlaneAdmirer
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RE: AMR Bankruptcy Court Thread

Thu Apr 26, 2012 2:09 pm

Quoting LAXintl (Reply 209):
Well the first 2 days of hearings on the 1113 motion to dump the contracts has passed.

Do you know if the judge gave a time for ruling on the motions? The sooner the better regardless of the outcome. US really did stink up the process with their non binding agreements. As I read in the Journal, the non-binding agreements would revert to a mean between UA and DL in a few years, it would almost be amusing for the judge to give AA that agreement now without US just to see the reaction from the unions.

One other question and perhaps it belongs in the thread regarding US and AA, but does the non binding agreement include work rule changes?
 
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LAXintl
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RE: AMR Bankruptcy Court Thread

Thu Apr 26, 2012 3:49 pm

Day three of AMR presenting its case was primarily filled with insightful testimony from the financial advisory group Rothschild which was retained prior to the BK filing.

The group was tasked with helping AMR weigh its options (continuing to try to avoid bankruptcy or to file for bankruptcy) and presented host of alternative business plans to the company. While the group did not recommend a specific path to the BoD, it became clear that continuing with the status quo which included trying to reach new labor deals with its unions to try to achieve savings without going to bankruptcy presented the company ever more risk going forward as the companies financial measures were deteriorating.

Also according to the testimony, none of AA's business plans a included a merger, however in a nod to US Airways, the adviser stated that AMR should likely indeed consider a merger while in BK, and more specifically AMR has an obligation to ensure the highest value to its shareholders and would want to ensure they are getting the best possible return so looking at alternatives to a standalone plan should be part of the process.

Quoting Revelation (Reply 210):
It'd be interesting to see what those "free" flights actually end up costing.

Dont know about AA, but at UA, they financially value each space-avail ticket at $200. Seems fair considering big cost inputs like fuel.

Quoting PlaneAdmirer (Reply 211):
Do you know if the judge gave a time for ruling on the motions?

See Reply 195.

But essentially if things go by the published schedule, then early June for the judgement.

[Edited 2012-04-26 09:04:25]
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PlaneAdmirer
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RE: AMR Bankruptcy Court Thread

Thu Apr 26, 2012 4:04 pm

Quoting LAXintl (Reply 212):
See Reply 195.

But essentially if things go by the published schedule, then early June for the judgement.

Thank you. Sorry for being lazy.
 
AAIL86
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RE: AMR Bankruptcy Court Thread

Thu Apr 26, 2012 4:54 pm

Quoting Revelation (Reply 210):
More consumables (free sodas, more tissues and TP) etc. It'd be interesting to see what those "free" flights actually end up costing.

You have a point. But you'd also have to consider the fact that the flight benefits are an attractive selling point that allow airlines to significantly depress what they would otherwise spend on employee salaries without them. So don't forget that factor in your cost/benefit analysis!
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Revelation
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RE: AMR Bankruptcy Court Thread

Thu Apr 26, 2012 5:24 pm

Quoting AAIL86 (Reply 214):
You have a point. But you'd also have to consider the fact that the flight benefits are an attractive selling point that allow airlines to significantly depress what they would otherwise spend on employee salaries without them.

I agree, but that's quite a different thing than saying employee flights are free.
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Wake now, discover that you are the song that the morning brings
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ckfred
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RE: AMR Bankruptcy Court Thread

Thu Apr 26, 2012 7:54 pm

Quoting LAXintl (Reply 204):
Authority to employ and retain Brinks Hofer Gilson & Lione as Corporate Counsel

What's this about? If I remember correctly, Brinks, Hoffer is an intellectual property (i.e., patents and trademarks) law firm headquartered in Chicago.
 
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LAXintl
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RE: AMR Bankruptcy Court Thread

Thu Apr 26, 2012 11:55 pm

In testimony on Thursday, consultants McKinsey & Co. shared their findings on work they had done for AMR particularly network analysis.

As we know in 2009 AA adopted its “corner-stone” strategy which has drawn much fire from many especially the analyst community.

McKinsey was since tasked looking at options of both drawing down, or growing these corner-stones. Modeling was ran on dropping one of 3 very competitive corner-stone markets (JFK, LAX or ORD) entirely and shrinking the airline, or dropping one of the 3 corner stone and redeploying the capacity to the remaining 4. Results of the modeling showed AA would see very strong negative revenue results across its network. Alternatively it was noted, that if AA could right-size aircraft used and greatly expand its use of large regional jets as feed to these corner-stones, along with being able to put its code on other airlines, the corner-stone network results improved positively further adding pressure on the identified need to overcome contractual limitations in place with the pilots.

McKinsey also shared that none of the business scenarios they were asked to work included a merger,

Later in the day Jeff Brundage SVP HR testified that the company was limping along and did very much want to try to reach consensual labor agreements prior to the BK filing.
Prior to the BK the goal of the company with labor was to kick the can down the road by 1) avoiding a BK, 2) avoiding a strike. When the BK occurred, then option of top to bottom realignment of labor agreements become the new priority so the company could lay a new clean foundation that would help make AMR viable and profitable in the long-term.
He also testified that in hindsight, the pre-BK labor offers would likely not have allowed the company to avoid bankruptcy anyhow eventually as they were greatly dependent on outside factors such as improving economy and other tailwinds to help it limp along.

Also a bit interesting about the management directives from Arpey vs Horton. Brundage said Arpey marching orders were “get the best deal possible and keep American out of bankruptcy court.”, while Horton instructions were to take the gloves off and do "what is necessary for the success of the company."

