American ready for bankruptcy as vote deadline nears (merged)
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American ready for bankruptcy as vote deadline nears
AMR lines up bankruptcy finances as zero-hour nears
Mon April 14, 2003 05:29 PM ET
By Kathy Fieweger and Jon Herskovitz
CHICAGO/DALLAS, April 14 (Reuters) - American Airlines has almost wrapped up $1.5 billion in debtor-in-possession financing should it file for bankruptcy as its labor groups face a Tuesday deadline on accepting concession deals aimed at staving off a Chapter 11 filing, a source familiar with the matter said.
American, a division of AMR Corp. AMR.N , said it would file for bankruptcy if any of its three main unions did not ratify the concession deals. All voting results are due at 11 a.m. CDT Tuesday (1600 GMT) and the pacts are aimed at saving the world's largest carrier $1.8 billion a year in labor costs.
The source said the DIP financing is "virtually complete." The potential DIP lenders are the lead bank, Citibank C.N , along with J.P. Morgan Chase & Co Inc. JPM.N , Merrill Lynch & Co Inc. MER.N , and CIT Group Inc. CIT.N , the source said.
If Fort Worth, Texas-based American files for Chapter 11 protection, Citibank will put up $750 million in a special credit-card backed DIP, similar to what Bank One Corp. ONE.N did for UAL Corp.'s UAL.N United Airlines last December.
The four lenders will take equal part in the remaining $750 million of financing. The total DIP loan can be increased to $1.75 billion, if necessary, upon a special vote, the source said.
Sources familiar with the situation have told Reuters American's management remains committed to the idea that the airline can restructure outside of bankruptcy court if workers go along, even though others are skeptical.
The union representing pilots at American Airlines changed the deadline for voting by its 13,500 members to Tuesday at 9 a.m. CDT (1400 GMT) from Monday at 4 p.m. CDT (2100 GMT) because the group processing the vote has been overwhelmed with phone calls, a spokesman for the Allied Pilots Association said.
VOTES DUE ON TUESDAY
Union groups that represent about 74,000 of American's 100,000-member work force are voting on concession pacts that are aimed at staving off the imminent bankruptcy filing.
"Voting 'no' is a vote for bankruptcy. Voting 'no' is a vote for additional job cuts," AMR Chief Executive Don Carty told employees last week at a town hall meeting.
The Transport Workers Union, which represents about 34,500 ground workers and mechanics, changed its deadline for voting to 9 a.m CDT (1400 GMT) on Tuesday from a Monday deadline because of a technical problems in its voting process.
The Association of Professional Flight Attendants, which represents more than 26,000 flight attendants at American, has set a deadline of 10 a.m. CDT (1500 GMT) on Tuesday for its vote.
"The pilots, with the most to lose (in particular, their generous pensions), seem likely to approve their contract, while the mechanics appear to be the most hostile to management's proposals," ratings agency Standard & Poor's said. Industry sources have said the vote is difficult to handicap.
A federal judge on Monday afternoon dismissed a lawsuit from a dissident group of American pilots aimed at stopping voting. The pilots argued the group has not received adequate information about their new contracts.
Carty has told workers that American would seek an additional $500 million in labor-cost cuts in bankruptcy and the carrier would seek several thousand additional job cuts if it is in Chapter 11 protection.
Union members have expressed anger at the deals that will cut pay for several major groups by between 15 percent and 23 percent. But union leaders said that, while the concession deals would entail painful cuts, the lack of approval would force the company into bankruptcy court, which would prompt even deeper cuts for labor.
The tentative deals include $660 million in savings from pilots, $340 million from flight attendants and $620 million from ground workers and mechanics. The carrier also obtained $180 million in savings from management and other groups.
AMR shares closed down 22 cents, almost 7 percent, to $3.08 in active trading on the New York Stock Exchange, where it was among the top percentage loss leaders.
Mon April 14, 2003 05:29 PM ET
By Kathy Fieweger and Jon Herskovitz
CHICAGO/DALLAS, April 14 (Reuters) - American Airlines has almost wrapped up $1.5 billion in debtor-in-possession financing should it file for bankruptcy as its labor groups face a Tuesday deadline on accepting concession deals aimed at staving off a Chapter 11 filing, a source familiar with the matter said.
American, a division of AMR Corp. AMR.N , said it would file for bankruptcy if any of its three main unions did not ratify the concession deals. All voting results are due at 11 a.m. CDT Tuesday (1600 GMT) and the pacts are aimed at saving the world's largest carrier $1.8 billion a year in labor costs.
