AMR Bankruptcy would save the company $800M
09-22-2011, 11:57 AM
#41
Line Holder
Joined APC: Apr 2011
Posts: 81
Originally Posted by eaglefly
who gave away that leverage ?
Most think it was given away in 1992 when alpa turned their backs on the first rj thinking it wasn't a threat, but actually most mainline pilot groups did this much earlier by creating and maintaining an "us and them" environment with their participating regional carriers that began flying they "didn't want to do".
"what mainline pilots and their bargaining representatatives should have done then was bring these pilot groups closer so as to prevent them being used against them in the future."
they flunked.
Then, once the drug was in place all they needed was the correct needle.........aka the 'rj". Now you don't have innocent little be-99's and metroliner's flying around but crj-900's and e-175's.
Personally, i think you really need to take a sobering look backward on the systemic failure of self-interested pilots and their sloppy bargaining reps to see why the profession of "major-airline pilot" is now hoplessly in the garbage can.
"leverage" had to start somewhere in infancy and the above was its metamorphasis to the broken-down old man this career has become.
It's a shame too.
Most think it was given away in 1992 when alpa turned their backs on the first rj thinking it wasn't a threat, but actually most mainline pilot groups did this much earlier by creating and maintaining an "us and them" environment with their participating regional carriers that began flying they "didn't want to do".
"what mainline pilots and their bargaining representatatives should have done then was bring these pilot groups closer so as to prevent them being used against them in the future."
they flunked.
Then, once the drug was in place all they needed was the correct needle.........aka the 'rj". Now you don't have innocent little be-99's and metroliner's flying around but crj-900's and e-175's.
Personally, i think you really need to take a sobering look backward on the systemic failure of self-interested pilots and their sloppy bargaining reps to see why the profession of "major-airline pilot" is now hoplessly in the garbage can.
"leverage" had to start somewhere in infancy and the above was its metamorphasis to the broken-down old man this career has become.
It's a shame too.
09-22-2011, 12:13 PM
#42
On Reserve
Joined APC: Sep 2011
Position: MD-88 FO Trainee
Posts: 20
Fellas, with all this doom and gloom, are there any prospects for AMR getting to the end of the recall list and hiring anytime soon? Pardon the naivite, but I'm in the AF looking to jump in a couple of years. Thanks.
09-22-2011, 01:41 PM
#43
Gets Weekends Off
Joined APC: Jan 2008
Posts: 531
Originally Posted by Evil
Fellas, with all this doom and gloom, are there any prospects for AMR getting to the end of the recall list and hiring anytime soon? Pardon the naivite, but I'm in the AF looking to jump in a couple of years. Thanks.
09-26-2011, 02:26 AM
#44
AAmerican Way for AA Pay
Joined APC: Oct 2005
Position: B-737 Pilot
Posts: 1,617
Forget AA; aim higher if you want a career with a stable airline. AA ain't it.
Bankruptcy is an unknown variable, as well. If chapter 11 occurs, which it most likely will, the aftermath isn't going to attract new-hire pilots.
Bankruptcy is an unknown variable, as well. If chapter 11 occurs, which it most likely will, the aftermath isn't going to attract new-hire pilots.
09-26-2011, 07:34 AM
#45
Gets Weekends Off
Joined APC: Aug 2005
Posts: 3,707
APA was approached to merge the list back in 1990 when there was only 500 pilots at AE. Lavoy member of the APA board made the same suggestion. APA board did not want to soil there seniority list with regional pilots. Ever since then they have blamed the regional pilots for everything that goes wrong with there careers. But it is always great to have a a scapegoat to blame for all there problems. Unfortunately is all due to there short sightedness even when it was explained to them what would happen and has happened as it was explained to them. There superior attitude and all the mainline pilots attitude has brought this upon themselves and they all use the regional pilots as an excuse for there problems. ALPA started this long road we all have gone down and APA went along.