Quoting ckfred (Reply 216):
What's this about? If I remember correctly, Brinks, Hoffer is an intellectual property (i.e., patents and trademarks) law firm headquartered in Chicago.

The authorization to retain them had the following:

The Debtors are authorized to employ and retain Brinks Hofer as intellectual
property counsel nunc pro tunc to the Commencement Date to assist the Debtors with intellectual
property law matters, including patent, trademark, copyright, and trade secret matters, including
(a) trademark clearance and filing activities including trademark and service mark applications
and maintenance of registrations in the U.S. Patent and Trademark Office and oversight of the
worldwide procurement and maintenance of all trademarks and service marks involving the
Debtors, (b) opposition and cancellation proceedings before the U.S. Patent and Trademark
Office and oversight of worldwide opposition and cancellation proceedings, as well as other
domestic and international trademark enforcement actions and adversarial court proceedings
involving the enforcement or defense of registered or common law trademarks or service marks
of the Debtors, including any appeals related thereto, to the extent not stayed by these chapter 11
cases, (c) intellectual property opinion and procurement activities, including domestic and
international trademark and service mark renewals and payment of annuities to maintain current
trademark and service mark registrations, (d) negotiation and drafting of contracts and licenses
involving intellectual property rights and settlement of adversarial proceedings involving same,
(e) continuing negotiations related to the attempted resolution of trademark and related disputes,
and (f) such other matters as may arise in connection with the foregoing.


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delta2ual
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RE: AMR Bankruptcy Court Thread

Fri Apr 27, 2012 3:00 pm

Quoting LAXintl (Reply 217):
Alternatively it was noted, that if AA could right-size aircraft used and greatly expand its use of large regional jets as feed to these corner-stones, along with being able to put its code on other airlines, the corner-stone network results improved positively further adding pressure on the identified need to overcome contractual limitations in place with the pilots.

So, basically a consultant hired by AA came up with the same strategy AA wants to pursue: more large regional jets and domestic codesharing. That's a surprise.

[Edited 2012-05-07 11:48:05 by srbmod]
From the world's largest airline-to the world's largest airline. Delta2ual
 
commavia
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RE: AMR Bankruptcy Court Thread

Fri Apr 27, 2012 4:06 pm

Quoting delta2ual (Reply 219):
So, basically a consultant hired by AA came up with the same strategy AA wants to pursue: more large regional jets and domestic codesharing. That's a surprise.

Well, yes.

While obviously a classic example of group-think and pay-for-the-answer-you-want, on the flip side, it should also be noted that the strategy AA has outlined - and they paid consultants to justify - is basically the exact same strategy all of their legacy/network competitors pursued in bankruptcy: outsource, lay off, shift from mainline to regional, and codeshare.

AA is just catching up.
 
miaami
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RE: AMR Bankruptcy Court Thread

Fri Apr 27, 2012 4:17 pm

Quoting delta2ual (Reply 219):
So, basically a consultant hired by AA came up with the same strategy AA wants to pursue: more large regional jets and domestic codesharing. That's a surprise.

AA has a history of not being able to do things themselves, they had to hire outside consultants to interpret the FAA regulations on wiring the Super80's. The FAA grounded all the Super 80's twice nearly shutting down the entire airline. Maint Management could not interpret the regs. themselves apperhantly.
 
PlaneAdmirer
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RE: AMR Bankruptcy Court Thread

Fri Apr 27, 2012 4:47 pm

Quoting miaami (Reply 221):
AA has a history of not being able to do things themselves, they had to hire outside consultants to interpret the FAA regulations on wiring the Super80's. The FAA grounded all the Super 80's twice nearly shutting down the entire airline. Maint Management could not interpret the regs. themselves apperhantly.
Quoting delta2ual (Reply 219):
So, basically a consultant hired by AA came up with the same strategy AA wants to pursue: more large regional jets and domestic codesharing. That's a surprise.

In bankrtupcy court and considering that the motions are opposed, there are strong reasons besides lazyness or being inept for AA to have hired consultants. A consultant adds some degree of objectivity even if paid by AA. If Arpy or Horton were testifying to these same issues, the representatives of the unions would be grilling them for not looking for knowledge outside of AA's own executive ranks. Now AA through it's professionals can say that it has. A third party consultant can provide a more objective view of the operations of DL and UA then AA's management even though AA's management is in the trenches every day.

It should also be pointed out that the testimony provided by the consultants will be challenged vigorously in this case by the counsel for the unions with the help of the consultants hired by the unions.

The adversial approach will give more facts to the judge in deciding than merely management says X and the unions say Y.

In my experience, bankruptcy courts have a strong bias to professional consultants over the testimony of the direct litigants even if paid for by the litigant. Recently I had a case where my professional came to a conclusion that was more favorable to the other side and the other side's professional conclusion was more favorable to me.

Parker must be a glutten for punishment to interject US into this....
 
crAAzy
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RE: AMR Bankruptcy Court Thread

Fri Apr 27, 2012 5:48 pm

Quoting delta2ual (Reply 219):
So, basically a consultant hired by AA came up with the same strategy AA wants to pursue: more large regional jets and domestic codesharing. That's a surprise

To the degree that they can't get the labor agreements necessary to run their own operations profitably, yes - but anyone in the industry could have told them that - in fact they have been telling them that for years.

Additionally, with regards to their cornerstone strategy, it really doesn't take much of an analysis to see that if you remove one of the 5 corner stones you essentially cut out a major geographic region in AA's network - especially with the limited opportunities to expand at JFK and LAX.