The source said the DIP financing is "virtually complete." The potential DIP lenders are the lead bank, Citibank C.N , along with J.P. Morgan Chase & Co Inc. JPM.N , Merrill Lynch & Co Inc. MER.N , and CIT Group Inc. CIT.N , the source said.
If Fort Worth, Texas-based American files for Chapter 11 protection, Citibank will put up $750 million in a special credit-card backed DIP, similar to what Bank One Corp. ONE.N did for UAL Corp.'s UAL.N United Airlines last December.
The four lenders will take equal part in the remaining $750 million of financing. The total DIP loan can be increased to $1.75 billion, if necessary, upon a special vote, the source said.
Sources familiar with the situation have told Reuters American's management remains committed to the idea that the airline can restructure outside of bankruptcy court if workers go along, even though others are skeptical.
The union representing pilots at American Airlines changed the deadline for voting by its 13,500 members to Tuesday at 9 a.m. CDT (1400 GMT) from Monday at 4 p.m. CDT (2100 GMT) because the group processing the vote has been overwhelmed with phone calls, a spokesman for the Allied Pilots Association said.
VOTES DUE ON TUESDAY
Union groups that represent about 74,000 of American's 100,000-member work force are voting on concession pacts that are aimed at staving off the imminent bankruptcy filing.
"Voting 'no' is a vote for bankruptcy. Voting 'no' is a vote for additional job cuts," AMR Chief Executive Don Carty told employees last week at a town hall meeting.
The Transport Workers Union, which represents about 34,500 ground workers and mechanics, changed its deadline for voting to 9 a.m CDT (1400 GMT) on Tuesday from a Monday deadline because of a technical problems in its voting process.
The Association of Professional Flight Attendants, which represents more than 26,000 flight attendants at American, has set a deadline of 10 a.m. CDT (1500 GMT) on Tuesday for its vote.
"The pilots, with the most to lose (in particular, their generous pensions), seem likely to approve their contract, while the mechanics appear to be the most hostile to management's proposals," ratings agency Standard & Poor's said. Industry sources have said the vote is difficult to handicap.
A federal judge on Monday afternoon dismissed a lawsuit from a dissident group of American pilots aimed at stopping voting. The pilots argued the group has not received adequate information about their new contracts.
Carty has told workers that American would seek an additional $500 million in labor-cost cuts in bankruptcy and the carrier would seek several thousand additional job cuts if it is in Chapter 11 protection.
Union members have expressed anger at the deals that will cut pay for several major groups by between 15 percent and 23 percent. But union leaders said that, while the concession deals would entail painful cuts, the lack of approval would force the company into bankruptcy court, which would prompt even deeper cuts for labor.
The tentative deals include $660 million in savings from pilots, $340 million from flight attendants and $620 million from ground workers and mechanics. The carrier also obtained $180 million in savings from management and other groups.
AMR shares closed down 22 cents, almost 7 percent, to $3.08 in active trading on the New York Stock Exchange, where it was among the top percentage loss leaders.
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411--The APA is regarded as the LEAST likely union on the property to turn this down. The group that attempted to stop the vote is the last bastion of ultra-radicals left.
Until AMR comes to grips with the fact that they are at least half responsible for the well-deserved moniker "Sky Nazi's", there will never be true labor cooperation. AA management aspires to be more like SWA but won't take even one baby-step toward fostering that kind of employee-management relationship.
The floggings will continue until morale improves!
TC
Until AMR comes to grips with the fact that they are at least half responsible for the well-deserved moniker "Sky Nazi's", there will never be true labor cooperation. AA management aspires to be more like SWA but won't take even one baby-step toward fostering that kind of employee-management relationship.
The floggings will continue until morale improves!
TC
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Associated Press
American Airlines Pilots OK Concessions
Tuesday April 15, 12:25 pm ET
By Angela K. Brown, Associated Press Writer
American Airlines Pilots' Union Approve Concessions Deal
FORT WORTH, Texas (AP) -- American Airlines pilots approved wage and other concessions that the airline said it needed to avoid filing for bankruptcy, the pilots' union announced Tuesday.
American, the world's largest carrier, was waiting for results of voting by flight attendants and ground workers, which were also expected Tuesday.