AA will file for c-11, it is not if but when. My belief is between January and February 2012 with a prepackaged deal and financed wholly by the cash on hand AMR has. BK will take 6 months and by summer 2012 they will be leaner and cheaper.
AA will file for c-11, it is not if but when. My belief is between January and February 2012 with a prepackaged deal and financed wholly by the cash on hand AMR has. BK will take 6 months and by summer 2012 they will be leaner and cheaper.
09-26-2011, 04:52 PM
#47
Gets Weekends Off
Joined APC: Aug 2011
Position: C172
Posts: 122
Originally Posted by Elvis90
AMR Could Play Bankruptcy Card To Break Labor Logjam - Forbes
Trying for $800 million in savings
At the Deutsche Bank Aviation and Transportation Conference held recently, American Airlines denied seeking bankruptcy liquidation (Chapter 7) but did not rule out the possibility of seeking bankruptcy protection (Chapter 11) to reorganize its labor agreements that put it at a marked disadvantage to airline industry peers such as Delta Air Lines, Southwest Airlines,US Airways and United Continental.
In the past, several major players including Delta, US Airways and United Airlines have filed for bankruptcy in an attempt to rationalize their costs. American Airlines has avoiding bankruptcy so far, but this looks increasingly likely as negotiations have broken down between the unions and management.
Below, we take a look at what might factors may cause American to file for bankruptcy protection and how these may impact the company’s valuation.
We have a $5.65 price estimate for American Airlines, implying a premium of around 60% over the current market price.
American Airlines’ work force is said to rank among the lowest in the industry in terms of productivity and according to management estimates, the airline is at $800 million-a-year disadvantage to competitors on labor costs (See AMR Faces Union Stalemate in Bid for $800 Million Labor Savings).
While competitors have negotiated better deals with the unions through bankruptcy, American continues to honor its expensive labor agreements. The airline has been trying to negotiate new agreements with its union for years now, but the contract negotiations have stalled badly. While labor costs account for about 31% of all operating costs at American, they stand at around 22-23% for Delta and United Continental.
However, the airline is trying to make up for the higher labor costs through efforts like fleet replacement aimed at deriving fuel efficiencies and the recent spin-off of its regional carrier, American Eagle to access more competitive rates from other carriers. The airline has also entered into new partnerships with British Airways and Japan Airlines that should boost revenue from international travel.
If American files for bankruptcy and comes out with re-negotiated labor contracts, it should be able to reduce its operating expenses by eliminating the $800 million cost disadvantage relative to peers, at least in part. This indicates a potential upside to the current valuation which factors in heavy compensation and retirement liabilities.
Trying for $800 million in savings
At the Deutsche Bank Aviation and Transportation Conference held recently, American Airlines denied seeking bankruptcy liquidation (Chapter 7) but did not rule out the possibility of seeking bankruptcy protection (Chapter 11) to reorganize its labor agreements that put it at a marked disadvantage to airline industry peers such as Delta Air Lines, Southwest Airlines,US Airways and United Continental.
In the past, several major players including Delta, US Airways and United Airlines have filed for bankruptcy in an attempt to rationalize their costs. American Airlines has avoiding bankruptcy so far, but this looks increasingly likely as negotiations have broken down between the unions and management.
Below, we take a look at what might factors may cause American to file for bankruptcy protection and how these may impact the company’s valuation.
We have a $5.65 price estimate for American Airlines, implying a premium of around 60% over the current market price.
American Airlines’ work force is said to rank among the lowest in the industry in terms of productivity and according to management estimates, the airline is at $800 million-a-year disadvantage to competitors on labor costs (See AMR Faces Union Stalemate in Bid for $800 Million Labor Savings).
While competitors have negotiated better deals with the unions through bankruptcy, American continues to honor its expensive labor agreements. The airline has been trying to negotiate new agreements with its union for years now, but the contract negotiations have stalled badly. While labor costs account for about 31% of all operating costs at American, they stand at around 22-23% for Delta and United Continental.