Additionally, the people that say AA is going to cut ORD have no idea how much east/west traffic AA funnels through ORD because they can't compete or expand out of JFK and LAX. Traffic that would otherwise be very unappealing connecting through DFW.
 
miaami
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RE: AMR Bankruptcy Court Thread

Fri May 04, 2012 5:45 pm

Looks like 18 Eagle planes are going back to lenders.

http://www.reuters.com/article/2012/...idUSL1E8G41KV20120504?feedType=RSS

I wonder if these are the 37 seaters? Besides the ATR's have they returned any other aircraft?
 
SonomaFlyer
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RE: AMR Bankruptcy Court Thread

Fri May 04, 2012 6:04 pm

They filed to reject leases on many MD-80 series and a few 757's. The are renegotiating on others.
 
stillageek
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RE: AMR Bankruptcy Court Thread

Fri May 04, 2012 8:05 pm

Those 18 planes haven't been in revenue service in years. They are currently parked out in the desert at KIGM.
 
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LAXintl
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RE: AMR Bankruptcy Court Thread

Mon May 07, 2012 3:19 pm

Hello all.

Now that the court has recovered from part one of the 1113 hearings, its getting back to normal business.

There is an upcoming hearing on May 10th with rather full agenda.
Several items are rescheduled from previous hearings in case they happen to sound familiar.


o Seeking further 60-day extension for ongoing discussion on negotiations covering 2 MD-80 aircraft – N921 and N922TW
o Acceptance of terms on 4 MD-80 aircraft – N584, N587, N588, N589
o Objection of creditors committee for above 4 accepted MD-80 aircraft. Creditors feel agreed rates are above market, and AA does not need the 4 frames for its continued business operations
o Authorization to reject of 9 MD-80s and engines deemed excess equipment – N556, N557, N558, N559, N560, N561, N573, N574, N575
o Motion and notice of hearing by Passenger Service Agents (PSAs) to restraining AMR from making unilateral changes to terms and conditions of employment while under NLRB guidance and pending unionization vote outcome
o Authorization to reject various facilities lease and bond agreements at DFW and Ft Worth Alliance airports
o US Bank objection to inconsistent use of 1110 negotiations by AMR, and delayed return of equipment covered by negotiations. AA has continued to make use of equipment without relevant payments. Bank seeks to reestablish its rights to assert claims of non compliance and all provisions lease terms including compliance with all required surrender conditions.
o Extension of automatic stay covering approximately 200 lawsuits pending in the US against AMR by 3rd parties. Debtors seek to focus their attention on restructuring and minimize litigation and usage of resources to attend to multiple other court jurisdictions.
o Reservation of rights by the DFW Airport Board and City of Dallas with respect to the debtors' motion seeking authorization to reject certain agreements
o Motion for relief from automatic stay for recessed litigation trail over a discrimination case brought against AA in California to proceed.
o Proposal extending hearing date and deadline to file objections over claims.
o Authorization to make required pre-delivery payments to Airbus and Boeing pursuant to purchase agreements.
o Notice of hearing date set to allow AMR to purchase 9 MD-80 aircraft covered under a 1991 trust certificates and other debt instruments.
o Application to employ and retain Felsberg, Pedretti E Mannrich Advogados E Consultores Legais for general representation in legal matters in Brazil
o Authority to employ and retain Sheppard Mullin Richter & Hampton LLP as Special Counsel
o Additional extension covering negotiations for single B757 – N611

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ckfred
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RE: AMR Bankruptcy Court Thread

Mon May 07, 2012 5:52 pm

Quoting miaami (Reply 221):
AA has a history of not being able to do things themselves, they had to hire outside consultants to interpret the FAA regulations on wiring the Super80's. The FAA grounded all the Super 80's twice nearly shutting down the entire airline. Maint Management could not interpret the regs. themselves apperhantly.

Didn't Delta also have problems with the FAA over rewiring on the MD-88 fleet?

Remember that AA got the rewiring done well ahead of the deadline. Then, after Southwest's issue with maintenenace, a new FAA person in Dallas looked at what AA did and said it was wrong, despite the fact that the FAA person's successor said it was ok.

Then another FAA person, this time in Long Beach, claimed that both people in Dallas had it wrong.

From what a pilot friend of mine at AA says, the FAA is great at saying what's wrong, but they don't tell you specifically how to make it right. So, you play a game of fixing it, then running it past the FAA. Even then, the fact that one FAA person says something is ok has no bearing on what another person from the FAA says.

It's sort of like saying that "Mom said it was ok." Only to hear, "Your mother is wrong. It's not ok."
 
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LAXintl
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RE: AMR Bankruptcy Court Thread

Tue May 15, 2012 3:14 am

This week kicked off Round II of the 1113 hearings in AMRs attempt dump the CBAs.

In this round, the unions have one-week to present their arguments and present witnesses.

First off on Monday, were the pilots.
Much of their testimony was provided by the APA chief negotiator and also union counsel and centered around the great difficulty they experience while negotiating with AMR the last several years. As the union would have it, the company was unwilling party and repeatedly shunned attempts reach a consensual pack. The longer negotiations went on, the more entrenched AMR became and grew its concessions demands, and ultimately in bad faith pushed unrealistic take it or leave it terms.

The APA Chief negotiator also testified that its term sheet proposal with US Airways would save a combined company approximately $240mil in annual savings over the 6-year term. The negotiator termed his experience in dealing with US Air management as “whole different environment”, and that the talks took a broad cooperative approach, instead of AMR’s narrow focus on dollar and cents targets.

The AFPA and TWU are slated to call witnesses over the next several days once the pilots complete their testimony.