Airline officials had vowed to file for bankruptcy quickly if any of the three unions rejected the concessions. American is trying to cut labor costs by $1.8 billion a year, or more than 20 percent.
Leaders of American's three main unions had reluctantly supported the concessions as a better alternative than bankruptcy. They feared that American could use the bankruptcy process to impose even harsher cuts and reduced pension benefits.
But angry employees packed union meetings to complain that terms of the concession deals were too harsh. They objected to the length of the deals -- nearly six years -- and small raises in later years.
American sweetened the deals last week by offering one-time bonuses of up to 4.5 percent in 2006 or later if the company's credit ratings improve sharply.
The Allied Pilots Association said its members approved the concessions 69 percent to 31 percent. The union said 10,200 pilots, a high turnout, took part.
Discussions between the company and union leaders continued up to the end of voting. Pilots' union president John Darrah met with American chairman and chief executive Donald J. Carty on Tuesday morning before either man knew the results of the voting, a union spokesman said.
The flight attendants' union said it asked Monday for more time to vote because of problems with balloting but American denied the request. A union spokesman said there was a delay in making contract language available to employees.
The union elections were conducted by phone and over the Internet -- an accelerated process needed to meet American's ratification deadline.
Employees began voting shortly after negotiators for the company and unions reached tentative agreements March 31.
Pilots and ground workers were able to change their votes until Tuesday, but flight attendants were not, raising concern that many flight attendants had voted to reject the deal before American sweetened the offer last week with possible bonuses.
American sought $660 million in annual concessions from its 12,000 pilots, $620 million from 34,000 ground workers and $340 million from 24,000 flight attendants. The agreements include layoffs for 2,500 pilots, about 2,000 flight attendants and up to 1,400 ground workers.
Carty warned that if American went into bankruptcy, it would seek $500 million in additional labor concessions.
American's parent, Fort Worth-based AMR, has lost nearly $5.3 billion in the past two years and continues to lose about $5 million a day.
In a report disclosed Tuesday, AMR's auditor, Ernst & Young LLP, questioned the company's ability to stay in business.
The auditors cited AMR's "significant losses" and uncertainty about its ability to cut operating costs. They also raised doubt about whether AMR could meet a $1 billion liquidity requirement for an $834 million line of credit.
American Airlines Pilots OK Concessions
Tuesday April 15, 12:25 pm ET
By Angela K. Brown, Associated Press Writer
American Airlines Pilots' Union Approve Concessions Deal
FORT WORTH, Texas (AP) -- American Airlines pilots approved wage and other concessions that the airline said it needed to avoid filing for bankruptcy, the pilots' union announced Tuesday.
American, the world's largest carrier, was waiting for results of voting by flight attendants and ground workers, which were also expected Tuesday.
Airline officials had vowed to file for bankruptcy quickly if any of the three unions rejected the concessions. American is trying to cut labor costs by $1.8 billion a year, or more than 20 percent.
Leaders of American's three main unions had reluctantly supported the concessions as a better alternative than bankruptcy. They feared that American could use the bankruptcy process to impose even harsher cuts and reduced pension benefits.
But angry employees packed union meetings to complain that terms of the concession deals were too harsh. They objected to the length of the deals -- nearly six years -- and small raises in later years.
American sweetened the deals last week by offering one-time bonuses of up to 4.5 percent in 2006 or later if the company's credit ratings improve sharply.
The Allied Pilots Association said its members approved the concessions 69 percent to 31 percent. The union said 10,200 pilots, a high turnout, took part.
Discussions between the company and union leaders continued up to the end of voting. Pilots' union president John Darrah met with American chairman and chief executive Donald J. Carty on Tuesday morning before either man knew the results of the voting, a union spokesman said.
The flight attendants' union said it asked Monday for more time to vote because of problems with balloting but American denied the request. A union spokesman said there was a delay in making contract language available to employees.
The union elections were conducted by phone and over the Internet -- an accelerated process needed to meet American's ratification deadline.
Employees began voting shortly after negotiators for the company and unions reached tentative agreements March 31.
Pilots and ground workers were able to change their votes until Tuesday, but flight attendants were not, raising concern that many flight attendants had voted to reject the deal before American sweetened the offer last week with possible bonuses.
American sought $660 million in annual concessions from its 12,000 pilots, $620 million from 34,000 ground workers and $340 million from 24,000 flight attendants. The agreements include layoffs for 2,500 pilots, about 2,000 flight attendants and up to 1,400 ground workers.
