AMR Corp files bankruptcy in New York
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The blame game doesn't mean a hill of beans from here on out. Place all the blame you want at management, no one that matters is listening. Case closed. What happens now is the BK court will round up what's left and parse it out to the secured and unscercured creditors. Estimates have the secured creditors receiving ony ten cents on the dollar so that should give you a hint where the unsecured creditors stand. Since the employees usually wind up as unsecured creditors in these deals, they will continue to take it in the shorts. Don't know if embracing that last contract offer would have made a difference or not but one thing you can bank on is that nothing now or in the AA pilots future will ever enable them to recover what is about to be lost. For those that complain about the age 65 rule, you can be assured that 95%+ of the pilots from here on out at AA will continue on to that age. Most pilots are simply not able to take a 2 million dollar hit on their retirement and move on as if nothing happened. This is a watershed event in every AA pilots career and a devistaing one at that. Life goes on, but nothing like what might have been had this BK not occured. The sooner one stops pointing the finger and gets moving on with his or her reduced expectations, the better their lives will be. Cross your fingers that AA does not simply vanish from the scene as others that have gone before it have done.
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Don't Work for U.S. Carrier
Aside from the fact that the CEOs compensation is rising "AMR Corp. Chief Executive Gerard Arpey received $5.2 million in total compensation last year, even though the parent company of American Airlines was the only major U.S. carrier to lose money in 2010." and the fact that the new aircraft orders are still a go :
"Tom Horton, the chief executive of American Airlines, insisted a £24.7bn order for 460 aircraft from Boeing and Airbus is "rock solid" despite filing for bankruptcy protection"
the fact that they are even allowed to file ch11 with an eye to terminate already agreed upon and earned benefits should be illegal. It is immoral.
That is why I told my child to get their 3000 hrs in and go to the UAE or Cathay, anywhere, that does not have a history of breaking agreements and terminating earned benefits. The best predictor of future performance is past performance, so work for an American Carrier and expect to be screwed.
"Tom Horton, the chief executive of American Airlines, insisted a £24.7bn order for 460 aircraft from Boeing and Airbus is "rock solid" despite filing for bankruptcy protection"
the fact that they are even allowed to file ch11 with an eye to terminate already agreed upon and earned benefits should be illegal. It is immoral.
That is why I told my child to get their 3000 hrs in and go to the UAE or Cathay, anywhere, that does not have a history of breaking agreements and terminating earned benefits. The best predictor of future performance is past performance, so work for an American Carrier and expect to be screwed.
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While CX has not, and hopefully never will contimplate much less declare BK, I think there is plenty of evidence that it can be a hostile place to work...at times.
Better yet suggest to you child that there better ways to enjoy aviation other than sitting in the cockpit of an airliner for 30+ years. Just say'n
Ditto for UAE.
Better yet suggest to you child that there better ways to enjoy aviation other than sitting in the cockpit of an airliner for 30+ years. Just say'n
Ditto for UAE.
There are significant parallels between the airline and the US car manufacturing sector.
While one can complain about the level of remuneration of a CEO, the basic imbalance between the wage bill of the staff and the price a market will stand is quite clear. There is only one CEO but when tens of thousands of staff are paid a large percentage higher than the market rate, no company can survive.
In the Uk it is illegal to trade while insolvent and in the US a similar scheme exists which can be applied to 'going to go insolvent' if nothing is done.
Sad for the folks involved, but hardly a surprise, and hardly the fault of the management when the unions point blank refuse to accept market rate terms. Even the best CEO in the world, getting paid $1 can do nothing when a union would rather drive the company to bankruptcy than accept a reduction in salary for their members. We passengers don't want to pay more than we have to and that means the staff will have to accept different terms, or get another job.
A bit of contributory negligence on the part of the union leadership IMO.
While one can complain about the level of remuneration of a CEO, the basic imbalance between the wage bill of the staff and the price a market will stand is quite clear. There is only one CEO but when tens of thousands of staff are paid a large percentage higher than the market rate, no company can survive.
In the Uk it is illegal to trade while insolvent and in the US a similar scheme exists which can be applied to 'going to go insolvent' if nothing is done.
Sad for the folks involved, but hardly a surprise, and hardly the fault of the management when the unions point blank refuse to accept market rate terms. Even the best CEO in the world, getting paid $1 can do nothing when a union would rather drive the company to bankruptcy than accept a reduction in salary for their members. We passengers don't want to pay more than we have to and that means the staff will have to accept different terms, or get another job.
A bit of contributory negligence on the part of the union leadership IMO.
There is only one CEO but when tens of thousands of staff are paid a large percentage higher than the market rate, no company can survive.