In other news have a few other matters to cover this week also in court.

o Order extending time frame to continue negotiations covering two B757s – N611 & N641
o Lifting of automatic stay to permit two pending proceedings in US Court of Appeals against AMR and to indemnify claimants seeking payment of claims in full by available insurance coverage.
o Modified stipulation approving extension to negotiate over a single MD80 – N9414

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dirtyfrankd
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RE: AMR Bankruptcy Court Thread

Tue May 15, 2012 5:24 pm

Quoting LAXintl (Reply 226):
Hello all.

Now that the court has recovered from part one of the 1113 hearings, its getting back to normal business.

There is an upcoming hearing on May 10th with rather full agenda.
Several items are rescheduled from previous hearings in case they happen to sound familiar.


o Seeking further 60-day extension for ongoing discussion on negotiations covering 2 MD-80 aircraft – N921 and N922TW
o Acceptance of terms on 4 MD-80 aircraft – N584, N587, N588, N589
o Objection of creditors committee for above 4 accepted MD-80 aircraft. Creditors feel agreed rates are above market, and AA does not need the 4 frames for its continued business operations
o Authorization to reject of 9 MD-80s and engines deemed excess equipment – N556, N557, N558, N559, N560, N561, N573, N574, N575
o Motion and notice of hearing by Passenger Service Agents (PSAs) to restraining AMR from making unilateral changes to terms and conditions of employment while under NLRB guidance and pending unionization vote outcome
o Authorization to reject various facilities lease and bond agreements at DFW and Ft Worth Alliance airports
o US Bank objection to inconsistent use of 1110 negotiations by AMR, and delayed return of equipment covered by negotiations. AA has continued to make use of equipment without relevant payments. Bank seeks to reestablish its rights to assert claims of non compliance and all provisions lease terms including compliance with all required surrender conditions.
o Extension of automatic stay covering approximately 200 lawsuits pending in the US against AMR by 3rd parties. Debtors seek to focus their attention on restructuring and minimize litigation and usage of resources to attend to multiple other court jurisdictions.
o Reservation of rights by the DFW Airport Board and City of Dallas with respect to the debtors' motion seeking authorization to reject certain agreements
o Motion for relief from automatic stay for recessed litigation trail over a discrimination case brought against AA in California to proceed.
o Proposal extending hearing date and deadline to file objections over claims.
o Authorization to make required pre-delivery payments to Airbus and Boeing pursuant to purchase agreements.
o Notice of hearing date set to allow AMR to purchase 9 MD-80 aircraft covered under a 1991 trust certificates and other debt instruments.
o Application to employ and retain Felsberg, Pedretti E Mannrich Advogados E Consultores Legais for general representation in legal matters in Brazil
o Authority to employ and retain Sheppard Mullin Richter & Hampton LLP as Special Counsel
o Additional extension covering negotiations for single B757 – N611

What were the outcomes from the 5/10 hearing specific to these agenda items?
 
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RE: AMR Bankruptcy Court Thread

Wed May 16, 2012 3:45 pm

Which specific docket item outcome are you interested in ?
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RE: AMR Bankruptcy Court Thread

Wed May 16, 2012 5:38 pm

Quoting LAXintl (Reply 230):
Which specific docket item outcome are you interested in ?

I'm interested in all...but I'm guessing that would probably take too long to type out. Where do you get all your updates, on the bankruptcy site maintained by AA?
 
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RE: AMR Bankruptcy Court Thread

Thu May 17, 2012 4:03 pm

Day two and three of the union presenting their counter arguments against the 1113 motion In New York have passed.

APA continued on the stand on Tuesday with much of the testimony about what they perceived was ever more unrealistic counter party they were dealing with in negotiations. The company ask continued to increase as negotiations continued, with demanded savings valuation climbing from $200mil to over $500mil annually and entire sections like scope being essentially thrown out.
APA says it was more than willing to collaborate with the company and bring parity with peers, but AMR was asking pilots essentially to “surrender” and let AA overrun the employees and industry process. Union again said their $270mil savings proposal with US Air shows how they are willing ensure pilot cost at AA remain competitive.

On Wednesday, the flight attendants took the stand and worked to make the point that they continued to act reasonably while in negotiations. They ultimately felt AMR’s last offer cuts were simply not something they could act on. Asking for $230mil in savings plus 2300 furloughs was too devastating for a group that did not earn that much anyhow and have gone 9 years under already concessionary agreement. Union said the choice for FA's was "almost putting a gun in your hand and saying shoot yourself, it's so devastating, nobody would voluntarily do that."


Also on Wednesday, the Judge ruled on pending decision regarding a requested stay in planned cuts against the passenger service agents since the group was in the middle of unionization with the CWA and under NLRB auspices. CWA contended that making cuts now would be punitive and would not be in the spirit of NLRB regulations that status quo should remain. Judge basically stated that as far as he was concerned there was no union agreement in place with the group so AA could make the changes it desired without the BK court action, and that any labor related issues should be settled by a pending hearing at the appropriate district court level and he was “very loathe” to invoke sections of BK code to become involved in the brewing battle between the NMB and AMR.
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RE: AMR Bankruptcy Court Thread

Sat May 19, 2012 9:17 pm

Judge Lane Friday (18May) said he was delaying his decision on the 1113 process from June 6 to June 22 in order to have time to go over the particulars in detail. My understanding, however, is that if the delay isn't mutually agreed upon by all parties, AA can go ahead and impose their term sheets pending the judge's decision. I wonder what AA will do, or if the delay was agreed to. The typical 1113 process is a 30-day process, which was previously extended to accommodate the court's schedule (mutually agreed upon), making me wonder if AA will tolerate any additional delays. Hmmm...
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RE: AMR Bankruptcy Court Thread