Carty warned that if American went into bankruptcy, it would seek $500 million in additional labor concessions.
American's parent, Fort Worth-based AMR, has lost nearly $5.3 billion in the past two years and continues to lose about $5 million a day.
In a report disclosed Tuesday, AMR's auditor, Ernst & Young LLP, questioned the company's ability to stay in business.
The auditors cited AMR's "significant losses" and uncertainty about its ability to cut operating costs. They also raised doubt about whether AMR could meet a $1 billion liquidity requirement for an $834 million line of credit.
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Two American unions OK deals
Vote by pilots, ground workers clears 2 of 3 hurdles airline needs to avoid bankruptcy.
April 15, 2003: 12:48 PM EDT
NEW YORK (CNN/Money) - American Airlines pilots and ground workers agreed to concession contracts, letting the world's largest airline clear two of three hurdles needed in its effort to stay out of bankruptcy.
The rank and file of the Allied Pilots Association voted 69 percent in favor the pact, which is expected to save the airline $660 million a year in labor costs. The Transport Workers Union, which represents ground workers such as mechanics and baggage handlers, also approved their deals, but by more narrow margins, with about 53 percent support, CNNfn has learned.
But the airline has said it also needs rank and file approval by the Association of Professional Flight Attendants to avoid bankruptcy, and there was no immediate word on results of that vote that was concluded Tuesday morning. The company had set an 11 a.m. CT (noon ET) deadline for all the ratifications to take place.
http://money.cnn.com/2003/04/15/news...nies/amr_vote/
Vote by pilots, ground workers clears 2 of 3 hurdles airline needs to avoid bankruptcy.
April 15, 2003: 12:48 PM EDT
NEW YORK (CNN/Money) - American Airlines pilots and ground workers agreed to concession contracts, letting the world's largest airline clear two of three hurdles needed in its effort to stay out of bankruptcy.
The rank and file of the Allied Pilots Association voted 69 percent in favor the pact, which is expected to save the airline $660 million a year in labor costs. The Transport Workers Union, which represents ground workers such as mechanics and baggage handlers, also approved their deals, but by more narrow margins, with about 53 percent support, CNNfn has learned.
But the airline has said it also needs rank and file approval by the Association of Professional Flight Attendants to avoid bankruptcy, and there was no immediate word on results of that vote that was concluded Tuesday morning. The company had set an 11 a.m. CT (noon ET) deadline for all the ratifications to take place.
http://money.cnn.com/2003/04/15/news...nies/amr_vote/
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American Airlines Attendants Reject Plan
Reuters
Tuesday, April 15, 2003; 3:16 PM
DALLAS - Flight attendants at American Airlines on Tuesday voted against a concession agreement, paving the way for an imminent bankruptcy filing by the world's largest carrier, a local news radio station reported.
The airline has said that if its three major union groups do not ratify deals that will help save the carrier $1.8 billion a year in labor costs, American, a division of AMR Corp. , would be forced to file for bankruptcy.
News radio station KRLD reported that the union had narrowly rejected the deal and was in talks with the airline to see if they could quickly poll their members again. The two other major unions at American had approved concession deals earlier in the day.
The Association of Professional Flight Attendants voted against a deal that would cut annual pay and benefits for flight attendants collectively by $340 million.
____________________________________________
American Attendants Vote
To Reject Wage Concessions
By SCOTT MCCARTNEY
Staff Reporter of THE WALL STREET JOURNAL
The flight attendants union at AMR Corp.'s American Airlines narrowly rejected $340 million of contract concessions by only a few hundred votes, people familiar with the situation said, but the company and union are discussing whether to hold a new vote because of problems in balloting.
The board of the Association of Professional Flight Attendants is meeting to discuss the results. People familiar with the matter say there have been discussions between the union and AMR management on the possibility of allowing a new vote, perhaps in as short a time as 24 hours, because flight attendants weren't allowed to change their vote even as contract terms changed last week.
Unions representing pilots and ground workers approved concessions earlier today. Without ratification by all three unions of the plan to slash $1.8 billion in annual labor costs, American has said it will file for bankruptcy reorganization.
Updated April 15, 2003 3:41 p.m.
______________________________________________
From http://www.apfa.org/ :
APFA Balloting Results
APFA/AAL Restructuring Participation Agreement
Yes
9,309
No
9,842
Ineligible
462
Total Votes Cast
19,151
Reuters
Tuesday, April 15, 2003; 3:16 PM
DALLAS - Flight attendants at American Airlines on Tuesday voted against a concession agreement, paving the way for an imminent bankruptcy filing by the world's largest carrier, a local news radio station reported.