Full disclosure: I do not, nor ever have, worked for AMR but I would again maintain that the above position is severely weakened by not, either out or commission or ommisision, stating exactly what that market rate is.
Looking at peer competitors in the United States (one would assume we would have to limit the statistical sample to that geographical region for this example) one finds a broadly diverse level of remuneration--American pilots would have to take a pay raise if on Southwest's pay scale and a cut if on that of United or USAirways. Productivity measures would need to be made to see how these pilots contribute to the revenue model vis a vis the competitors.
If I am errant I will certainly admit it, but I keep thinking that one cannot say that any pilot group (or work group for that matter) is unduly (either high or low) paid until one can accurately state what that market rate exactly is. Just saying "it is too much" does not cut it here.
For those who are going to argue so, please (!) help us along with giving us figures with which to work. What should these groups be paid? By giving us this figure, you will give us a benchmark against which to weigh your argument. Again, without them, the argument is nugatory.
Last edited by Uncle Fred; 2nd Dec 2011 at 21:03.
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hunger4justice
With your monicker, what beautiful irony. Let's have some more!
That is why I told my child to get their 3000 hrs in and go to the UAE or Cathay, anywhere, that does not have a history of breaking agreements and terminating earned benefits.
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Sad for the folks involved, but hardly a surprise, and hardly the fault of the management when the unions point blank refuse to accept market rate terms. Even the best CEO in the world, getting paid $1 can do nothing when a union would rather drive the company to bankruptcy than accept a reduction in salary for their members. We passengers don't want to pay more than we have to and that means the staff will have to accept different terms, or get another job.
In the USA airline labor relations are governed under a lovely set of rules known as the Railway Labor Act (RLA) These rules were imposed on railroads back in 1926 and extended to cover airlines in 1936. They create very strict controls on labor relations. These rules make it very difficult for pilots to negotiate new contracts, and seniority rules make it extremely difficult to just decide to leave a company if the contract isn't what you want it to be. Imagine working 20 years in a business, but being told if you left the company you worked for to move to another the most you would be allowed to make is the entry level secretary wage, though you will retain the responsibilities of your position.
The RLA defines things as major or minor disputes. Anything relating to a current contract is a "minor" dispute. Labor is not allowed to strike for minor disputes. Disputes are only classified "major" when they relate to negotiating new contracts. For pilots to take any kind of action on a major dispute, such as a strike, the national mediation board must be involved. First, we must negotiate for years, as management has no incentive to provide a new contract. Then NMB has sole decision making responsibilities when it comes to determining whether progress is being made. If no progress is being made, we continue negotiating. If some progress is being made, we continue negotiating. If some progress is made, and there are only a few key points we can't agree on, then the NMB either keeps us negotiating, parks us (ceases negotiations) or releases us into a 30 day cooling off period. Only after those 30 days are we given permission to strike, though the President can form an Emergency Board and delay any strike for another 60 days.
Please note that we are now frequently years past the date that our old contract was supposed to end. For this reason, a 4 year CBA here can frequently last 7 - 9 years. The reason we as pilots are so concerned over short term concessions or signing on to a substandard new CBA is because we will most likely be stuck with those terms for a significant number of years. We typically don't have the option of jumping ship to a new company once we've committed significant years to our current company. Basically, we need to look out for ourselves because surely no one else is.
American/AMR has just filed papers on rejecting 24 aircraft leases, of which 4 are Fokker F100's, which they haven't flown since 2004.
http://bit.ly/vafhWZ
So they have been paying the lease fee's + desert storage parking fee's
http://bit.ly/vafhWZ
So they have been paying the lease fee's + desert storage parking fee's
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If I am errant I will certainly admit it, but I keep thinking that one cannot say that any pilot group (or work group for that matter) is unduly (either high or low) paid until one can accurately state what that market rate exactly is. Just saying "it is too much" does not cut it here
One of the indications on the news today was that AMR was burdened with 31% of their total operating expenses for retirement benefits.
UAL, DAL, NW took bankruptcy for the generally same reason.
This appears to be probably one of the main issues to declare bankruptcy from where I see it.
That is a lot of revenue to be generated above other operators and be profitable in a cost competive market.
The wages in themselves appear to be relatively close to other mainline carriers.
Many of the other carriers seem to be in the 401k camp for retirement but I do not know to what extent what each airline makes additional contributions.
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This is the best piece that I have seen written on the subject of the AA Bankruptcy. Done by the Boyd Group International. They really know the airline business and dispell a number of the rumors that are running around.
http://www.aviationplanning.com/Imag...%20Reality.pdf
http://www.aviationplanning.com/Imag...%20Reality.pdf
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I have some experience with American. When I started there in the beginning of 1979, they operated an all jet (3 pilots), mostly US domestic operation with a small dedicated freighter operation. They had about 280 some aircraft. 30 years and 2 furloughs later, when I retired early (I thought they were going to file Chapter 11 in late 2008) they were operating near 800 or so 2 pilot jets almost all over the globe.