Sat May 19, 2012 9:36 pm

Quoting qqflyboy (Reply 233):
Judge Lane Friday (18May) said he was delaying his decision on the 1113 process from June 6 to June 22 in order to have time to go over the particulars in detail. My understanding, however, is that if the delay isn't mutually agreed upon by all parties, AA can go ahead and impose their term sheets pending the judge's decision. I wonder what AA will do, or if the delay was agreed to. The typical 1113 process is a 30-day process, which was previously extended to accommodate the court's schedule (mutually agreed upon), making me wonder if AA will tolerate any additional delays. Hmmm...
http://aviationblog.dallasnews.com/archives/2012/05/ruling-on-american-airlines-co.html

"American counsel Jack Gallagher said American was "eager to accommodate the court" and suggested June 22 as a new deadline, which the judge quickly embraced."
 
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RE: AMR Bankruptcy Court Thread

Sat May 19, 2012 10:07 pm

Ah yes I just read an article in Star Telegram saying much of the same. Thanks Commavia. Another interesting point in the Star Telegram article was the mutual agreement between the APA and the Company to sit down for mediation between June 4 and June 22. One wonders if they'll accomplish anything. Wait and see!
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RE: AMR Bankruptcy Court Thread

Sun May 20, 2012 12:34 pm

In the posts about the union testimony, I'm reading lots about how the unions say they the company demands were unacceptable, but not much about why. Did they use any technique such as comparison of the company demands against industry averages to show they were unreasonable?
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RE: AMR Bankruptcy Court Thread

Sun May 20, 2012 5:15 pm

For the remainder of the week APFA presented their case.

Most interesting in my view was well know industry economist Dan Akins who testified on behalf of the unions.
Mr Atkins was not short in words expressing his professional opinions that AA's proposed standalone plan has little chance for success. Mr Atkins explained that AA's proposed corner-stone plan of 20% growth plans were unlikely to bring success and matter of fact would provoke a competitive response particularly in fractured markers like LA, NYC and Chicago where AA is relative weak. AA's capacity plan would threatens the stability of the industry and surely evoke a response.

Mr Atkins termed potential merger with US Airways as "it's not an alternative. it's inevitable."

A US Airways merger in Atkins point of view would provide AA the added capacity and network without upsetting the industry balance and help AA win-back the business it has lost in recent years to peers as AA's network fell behind its merged competitors.

Quoting qqflyboy (Reply 233):
Judge Lane Friday (18May) said he was delaying his decision on the 1113 process from June 6 to June 22 in order to have time to go over the particulars in detail.

The prime reason for the slip from June 6th to June 22nd is that the union did not complete their testimony last week.

TWU which took the floor on Friday afternoon expects to take till Tuesday to wrap up its presentations. This pushed back dates for follow up briefs, and put pressure on the court's calender.

Quoting Revelation (Reply 236):
In the posts about the union testimony, I'm reading lots about how the unions say they the company demands were unacceptable, but not much about why. Did they use any technique such as comparison of the company demands against industry averages to show they were unreasonable?

Under 1113 rules, unions have to show the court they were being reasonable and willing party to negotiate with the company and made their decisions to turn down the company proposals in "good cause", while its American burden to to prove that the unions were not being reasonable party to the negotiations, and that American is in such dire condition it needs to get out from underneath its previously agreed CBA's.
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RE: AMR Bankruptcy Court Thread

Mon May 21, 2012 4:45 am

Quoting LAXintl (Reply 237):
The prime reason for the slip from June 6th to June 22nd is that the union did not complete their testimony last week.

TWU which took the floor on Friday afternoon expects to take till Tuesday to wrap up its presentations. This pushed back dates for follow up briefs, and put pressure on the court's calender.

While partially true, testimony is only taking two days longer than planned, but the court's judgment has been delayed two weeks. It's a good sign the judge isn't just taking AA's testimony as Carte Blanche, and will really take the time to make the most well informed judgment.

Quoting Revelation (Reply 236):
In the posts about the union testimony, I'm reading lots about how the unions say they the company demands were unacceptable, but not much about why. Did they use any technique such as comparison of the company demands against industry averages to show they were unreasonable?

There was a great deal of testimony about the previous concessions the unions voluntarily accepted in 2003. The unions wanted the court to understand the asks the company wants now are on top of the 33% pay/benefits cuts taken in 2003, and as Mr. Akins testified, if you combine that 33% with today's asks, then the flight attendants (in particular) would have 50% less buying power than prior to the concessions. Delta,. Northwest and United didn't demand nearly that much in bankruptcy. It's important for the court to understand the significance of those givebacks in 2003, because the other airlines didn't demand concessions prior to their bankruptcies. For the employees, it's as if we went through bankruptcy in 2003, and now we're doing it again.
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RE: AMR Bankruptcy Court Thread

Mon May 21, 2012 11:12 am

Quoting LAXintl (Reply 237):
Mr Atkins was not short in words expressing his professional opinions that AA's proposed standalone plan has little chance for success. Mr Atkins explained that AA's proposed corner-stone plan of 20% growth plans were unlikely to bring success and matter of fact would provoke a competitive response particularly in fractured markers like LA, NYC and Chicago where AA is relative weak. AA's capacity plan would threatens the stability of the industry and surely evoke a response.

Yeah, Mr. Atkins' theories are always interesting to hear.