The airline has said that if its three major union groups do not ratify deals that will help save the carrier $1.8 billion a year in labor costs, American, a division of AMR Corp. , would be forced to file for bankruptcy.
News radio station KRLD reported that the union had narrowly rejected the deal and was in talks with the airline to see if they could quickly poll their members again. The two other major unions at American had approved concession deals earlier in the day.
The Association of Professional Flight Attendants voted against a deal that would cut annual pay and benefits for flight attendants collectively by $340 million.
____________________________________________
American Attendants Vote
To Reject Wage Concessions
By SCOTT MCCARTNEY
Staff Reporter of THE WALL STREET JOURNAL
The flight attendants union at AMR Corp.'s American Airlines narrowly rejected $340 million of contract concessions by only a few hundred votes, people familiar with the situation said, but the company and union are discussing whether to hold a new vote because of problems in balloting.
The board of the Association of Professional Flight Attendants is meeting to discuss the results. People familiar with the matter say there have been discussions between the union and AMR management on the possibility of allowing a new vote, perhaps in as short a time as 24 hours, because flight attendants weren't allowed to change their vote even as contract terms changed last week.
Unions representing pilots and ground workers approved concessions earlier today. Without ratification by all three unions of the plan to slash $1.8 billion in annual labor costs, American has said it will file for bankruptcy reorganization.
Updated April 15, 2003 3:41 p.m.
______________________________________________
From http://www.apfa.org/ :
APFA Balloting Results
APFA/AAL Restructuring Participation Agreement
Yes
9,309
No
9,842
Ineligible
462
Total Votes Cast
19,151
Last edited by Airbubba; 16th Apr 2003 at 04:24.
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"Until AMR comes to grips with the fact that they are at least half responsible for the well-deserved moniker "Sky Nazi's", there will never be true labor cooperation."
AA717driver, I have not heard the term "Sky Nazi's" before. What does it mean?
AA717driver, I have not heard the term "Sky Nazi's" before. What does it mean?
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One more time with feeling...
American puts bankruptcy on hold
Flight attendants reject concessions but AMR delays bankruptcy filing to allow second vote on pact.
April 15, 2003: 5:05 PM EDT
By Chris Isidore, CNN/Money Senior Writer
NEW YORK (CNN/Money) - American Airlines pulled back on its bankruptcy deadline late Tuesday afternoon, allowing the flight attendants' union a second chance to ratify the concession contract the airline said it needs to stay out of bankruptcy court.
The world's largest airline and the union, the Association of Professional Flight Attendants, said that the new electronic vote would be concluded by 5 p.m. CT (6 p.m. ET) Wednesday in what the airline said is a last chance to avoid bankruptcy.
The airline previously said it was prepared to file for bankruptcy unless all three unions had agreed to the deal by 11 a.m. CT Tuesday. The company said late Tuesday afternoon that it had set the deadline for ratification because it had a substantial amount of loan repayments due. But it said it made millions of dollars in scheduled debt payments due Tuesday in order to give the company a last chance to avoid bankruptcy.
"With almost 10,000 jobs hanging in the balance, and the future of 100,000 employees at stake, we agreed to take this risk and make this investment for our employees because we believe that all employees will be better off if we can save jobs and restructure our costs consensually rather than through the bankruptcy process," said a statement from Don Carty, chairman of American parent AMR Corp. "This is our last chance to avoid bankruptcy."
The two other major unions at American -- the Allied Pilots Association and the Transport Workers Union, which represents most American ground workers, approved the concession deals, but the rank and file for the APFA voted narrowly against the proposal. Management and the leadership of all three unions agreed to the new vote by the APFA in meetings that stretched throughout Tuesday afternoon.
Flight attendants reject concessions but AMR delays bankruptcy filing to allow second vote on pact.
April 15, 2003: 5:05 PM EDT
By Chris Isidore, CNN/Money Senior Writer
NEW YORK (CNN/Money) - American Airlines pulled back on its bankruptcy deadline late Tuesday afternoon, allowing the flight attendants' union a second chance to ratify the concession contract the airline said it needs to stay out of bankruptcy court.