However, the airline is trying to make up for the higher labor costs through efforts like fleet replacement aimed at deriving fuel efficiencies and the recent spin-off of its regional carrier, American Eagle to access more competitive rates from other carriers. The airline has also entered into new partnerships with British Airways and Japan Airlines that should boost revenue from international travel.
If American files for bankruptcy and comes out with re-negotiated labor contracts, it should be able to reduce its operating expenses by eliminating the $800 million cost disadvantage relative to peers, at least in part. This indicates a potential upside to the current valuation which factors in heavy compensation and retirement liabilities.
it wil cost amr more than a billion for attorney fees, accounting firms and financial firms.......sounds to me a tactic to scare APA.... I know a regioanal on BK last year it cost over 265 million without union or contract issues
09-26-2011, 05:51 PM
#48
Can't abide NAI
Joined APC: Jun 2007
Position: Douglas Aerospace post production Flight Test & Work Around Engineering bulletin dissembler
Posts: 11,990
Originally Posted by buddies8
AA will file for c-11, it is not if but when. My belief is between January and February 2012 with a prepackaged deal and financed wholly by the cash on hand AMR has. BK will take 6 months and by summer 2012 they will be leaner and cheaper.
New Rules for Corporate Bankruptcy
Although the act's main goal was to reform personal bankruptcy rules, it did change some rules on corporate filings. But Skeel says he is not convinced the changes were needed. The corporate-bankruptcy system has long been very effective, he suggests.
Previously, a company that filed for bankruptcy protection could remain under the control of its managers -- the "debtor in possession" -- indefinitely. Under the new rules, the company will have the exclusive right to plan the reorganization for only 180 to 210 days. After that, creditors will be able to propose plans of their own. Skeel says critics are rightly concerned that in some cases certain creditors will stall a company's reorganization so that they can propose one that favors them over other creditors.
Another provision will make it tougher for bankrupt companies to wriggle free of leases. This could make reorganization more difficult for retailers, though Skeel doesn't think this will be as big a problem as many of the law's critics do.
The act also makes it harder for companies in bankruptcy to pay bonuses to managers. That was mainly intended to prevent corporate crooks from continuing to plunder their companies in bankruptcy.
But Skeel argues these cases are rare. Most corporate bankruptcies do not involve fraud, and in those that do the crooks are usually gone by the time bankruptcy is filed. Managers who take companies out of bankruptcy have long been compensated primarily with performance-based bonuses, and that system has worked well, Skeel says. After the law takes effect, it will be important to see whether talented managers will stay through reorganizations without bonuses. "It seems pretty clear that when Congress put this provision in, it was not thinking about this."
Although the act's main goal was to reform personal bankruptcy rules, it did change some rules on corporate filings. But Skeel says he is not convinced the changes were needed. The corporate-bankruptcy system has long been very effective, he suggests.
Previously, a company that filed for bankruptcy protection could remain under the control of its managers -- the "debtor in possession" -- indefinitely. Under the new rules, the company will have the exclusive right to plan the reorganization for only 180 to 210 days. After that, creditors will be able to propose plans of their own. Skeel says critics are rightly concerned that in some cases certain creditors will stall a company's reorganization so that they can propose one that favors them over other creditors.
Another provision will make it tougher for bankrupt companies to wriggle free of leases. This could make reorganization more difficult for retailers, though Skeel doesn't think this will be as big a problem as many of the law's critics do.
The act also makes it harder for companies in bankruptcy to pay bonuses to managers. That was mainly intended to prevent corporate crooks from continuing to plunder their companies in bankruptcy.
But Skeel argues these cases are rare. Most corporate bankruptcies do not involve fraud, and in those that do the crooks are usually gone by the time bankruptcy is filed. Managers who take companies out of bankruptcy have long been compensated primarily with performance-based bonuses, and that system has worked well, Skeel says. After the law takes effect, it will be important to see whether talented managers will stay through reorganizations without bonuses. "It seems pretty clear that when Congress put this provision in, it was not thinking about this."