The thing I find fascinating about the views some so-called industry "experts" and "analysts" seem to have with AMR's business plan is this obsession with what a supposedly horrible idea AA's "growth" is. (It's almost like the A.net obsession with what a horrible idea it was for AA to offload the TWA 757s.) The part I find incredible is that - at least in everything I've seen - AA has really proposed virtually no growth, at least domestically, and thus all of this talk about "provoking a competitive response" and being "toxic to the industry" just seems ridiculous.

AA recently confirmed it in court - that their plan envisions essentially zero net domestic capacity growth for several years. The only real growth AA plans appears to be on the international side - just like Delta, United and USAirways have done, and while that will provoke some competitive response, most of AA's international growth is likely to be in places most likely to be able to handle the new capacity. Plus, where did this meme come from that AMR's plan somehow factors in no competitive response? Do we have any evidence that the AMR plan somehow excludes the idea of competition, or did I miss that?

What AA has proposed is to shift a bunch of their domestic capacity to higher frequencies on RJs - again, just as Delta, United and USAirways have done. That's not really "growth" - AA is just using the word as a marketing slogan (a la "end-to-end networks") - and hardly "toxic," and it doesn't appear to have any impact on capacity in any markets - "fractured" or not. So I suppose AA following competitors' lead by going to mostly RJs in a lot of markets could provoke some "competitive response" - but what? What are Delta, United and USAirways going to do? Add more RJs into these markets? I thought those airlines had apparently gotten religion about capacity constraint and AA didn't? Which, of course, is also a well-worn "expert"/"analyst" fallacy, since (at least according to United's numbers) AA has cut more net capacity in recent years than their major peers.

Quoting LAXintl (Reply 237):
Mr Atkins termed potential merger with US Airways as "it's not an alternative. it's inevitable."


Agreed.



[Edited 2012-05-21 04:16:46]
 
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RE: AMR Bankruptcy Court Thread

Mon May 21, 2012 5:17 pm

Quoting LAXintl (Reply 237):
Most interesting in my view was well know industry economist Dan Akins who testified on behalf of the unions.

I know the unions want the US merger, but I'm not experienced enough with these matters to see how his testimony about AA having a weak strategy going forward serves the union's interests.

Quoting LAXintl (Reply 237):
Mr Atkins termed potential merger with US Airways as "it's not an alternative. it's inevitable."

Yet it seems AA and Boeing want it after the BK. Note that Boeing only has 1 of 9 seats on the creditor's committee.

Quoting LAXintl (Reply 237):
Under 1113 rules, unions have to show the court they were being reasonable and willing party to negotiate with the company and made their decisions to turn down the company proposals in "good cause",

So that "good cause" is that they felt they gave enough in 2003, as opposed to them being underpaid vs their peers?

Quoting LAXintl (Reply 237):
American is in such dire condition it needs to get out from underneath its previously agreed CBA's

That can't be a very hard case to make, can it?

Quoting qqflyboy (Reply 238):
Northwest and United didn't demand nearly that much in bankruptcy. It's important for the court to understand the significance of those givebacks in 2003, because the other airlines didn't demand concessions prior to their bankruptcies. For the employees, it's as if we went through bankruptcy in 2003, and now we're doing it again.

Indeed, but without testimony about what the whole industry has gone through, such statements seem to me to be self-centered. For instance, the court doesn't know if AA's employees had better pay and conditions than their peers in 2003 or where AA's current demands will put them relative to their peers. I know the union and their employees want to make it about what they've gone through, but AA doesn't function in a vacuum.

BTW I don't know how well AA employees do vs their peers, I'm just wondering why there isn't any testimony about it.
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commavia
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RE: AMR Bankruptcy Court Thread

Mon May 21, 2012 5:38 pm

Quoting qqflyboy (Reply 238):
For the employees, it's as if we went through bankruptcy in 2003, and now we're doing it again.

So ... sort of like what the USAirways employees experienced ... two bankruptcies within as many years. Who do the unions want to merge with again?

  
 
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RE: AMR Bankruptcy Court Thread

Mon May 21, 2012 6:00 pm

Beyond the ongoing 1113 hearings this week, the court also has an agenda of regular business its schedule to get to.
Depending on how late the hearings run (especially since AMR gets time for a rebuttal), I suspect some of these items will be pushed back.

o Motion authorizing AMR to produce documents and subpoenas for the Pension Benefit Guaranty Corporation
o Authorization for AMR to reject aircraft and engine on 9 MD-80 aircraft
o Authorizing purchase of 9 MD-80 aircraft subject to 1991 series bonds
o Authorize payment of compensation and reimbursement of expenses of Bain & Company, Inc., strategic consultant to American Eagle.
o Authorize rejection of various leases and executory contracts at San Juan Luis Muñoz Marin International Airport
o Authority to retain KPMG LLP as tax compliance and tax consultants
o Authorizing AvAirPros to provide consulting services
o Authority to retain McKinsey Recovery & Transformation Services in US and Japan
o Extension to continue negotiations over single B757.


In other news, based on received approval to make progress payments to Airbus and Boeing, AMR will be making $162mil in progress payments in the coming couple weeks.


Quoting commavia (Reply 239):
AA has really proposed virtually no growth, at least domestically, and thus all of this talk about "provoking a competitive response" and being "toxic to the industry" just seems ridiculous.

Might not be much ultimate net ASM growth, but will certainly be growth in number of markets, and frequency.

To expect its competitors simply to sit there and not to react to such AA actions, would not be very realistic ha. Certainly what Mr Atkins comments are, and the fears from the Wall Street Analyst community is that AMR would trigger a costly industry wide battle.