The world's largest airline and the union, the Association of Professional Flight Attendants, said that the new electronic vote would be concluded by 5 p.m. CT (6 p.m. ET) Wednesday in what the airline said is a last chance to avoid bankruptcy.
The airline previously said it was prepared to file for bankruptcy unless all three unions had agreed to the deal by 11 a.m. CT Tuesday. The company said late Tuesday afternoon that it had set the deadline for ratification because it had a substantial amount of loan repayments due. But it said it made millions of dollars in scheduled debt payments due Tuesday in order to give the company a last chance to avoid bankruptcy.
"With almost 10,000 jobs hanging in the balance, and the future of 100,000 employees at stake, we agreed to take this risk and make this investment for our employees because we believe that all employees will be better off if we can save jobs and restructure our costs consensually rather than through the bankruptcy process," said a statement from Don Carty, chairman of American parent AMR Corp. "This is our last chance to avoid bankruptcy."
The two other major unions at American -- the Allied Pilots Association and the Transport Workers Union, which represents most American ground workers, approved the concession deals, but the rank and file for the APFA voted narrowly against the proposal. Management and the leadership of all three unions agreed to the new vote by the APFA in meetings that stretched throughout Tuesday afternoon.
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At it....again
Now the hosties are at it again, throwing a wrench into the works. AA will downsize to meet the available traffic, regardless of the unions involved. Survival of the company will mean substantial wage and contractual concessions whether the employees like it or not...and many won't.
This refers to a comment which was seen on another topic about AMR.
A few years ago when the industry was healthier, AMR reportedly spent more than a billion dollars to buy back its own stock. If this is true, whose brilliant idea was that? Was it just to have more control over the Board of Directors?
If they are still in upper mgmt, then are those people also still in charge of AMR's strategic decisions?
A few years ago when the industry was healthier, AMR reportedly spent more than a billion dollars to buy back its own stock. If this is true, whose brilliant idea was that? Was it just to have more control over the Board of Directors?
If they are still in upper mgmt, then are those people also still in charge of AMR's strategic decisions?
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2.6 Billion and it was Don Carty that piled the money that high and then set fire to it....
Worst airline manager in the history of the airlines. Took the best balance sheet in the industry and wrecked it in 4 years.
2.6 billion for stock.
1.something billion for a white elephant terminal in JFK
Billions and billions buying an airline that couldn't make money if it was hauling cocaine (TWA)
The American Airlines arena (we are still paying 5 million dollars/month on that one...
the beat goes on.
Crandall was conservative. Carty spends like a drunken sailor
Cheers
Wino
Worst airline manager in the history of the airlines. Took the best balance sheet in the industry and wrecked it in 4 years.
2.6 billion for stock.
1.something billion for a white elephant terminal in JFK
Billions and billions buying an airline that couldn't make money if it was hauling cocaine (TWA)
The American Airlines arena (we are still paying 5 million dollars/month on that one...
the beat goes on.
Crandall was conservative. Carty spends like a drunken sailor
Cheers
Wino
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F Carty, F Bush, F Bin Laden, F Hussein, and most of all F all those pussy ass consumers that cower under their coffee tables afraid to get on a jet.
With these agreements at American and United we have set back the quality of this profession for years to come. We may never get back to where we were. I have 21 years to go before I can "retire" from this catastrophe. I can't wait!
With these agreements at American and United we have set back the quality of this profession for years to come. We may never get back to where we were. I have 21 years to go before I can "retire" from this catastrophe. I can't wait!
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Wino & Raamjet,
You're right on some counts. I agree Carty has been wasteful, inefficient and arrogant about running a high-cost airline. He has'nt done any pioneering things that shook up the industry like Crandall did, and his employee relations are the worst. But, some ideas (that other managers may have come up with) like rolling hubs, eliminating cost overruns and streamlining fleets are good ones.
One thing about the AA purchase of TWA you guys keep dwelling on, inaccurately. AA did not 'spend billions and billions' on TWA. It paid $750 million (only $500 million in cash) for an airline analysts and Wall Street had valued at $2.5 billion. In other words, AA got a great deal for a valuable company with good assets, many of which have allowed your junior pilots/FAs/ground workers to continue working. After 9-11, without the TWA purchase, 20,000 AA employees would have been cut from the payroll, but instead, 14,000 TWA employees softened the blow, and allowed much more junior AA employees to continue working.