The union was offered several times when Robert Crandall was President and CEO of AMR for the pilots to take over ownership or partial ownership of the company, but each time the pilot union declined the offer. Yet the union continuously broadcast and shouted from the rooftops how evil and inept management was, how the evil managers were trying to destroy the earning power of pilots and oh how the union wished they had a CEO who wanted to run an airline, blah blah blah.
Curiously, over the years, many of the upper level union officers would, upon leaving union service go right over to the Flight Academy and take high level management positions. Amazing when most of the higher level flight ops jobs require approval from corporate headquarters. I still wonder about that.
Anyhow, as has been mentioned in the thread, the plight of recently retired pilots who face the possible loss of one part of their retirement funds. That would be the defined benefit or "A"plan, which is now (NOV29 Chapt11) no longer available as a lump sum, but as an annuity.
Who knows what will happen to the A fund in bankruptcy. The pilot B fund, however is rock solid and safe, still available for lump sum distribution. The company will I believe contribute to the "B" fund during the bankruptcy process. The "B" fund is 11% of pilot pay each year; the A plan, 4%.
Two types of dates have been mentioned. Pilot retirement date and Retirement Benefit Commencement date; and at least for early retirement they are NOT the same.
For example, in my case when I retired early at the end of August 2008, my retirement date was 01SEP2008, but my retirement benefit commencement date 2 months later, 01NOV2008.
In normal retirement (age 60 or 65) I believe the retirement date and the benefit commencement date coincide.
Bottom line, I truly hope the guys who early bailed in October still get their lump sums from the A fund when their benefit commencement date arrived/arrives sometime this month.
I think (but do not know) that any pilot who retired EARLY within the months of October or November and would have a Commencement date of Dec 01 or Jan01 is not going to get a lump sum from the A fund.
The union was offered several times when Robert Crandall was President and CEO of AMR for the pilots to take over ownership or partial ownership of the company, but each time the pilot union declined the offer. Yet the union continuously broadcast and shouted from the rooftops how evil and inept management was, how the evil managers were trying to destroy the earning power of pilots and oh how the union wished they had a CEO who wanted to run an airline, blah blah blah.
Curiously, over the years, many of the upper level union officers would, upon leaving union service go right over to the Flight Academy and take high level management positions. Amazing when most of the higher level flight ops jobs require approval from corporate headquarters. I still wonder about that.
Anyhow, as has been mentioned in the thread, the plight of recently retired pilots who face the possible loss of one part of their retirement funds. That would be the defined benefit or "A"plan, which is now (NOV29 Chapt11) no longer available as a lump sum, but as an annuity.
Who knows what will happen to the A fund in bankruptcy. The pilot B fund, however is rock solid and safe, still available for lump sum distribution. The company will I believe contribute to the "B" fund during the bankruptcy process. The "B" fund is 11% of pilot pay each year; the A plan, 4%.
Two types of dates have been mentioned. Pilot retirement date and Retirement Benefit Commencement date; and at least for early retirement they are NOT the same.
For example, in my case when I retired early at the end of August 2008, my retirement date was 01SEP2008, but my retirement benefit commencement date 2 months later, 01NOV2008.
In normal retirement (age 60 or 65) I believe the retirement date and the benefit commencement date coincide.
Bottom line, I truly hope the guys who early bailed in October still get their lump sums from the A fund when their benefit commencement date arrived/arrives sometime this month.
I think (but do not know) that any pilot who retired EARLY within the months of October or November and would have a Commencement date of Dec 01 or Jan01 is not going to get a lump sum from the A fund.
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Personally I'll be happy when ALL american airlines are made bankrupt and forbidden the protection of chapter 11.
Without exception (and I travel constantly throughout the US and Internationally), I find them to be badly organized, have poor service, poor reliability, uncomfortable seating and lousy customer relations service. I could list horror stories of lost baggage (3 times this year alone).. overbooking, late flights and missed connections ... life's too short.
Far better that they pack it up and let European airlines take over.
Without exception (and I travel constantly throughout the US and Internationally), I find them to be badly organized, have poor service, poor reliability, uncomfortable seating and lousy customer relations service. I could list horror stories of lost baggage (3 times this year alone).. overbooking, late flights and missed connections ... life's too short.
Far better that they pack it up and let European airlines take over.
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No news yet about retiree medical, tho I would think the cost will go up dramatically in the months ahead. I don't know about other U.S. Carriers, but AMR was self-funded for covering employee medical expenses; they just hire medical insurance group management help to administer the program.