09-27-2011, 09:30 AM
#49
Gets Weekends Off
Joined APC: Jul 2006
Position: Boeing Hearing and Ergonomics Lab Rat, Night Shift
Posts: 1,724
Doesn't look too good:
American Airlines wants to raise $725.7 million by borrowing against aircraft | Airline Biz Blog | dallasnews.com
If I were at AA, I'd try to get a contract pronto including big work-rules improvements and the largest possible raise that can be gained with an immediate signing... That will serve as the baseline should there be a BK.
You could even make it amendable in 2013, just to get a stopgap deal...
Cheers
George
American Airlines wants to raise $725.7 million by borrowing against aircraft
American Airlines Inc. intends to borrow $725.7 million and may borrow another $232 million, using a variety of airplanes to secure the debt, the carrier said Tuesday.
...Last week AMR projected that its liquidity - cash and short-term investments - will drop to about $4.7 billion as of Friday, Sept. 30, down from $5.6 billion on June 30.
Assuming the deal closes, AMR's liquidity as of Dec. 31 should remain above $3.5 billion, or more than 15 percent of its operating revenues over the previous 12 months...
American Airlines Inc. intends to borrow $725.7 million and may borrow another $232 million, using a variety of airplanes to secure the debt, the carrier said Tuesday.
...Last week AMR projected that its liquidity - cash and short-term investments - will drop to about $4.7 billion as of Friday, Sept. 30, down from $5.6 billion on June 30.
Assuming the deal closes, AMR's liquidity as of Dec. 31 should remain above $3.5 billion, or more than 15 percent of its operating revenues over the previous 12 months...
If I were at AA, I'd try to get a contract pronto including big work-rules improvements and the largest possible raise that can be gained with an immediate signing... That will serve as the baseline should there be a BK.
You could even make it amendable in 2013, just to get a stopgap deal...
Cheers
George
09-29-2011, 10:24 AM
#50
On Reserve
Thread Starter
Joined APC: Jul 2008
Position: MSP7ERB
Posts: 1,886
AMR in Stalemate in Bid for $800 Million Labor Savings - Bloomberg
AMR in Stalemate in Bid for $800 Million Labor Savings
By Mary Schlangenstein - Sep 29, 2011
AMR Corp. (AMR)’s American Airlines, saddled with the U.S. industry’s highest labor costs, now faces contract negotiations stalled so badly that federal mediators have walked away from the talks.
A stalemate with three unions is thwarting American’s bid to chop what it says is an $800 million-a-year disadvantage to rivals in labor expenses. Pilots say “considerable gaps” remain as they meet with executives at a rural Texas resort this week to assess what to do next in bargaining that began in 2006.
Unions for the pilots, flight attendants and ground workers want to recoup at least part of the $1.6 billion in annual concessions made to avert bankruptcy in 2003. Fort Worth, Texas- based AMR seeks productivity gains to cut labor bills that are helping drag it to a fourth straight annual loss.
“Not only do they need to be able to exact some cost savings out of labor agreements, but they need certainty to navigate what’s ahead,” said Brian Nelson, president of equity research at Valuentum Securities Inc. in Chicago. “While they do have a large cash position, their cash-flow generation is faltering. I would put labor near the top of the priority list.”
AMR will be alone among peers with a 2011 loss and won’t post a profit in 2012, based on analysts’ estimates compiled by Bloomberg. Its labor spending last year equaled 30.9 percent of sales, the most among the six largest U.S. airlines, according to data compiled by Bloomberg.
Union Template?
“The breakthrough would be if you got the pilots to do some concessions,” said Henry Oechler, an attorney with Chadbourne & Parke LLP in New York who has handled airline labor issues. “That could serve as a template for the other unions.”
By law, airline contracts don’t expire, so existing pay scales and work rules stay in place pending a new accord. American has flown for years under terms it wants to change while working on deals with three unions whose members make up 73 percent of employees at the third-largest U.S. carrier.