Also, the TWA buyout is'nt the reason AA is losing millions presently. If you care to look at UA, US and other 'legacy' carriers, all with high costs, they are all losing large sums of money. Keep in mind AA has lost more money in the past 2 years (over $5.2 BILLION) than TWA lost in its 75-year HISTORY. True fact.
Let's hope the F/As wake up; I hear they did'nt have any road shows to 'educate' them on how bad bankruptcy will be. If they vote "NO" again, it just goes to show what idiots they really are, and they'll unfortunately cause MORE pay cuts and MORE layoffs.
APA/TWU did a good job of communicating what will happen if chapter 11 comes. I give both groups credit for realizing it will be WORSE in bankruptcy, for all concerned.
You're right on some counts. I agree Carty has been wasteful, inefficient and arrogant about running a high-cost airline. He has'nt done any pioneering things that shook up the industry like Crandall did, and his employee relations are the worst. But, some ideas (that other managers may have come up with) like rolling hubs, eliminating cost overruns and streamlining fleets are good ones.
One thing about the AA purchase of TWA you guys keep dwelling on, inaccurately. AA did not 'spend billions and billions' on TWA. It paid $750 million (only $500 million in cash) for an airline analysts and Wall Street had valued at $2.5 billion. In other words, AA got a great deal for a valuable company with good assets, many of which have allowed your junior pilots/FAs/ground workers to continue working. After 9-11, without the TWA purchase, 20,000 AA employees would have been cut from the payroll, but instead, 14,000 TWA employees softened the blow, and allowed much more junior AA employees to continue working.
Also, the TWA buyout is'nt the reason AA is losing millions presently. If you care to look at UA, US and other 'legacy' carriers, all with high costs, they are all losing large sums of money. Keep in mind AA has lost more money in the past 2 years (over $5.2 BILLION) than TWA lost in its 75-year HISTORY. True fact.
Let's hope the F/As wake up; I hear they did'nt have any road shows to 'educate' them on how bad bankruptcy will be. If they vote "NO" again, it just goes to show what idiots they really are, and they'll unfortunately cause MORE pay cuts and MORE layoffs.
APA/TWU did a good job of communicating what will happen if chapter 11 comes. I give both groups credit for realizing it will be WORSE in bankruptcy, for all concerned.
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767, good post.
The TWU is the one that astonished me - that was a very tough sell, and a job well done.
The sad fact with a great # of the FA's I have spoken to is that they voted "no" in the blind without any research, thinking it would be a stab at Carty. Large numbers of them had very little idea of the bankruptcy process; the claim that there was no information available to them is false - there was plenty on their website for them to read. None of them had any kind of alternative plan for cost re-structuring - one of them told me we should cut Don Carty's wife's investment returns, my reply was that only leaves us looking fo $1.799 billion....
They're such a diverse group, whereas the pilots at any carrier tend to fit a much tighter mold; I think their FA leaders have a nightmare trying to convey anything to them.
As one of the pilot reps said ref. helping the FA union with the process and disseminating info: "...it's like herding cats..."
The TWU is the one that astonished me - that was a very tough sell, and a job well done.
The sad fact with a great # of the FA's I have spoken to is that they voted "no" in the blind without any research, thinking it would be a stab at Carty. Large numbers of them had very little idea of the bankruptcy process; the claim that there was no information available to them is false - there was plenty on their website for them to read. None of them had any kind of alternative plan for cost re-structuring - one of them told me we should cut Don Carty's wife's investment returns, my reply was that only leaves us looking fo $1.799 billion....
They're such a diverse group, whereas the pilots at any carrier tend to fit a much tighter mold; I think their FA leaders have a nightmare trying to convey anything to them.
As one of the pilot reps said ref. helping the FA union with the process and disseminating info: "...it's like herding cats..."
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'Stab at Carty' ?
I can't believe how ignorant and unducated they are, if thats the reasoning for their 'NO' vote. 'Cut Carty's wife's investments'??? He does have a young trophy wife, but why do ANY of these F/As think Carty or his wife is the problem?
THE AIRLINE IS LOSING MILLIONS PER DAY, and all they can think about is that its somehow personal between employees and Carty?
Mark my words, their industry-leading pay will be cut DOUBLE the 15% to 30% after a judge gets through with them. THEY will be the reason for a chapter 11 filing, and all the other employees will let them know.
You're right about roadshows, too; APFA really dropped the ball, by not educating the most ill-informed and uneducated group on the property.Idiots...
'Cut Carty's Wife's investments'??? Jeez.