A merger with US seems much more docile to the markets, as AA instantly grows overnight, and the combined entity if anything would likely shrink slightly at the end, and not upsetting what is becoming a pretty decent industry equilibrium.
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RE: AMR Bankruptcy Court Thread

Mon May 21, 2012 6:02 pm

Quoting Revelation (Reply 240):
So that "good cause" is that they felt they gave enough in 2003, as opposed to them being underpaid vs their peers?

This is partially where the US deal comes into play in the testimony, which there was plenty of. It showed the unions were willing to negotiate, it's just that AA never did/would. Every time the APFA, in particular, met with the company, AA had a take it or leave it stance. That's not negotiating, and they testified to that in court. The unions were willing to negotiate with another willing party. In this case it happened to be US Airways, not American. And to that end, the company agreed to mediation with the pilots beginning the week of June 4, to perhaps finally negotiate. Again, the company was never willing to negotiate before, it was simply a case of take it or leave it, and that's not what the 1113 process allows.

Quoting Revelation (Reply 240):
That can't be a very hard case to make, can it?

Well, when you've increased your cash position by nearly a billion dollars in bankruptcy (to over $5 billion), while also out performing any other first quarter results over the past decade (excluding bankruptcy charges), the case may be harder to make since these dramatic improvements were made without relief on the employee cost side. Yes, employee costs need to come down, but how far? The unions are arguing the cuts are much too much, and AA's improved performance outside of those cuts may hinder their case.

Quoting Revelation (Reply 240):
Indeed, but without testimony about what the whole industry has gone through, such statements seem to me to be self-centered. For instance, the court doesn't know if AA's employees had better pay and conditions than their peers in 2003 or where AA's current demands will put them relative to their peers. I know the union and their employees want to make it about what they've gone through, but AA doesn't function in a vacuum.

American has used comparisons with other carriers throughout this process, in court, and providing the historical background of our own negotiations is prudent in letting the court know what has already been given. All told, the company is asking for more than the company's they're comparing themselves to asked of their own employees. There was much testimony on this topic, almost to ad nauseam. And the judge allowed it. So clearly the historical background was important. How much, if any, it will play into the judges decision is anyone's guess, but it is still important.

Quoting commavia (Reply 241):
Who do the unions want to merge with again?

The company that's been making money hand over fist for the last several years.
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RE: AMR Bankruptcy Court Thread

Mon May 21, 2012 6:27 pm

Quoting LAXintl (Reply 242):
but will certainly be growth in number of markets

Domestically? Really? I don't think so - not much. Maybe a few limited, isolated places here and there, but very little.

Quoting LAXintl (Reply 242):
and frequency

Right - and what is the competitive response from Delta going to be? Go from 10 to 14 daily RJs LGA-ORD? Don't think so. These other airlines already have tons of frequency on non-owned regional jets - AA is just going to be catching up.

Quoting LAXintl (Reply 242):
To expect its competitors simply to sit there and not to react to such AA actions, would not be very realistic ha. Certainly what Mr Atkins comments are, and the fears from the Wall Street Analyst community is that AMR would trigger a costly industry wide battle.

Again, I'm sort of confused as to what competitive response people are expecting. What are Delta and United going to do?

Quoting qqflyboy (Reply 243):
The company that's been making money hand over fist for the last several years.

Let me know when you find that company, then, because it sure isn't USAirways, whose yields and margins have underperformed of late. Again: in Q1, AMR - in bankruptcy - had RASM growth substantially higher than USAirways and margins nearly identical.

I was half-kidding, although like many of Mr. Atkin's conclusions, I think there are questions to be raised. Sort of reminds me of when he said AMR's flight attendant CASM was the highest in the U.S. largely due to AA "overstaffing" their 3-class planes, despite the fact that United has a larger proportion of 3-class jets in its fleet than AA.

In this case, he contends that you can simply look at compensation and conclude AA's 'ask' is steeper. In isolation, based solely on that metric, he's likely right. But many could plausibly argue that is a disingenuously narrow perspective, since it excludes the fact that AA's 2003 concessions - even coupled with today's 'ask' - are still going to leave AA with more employees at those pay scales than competitors. So even if every AA employee took a 50% paycut (which of course wasn't the case) - it is debatable which concession, in the aggregate, was larger: 50% pay cut for 75,000 people or a 30% paycut for 45,000 people and a 100% paycut (i.e., layoff) for 30,000, which is - generalizing, of course - what happened at Delta, United and USAirways, who outsourced tons more flying to regionals, overhauls, fleet service, res, etc.

And either way, it looks as though Mr. Atkins was unpersuasive.

Quoting qqflyboy (Reply 243):
It showed the unions were willing to negotiate, it's just that AA never did/would.

You may see it that way, but the judge may not. AA could argue that it shows the unions were unwilling to negotiation with AMR, but willing to negotiate with someone else. Does that help the unions' cause?

Quoting qqflyboy (Reply 243):
Every time the APFA, in particular, met with the company, AA had a take it or leave it stance. That's not negotiating, and they testified to that in court.

And - playing devil's advocate here - Laura Glading, at the first meeting, reportedly refused to even entertain the proposals and said they "weren't happening," or something to that effect. Did she testify to that in court? The company certainly raised it. Does that show a willingness to negotiate?

I'm not arguing one way or another, but you certainly know the company is.
 
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RE: AMR Bankruptcy Court Thread

Mon May 21, 2012 9:52 pm

Quoting commavia (Reply 244):
Domestically? Really? I don't think so - not much. Maybe a few limited, isolated places here and there, but very little.