A National Mediation Board mediator recessed talks last month between American and the union for 11,000 mechanics over a lack of progress and didn’t set new sessions, after a similar outcome for baggage handlers in July. An April NMB session ended with no dates for more talks with 17,000 attendants.
American and its pilots have been on their own for talks since October, when the NMB abandoned those negotiations.
‘Very Challenging’
“As tough as 2011 has been, 2012 is shaping up to be another very challenging year,” Jeff Brundage, American’s senior vice president for employee relations, said in an e-mail before he and Vice President Mark Burdette gathered this week with pilot leaders at Rough Creek Lodge & Resort in Glen Rose, Texas.
While Brundage said American was “working as quickly as possible with our unions,” the Allied Pilots Association said it didn’t see any agreement soon.
“We’ve got considerable gaps between our positions on some of the big areas,” Sam Mayer, a union spokesman, said in an interview. “I don’t think either side has an expectation of getting there in one week, but we’ll have a better idea if both sides think they have a way to bridge the gaps.”
A contract with American’s 8,700 active pilots can’t come too soon for the airline, which hasn’t posted an annual profit since 2007 and saw competitors return to profit in 2010.
Stock Performance
AMR is the worst performer on the 10-carrier Bloomberg U.S. Airlines Index in 2011, tumbling 55 percent before today. The shares closed yesterday at $3.52, compared with $24.69 when talks started with pilots on Sept. 20, 2006.
Most American rivals were in bankruptcy then or had exited within 12 months. Avoiding Chapter 11 meant American couldn’t chop costs in court protection. Then it missed out on consolidation such as last year’s United Airlines-Continental Airlines merger, which created the world’s biggest airline.
AMR should end 2012 with $4.4 billion in liquidity, “so no financial risk” now, Dan McKenzie, a Rodman & Renshaw analyst in Chicago, said in a report yesterday. “But the margin for error continues to narrow.”
Through 2015, AMR has $6.37 billion due in principal payments on long-term debt, spokesman Sean Collins said.
Adding to the urgency for a pilot accord is the fact that American has ordered hundreds of Boeing Co. (BA) and Airbus SAS jets it can’t fly until new pay scales are negotiated, said Hunter Keay, an analyst at New York-based Wolfe Trahan & Co. who rates AMR as “underperform.” McKenzie recommends holding the stock.
NMB’s Role
The National Mediation Board declined to comment on the status of American’s labor talks. With the freeze, American isn’t getting its sought-after savings, and its work groups don’t have payback for the 2003 concessions or the required federal clearance to move toward a strike.
“We might be sitting on the sidelines for quite some time,” said Sidney Jimenez, president of Transport Workers Union Local 568 in Florida, which represents workers such as baggage handlers.
American has reached agreements with each work group on numerous contract provisions. The unresolved issues are those that often require the most negotiating time, including compensation and retirement.
Laura Glading, president of the Association of Professional Flight Attendants, said it was “baffling” that American hasn’t concluded agreements with its biggest unions.
“All three groups are offering them some increased productivity and efficiency,” Glading said in an interview. “Yet you still don’t do what you need to do to close the deals.”
AMR in Stalemate in Bid for $800 Million Labor Savings
By Mary Schlangenstein - Sep 29, 2011
AMR Corp. (AMR)’s American Airlines, saddled with the U.S. industry’s highest labor costs, now faces contract negotiations stalled so badly that federal mediators have walked away from the talks.
A stalemate with three unions is thwarting American’s bid to chop what it says is an $800 million-a-year disadvantage to rivals in labor expenses. Pilots say “considerable gaps” remain as they meet with executives at a rural Texas resort this week to assess what to do next in bargaining that began in 2006.
Unions for the pilots, flight attendants and ground workers want to recoup at least part of the $1.6 billion in annual concessions made to avert bankruptcy in 2003. Fort Worth, Texas- based AMR seeks productivity gains to cut labor bills that are helping drag it to a fourth straight annual loss.