As for the stock options from the distant past, I sold my options before the stock split, and before Trump ran the stock up to around $140 as it was thought he was going for a hostile takeover attempt. The pilot union was pleading with Crandall not to sell the airline, and of course he did not. At the peak, Crandall had control of north of $125 MILLION of AMR stock, tho some of it may have been restricted, whatever, the pilots depended on the hated Crandall and the AMR BOD to save the airline from Trump, which they did.
The option grants had I dimly recollect had life of about 10 years so I would think they have long expired anyhow.
As for the stock options from the distant past, I sold my options before the stock split, and before Trump ran the stock up to around $140 as it was thought he was going for a hostile takeover attempt. The pilot union was pleading with Crandall not to sell the airline, and of course he did not. At the peak, Crandall had control of north of $125 MILLION of AMR stock, tho some of it may have been restricted, whatever, the pilots depended on the hated Crandall and the AMR BOD to save the airline from Trump, which they did.
The option grants had I dimly recollect had life of about 10 years so I would think they have long expired anyhow.
There are significant parallels between the airline and the US car manufacturing sector.
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Airbubba
SW was not a major airline in 1978. It was a small regional carrier with a tiny fleet and very low costs.
Today it has become a high cost operation that could face Chapter 11 like all the other over bloated super large carriers have .
Remember that a lot of SW past success was from fuel hedges, flying into secondary airports, and having competitors will high costs. All these advantages are now gone. Just check out the stock price (LUV) which is telling in itself.
The "times they are a changing".
SW was not a major airline in 1978. It was a small regional carrier with a tiny fleet and very low costs.
Today it has become a high cost operation that could face Chapter 11 like all the other over bloated super large carriers have .
Remember that a lot of SW past success was from fuel hedges, flying into secondary airports, and having competitors will high costs. All these advantages are now gone. Just check out the stock price (LUV) which is telling in itself.
The "times they are a changing".
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Stick to aviation - not automotives
"... US auto makers have long since given up any illusion that they could do similar."
Mini - you may be a pilot but you don't have a clue about international automotive issues
Here is just one example for one US company that shows how incorrect your statement was:
Ford's October sales in its traditional 19 European markets increased by 4.7 per cent to 95,800 vehicles, while market share was 8.1 per cent - up 0.5 percentage points from 2010
Ford market share rose in 15 of its traditional 19 European markets compared with a year ago
October sales in the UK, where Ford is the market leader, climbed by 8 per cent to 23,500 sales, and share was 14.8 per cent, up 0.6 percentage points
Ford's positive momentum in Germany continues, with October sales up 6.8 per cent to 22,700 vehicles, and total vehicle market share at 8.0 per cent up by 0.5 percentage points. Year-to-date, Ford sales in Germany are up 18.1 per cent
Ford's sales across its total 51 European markets in October were 123,300 - an increase of 6,000 or 5.2 per cent higher on October 2010. Year-to-date, however, Ford's sales in these markets are 1,327,300, up 2.9 per cent, or 37,000 vehicles, from a year ago
Russia was Ford's third-largest market by volume in October, with sales totalling 11,400 vehicles, up 28.8 per cent from a year ago. Year-to-date, Ford sales in Russia are up 34.1 per cent
Sales of the new Focus surpassed the 150,000 mark (at 151,700) units after seven months on sale in Europe
Mini - you may be a pilot but you don't have a clue about international automotive issues
Here is just one example for one US company that shows how incorrect your statement was:
Ford's October sales in its traditional 19 European markets increased by 4.7 per cent to 95,800 vehicles, while market share was 8.1 per cent - up 0.5 percentage points from 2010
Ford market share rose in 15 of its traditional 19 European markets compared with a year ago
October sales in the UK, where Ford is the market leader, climbed by 8 per cent to 23,500 sales, and share was 14.8 per cent, up 0.6 percentage points
Ford's positive momentum in Germany continues, with October sales up 6.8 per cent to 22,700 vehicles, and total vehicle market share at 8.0 per cent up by 0.5 percentage points. Year-to-date, Ford sales in Germany are up 18.1 per cent
Ford's sales across its total 51 European markets in October were 123,300 - an increase of 6,000 or 5.2 per cent higher on October 2010. Year-to-date, however, Ford's sales in these markets are 1,327,300, up 2.9 per cent, or 37,000 vehicles, from a year ago
Russia was Ford's third-largest market by volume in October, with sales totalling 11,400 vehicles, up 28.8 per cent from a year ago. Year-to-date, Ford sales in Russia are up 34.1 per cent
Sales of the new Focus surpassed the 150,000 mark (at 151,700) units after seven months on sale in Europe