According to their presented plans, they could raise large express capacity by up to 400%. They also said network departures would rise 30%+ over 5-years. That is lots of added flying.

AMR wants to build network depth from their cornerstones. That means new markets, and more frequency small aircraft or not.

Quoting commavia (Reply 244):
What are Delta and United going to do?

Meet AA market by market. Especially places where AA is weaker - ORD, LAX and NYC. Neither will let AA launch host of new cities, or up their frequencies without a response.


Personally, if not for the ego's of those running AA today looking preserve their own positions, a merger should be a slam dunk and a positive thing for AMR. However management is afraid of a Ch11 merger as they would likely be swept out by Parker and gang showing up with cash in hand.
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RE: AMR Bankruptcy Court Thread

Mon May 21, 2012 10:42 pm

Quoting LAXintl (Reply 245):
They also said network departures would rise 30%+ over 5-years.

It's 20%, not 30%.

Quoting LAXintl (Reply 245):
That is lots of added flying.

So what? It's lots of added departures, but not necessarily lots of added seats. AA is highly unlikely to be dumping much if any new capacity into anyplace domestically in the next five years - with or without a merger. So again - I keep coming back to - why on earth would Delta or United respond to net-zero change to capacity in the market? Answer: they won't, I suspect.

Quoting LAXintl (Reply 245):
That means new markets, and more frequency small aircraft or not.

I'll give you some new markets - maybe - although, there again, I just don't see it. What new markets would AA be adding, realistically? The only region where they could plausibly add new markets - given their 'cornerstone' hub structure - is the northeast, and they will face challenges there with a lack of slots at JFK, and excessive competition at ORD.

Quoting LAXintl (Reply 245):
Meet AA market by market. Especially places where AA is weaker - ORD, LAX and NYC. Neither will let AA launch host of new cities, or up their frequencies without a response.

Respectfully, that is highly doubtful.

First, Delta and United are both in the process of reducing, not increasing, their RJ flying. Second, these two management teams have both claimed the moral high ground on supposedly "getting religion" about capacity constraint (and, lest we forget, by United's own numbers AA has cut more capacity in recent years than Delta or United) - are they going to reverse that just so they can add a 14th daily RJ on a given route because their competitor (AA) decreased capacity? Don't think so.

So Delta and United are highly unlikely to "meet AA market by market." If AA was coming out and saying we're adding 400 new 737s and we're going to be adding 20% more seats into the market, then I could see it - Delta and United would have no choice but to respond. But if all AA is basically doing is saying we're going to optimize our schedule so many routes move to higher frequency, with smaller jets, Delta and United would be asinine to respond in any irresponsible way to that. It doesn't really change the competitive dynamics at all.

And either way - all of this misses the larger implication here, propagated by the unions, which is that somehow AA's plan assumes no competitive response from other carriers to whatever they do. Is that true? I don't know. I haven't seen AA's plan. Have you? For all I know, AA assumes in their plan that by replacing hundreds of MD80s and ERJs with new 737s/A320s and 70-110-seat jets, Delta and United plan to merge and form Colossus Air to match AA's alleged dramatic shift "market for market." I have no idea what's in that plan, and I suspect neither do the unions.

Quoting LAXintl (Reply 245):
Personally, if not for the ego's of those running AA today looking preserve their own positions, a merger should be a slam dunk and a positive thing for AMR.

Agreed. I think the merger is logical, and inevitable. The only question is timing - when, not if, it makes the most sense.
 
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RE: AMR Bankruptcy Court Thread

Tue May 22, 2012 2:33 am

Quoting qqflyboy (Reply 243):
Well, when you've increased your cash position by nearly a billion dollars in bankruptcy (to over $5 billion),

Isn't that to be expected? I thought court protection is allowing them to not pay a lot of bills they used to have to pay.

I thought that was one reason why UA sat in BK for so long, and why the law got changed after that.
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RE: AMR Bankruptcy Court Thread

Tue May 22, 2012 5:06 am

Quoting commavia (Reply 246):
Agreed. I think the merger is logical, and inevitable. The only question is timing - when, not if, it makes the most sense.

I'd like to see a list of synergies made up by US management to get some sort of idea how they propose to keep costs low while practically tripling the size of their airline. Maybe they are thinking it would be best to have the BK judge throw out the union contracts over at AA so US can really look like the white knight swooping in to give them a contract that is better than nothing, but not as good as the one they are currently working under.
 
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RE: AMR Bankruptcy Court Thread

Wed May 23, 2012 11:11 pm

Well the testimony wrapped up today on AMRs 1113 motion to reject its CBAs.

No surprise AA disputed everything the unions presented with its rebuttal arguments and testimony.

Additionally AMR took the opportunity to shine a bit more light on its stand-alone business plan which the unions worked to discredit.

In essence the AMR expert witnesses vouched for the viability of the plan, and affirmed AA did not need a merger with US or anyone else to reasonably succeed and prosper.

Some major components of the plan are:
o Between $1.25 and 1.5bil in annual labor savings for a 6-year period. Plan include 12,800 employee cuts
o $600mil in savings from aircraft returns, facility lease changes, debt restructuring and vendor renegotiations
o $1bil in added revenues from right sizing fleet, and growth at corner-stone hubs

It was also noted that in expert opinions who have “stress tested” the business plan, AA stands to be a “very healthy” airline come 2017.

Only real area of potential concern was limitation on AMR to generate future cash as it has already monetized virtually all unencumbered assets , and the $4.8bil in the bank of April is the minimum it should have as a buffer incase of future disruptions, or events outside the airlines control.
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