“Not only do they need to be able to exact some cost savings out of labor agreements, but they need certainty to navigate what’s ahead,” said Brian Nelson, president of equity research at Valuentum Securities Inc. in Chicago. “While they do have a large cash position, their cash-flow generation is faltering. I would put labor near the top of the priority list.”
AMR will be alone among peers with a 2011 loss and won’t post a profit in 2012, based on analysts’ estimates compiled by Bloomberg. Its labor spending last year equaled 30.9 percent of sales, the most among the six largest U.S. airlines, according to data compiled by Bloomberg.
Union Template?
“The breakthrough would be if you got the pilots to do some concessions,” said Henry Oechler, an attorney with Chadbourne & Parke LLP in New York who has handled airline labor issues. “That could serve as a template for the other unions.”
By law, airline contracts don’t expire, so existing pay scales and work rules stay in place pending a new accord. American has flown for years under terms it wants to change while working on deals with three unions whose members make up 73 percent of employees at the third-largest U.S. carrier.
A National Mediation Board mediator recessed talks last month between American and the union for 11,000 mechanics over a lack of progress and didn’t set new sessions, after a similar outcome for baggage handlers in July. An April NMB session ended with no dates for more talks with 17,000 attendants.
American and its pilots have been on their own for talks since October, when the NMB abandoned those negotiations.
‘Very Challenging’
“As tough as 2011 has been, 2012 is shaping up to be another very challenging year,” Jeff Brundage, American’s senior vice president for employee relations, said in an e-mail before he and Vice President Mark Burdette gathered this week with pilot leaders at Rough Creek Lodge & Resort in Glen Rose, Texas.
While Brundage said American was “working as quickly as possible with our unions,” the Allied Pilots Association said it didn’t see any agreement soon.
“We’ve got considerable gaps between our positions on some of the big areas,” Sam Mayer, a union spokesman, said in an interview. “I don’t think either side has an expectation of getting there in one week, but we’ll have a better idea if both sides think they have a way to bridge the gaps.”
A contract with American’s 8,700 active pilots can’t come too soon for the airline, which hasn’t posted an annual profit since 2007 and saw competitors return to profit in 2010.
Stock Performance
AMR is the worst performer on the 10-carrier Bloomberg U.S. Airlines Index in 2011, tumbling 55 percent before today. The shares closed yesterday at $3.52, compared with $24.69 when talks started with pilots on Sept. 20, 2006.
Most American rivals were in bankruptcy then or had exited within 12 months. Avoiding Chapter 11 meant American couldn’t chop costs in court protection. Then it missed out on consolidation such as last year’s United Airlines-Continental Airlines merger, which created the world’s biggest airline.
AMR should end 2012 with $4.4 billion in liquidity, “so no financial risk” now, Dan McKenzie, a Rodman & Renshaw analyst in Chicago, said in a report yesterday. “But the margin for error continues to narrow.”
Through 2015, AMR has $6.37 billion due in principal payments on long-term debt, spokesman Sean Collins said.
Adding to the urgency for a pilot accord is the fact that American has ordered hundreds of Boeing Co. (BA) and Airbus SAS jets it can’t fly until new pay scales are negotiated, said Hunter Keay, an analyst at New York-based Wolfe Trahan & Co. who rates AMR as “underperform.” McKenzie recommends holding the stock.
NMB’s Role
The National Mediation Board declined to comment on the status of American’s labor talks. With the freeze, American isn’t getting its sought-after savings, and its work groups don’t have payback for the 2003 concessions or the required federal clearance to move toward a strike.
“We might be sitting on the sidelines for quite some time,” said Sidney Jimenez, president of Transport Workers Union Local 568 in Florida, which represents workers such as baggage handlers.
American has reached agreements with each work group on numerous contract provisions. The unresolved issues are those that often require the most negotiating time, including compensation and retirement.
Laura Glading, president of the Association of Professional Flight Attendants, said it was “baffling” that American hasn’t concluded agreements with its biggest unions.
“All three groups are offering them some increased productivity and efficiency,” Glading said in an interview. “Yet you still don’t do what you need to do to close the deals.”
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