THE AIRLINE IS LOSING MILLIONS PER DAY, and all they can think about is that its somehow personal between employees and Carty?
Mark my words, their industry-leading pay will be cut DOUBLE the 15% to 30% after a judge gets through with them. THEY will be the reason for a chapter 11 filing, and all the other employees will let them know.
You're right about roadshows, too; APFA really dropped the ball, by not educating the most ill-informed and uneducated group on the property.Idiots...
'Cut Carty's Wife's investments'??? Jeez.
Last edited by B767300ER; 17th Apr 2003 at 01:32.
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767
750 million in cash, 3 BILLION in debt assumption for twa so they paid 3.75 billion for TWA. They just didn't have to write the check for it all at once.
Rolling hubs is nothing new either. Delta did it 6 years ago in Atlanta. Furthermore, the efficiency gains (flying more flights with less planes, they claim they have saved about 10 wide bodies and 20 md80s total) are completely meaningless as we park aircraft that we have already paid for. That efficiency gain would have been very meaningfull before we bought the 10 wide bodies and 20 md80s...
Elimating cost overuns is MANAGMENTS JOB! So the fact that they didn't do it for a decade means I have to thank them for doing their job now? Can I go home and get paid full time for a decade, then come back to work and get thanked for doing it?
Streaminglining fleets? Are you sure? we simply traded the Md-11 for the 777, The 727 for the 737, the fokker for about 3 different types of RJ... You should actually examine the spin before you swallow it whole...
The Net effect of the TWA purchase was to push the average length of service of our airline WAY up. So instead of getting everyone at frst year pay, everyone came over at 12th year pay or greater. Except for a few LGA slots there was nothing there that we couldn't do through open skies ourselves (without taking on more non common fleets and topped out payscale people) On the other hand it made furloughs far more efficient than it would have been otherwise (furloughing a probationary employee gains almost nothing, cause they earn nothing) so it is quite likely that the company would not have been nearly as aggressive in its furloughs because the gain on the bottom line would be minimal.
The fact that AA lost more than the TWA did is irrelevant and TWA is tied up in that loss.
750 million in cash, 3 BILLION in debt assumption for twa so they paid 3.75 billion for TWA. They just didn't have to write the check for it all at once.
Rolling hubs is nothing new either. Delta did it 6 years ago in Atlanta. Furthermore, the efficiency gains (flying more flights with less planes, they claim they have saved about 10 wide bodies and 20 md80s total) are completely meaningless as we park aircraft that we have already paid for. That efficiency gain would have been very meaningfull before we bought the 10 wide bodies and 20 md80s...
Elimating cost overuns is MANAGMENTS JOB! So the fact that they didn't do it for a decade means I have to thank them for doing their job now? Can I go home and get paid full time for a decade, then come back to work and get thanked for doing it?
Streaminglining fleets? Are you sure? we simply traded the Md-11 for the 777, The 727 for the 737, the fokker for about 3 different types of RJ... You should actually examine the spin before you swallow it whole...
The Net effect of the TWA purchase was to push the average length of service of our airline WAY up. So instead of getting everyone at frst year pay, everyone came over at 12th year pay or greater. Except for a few LGA slots there was nothing there that we couldn't do through open skies ourselves (without taking on more non common fleets and topped out payscale people) On the other hand it made furloughs far more efficient than it would have been otherwise (furloughing a probationary employee gains almost nothing, cause they earn nothing) so it is quite likely that the company would not have been nearly as aggressive in its furloughs because the gain on the bottom line would be minimal.
The fact that AA lost more than the TWA did is irrelevant and TWA is tied up in that loss.
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From the BBC News website:
Flight attendants employed by the beleaguered American Airlines have narrowly voted in favour of accepting a pay cut to help the firm stave off bankruptcy proceedings.
They voted by 10,761 to 9,652 to support the proposed measure, according to results posted on the website of the Association of Professional Flight Attendants.
A further 562 votes were deemed ineligible.
Don Carty, chairman of American's parent company AMR, had said he would be "left with no alternative but to immediately file for bankruptcy" if the attendants rejected the deal.
Agreements secured
The future of 100,000 jobs rested on the outcome, Mr Carty said.
Earlier this week, American Airlines' mechanics voted to accept cuts in pay and conditions adding up to about $300m a year.
The pilots union has also ratified an agreement that cuts its members' wages and benefits by $660m.
Members of the Association of Professional Flight Attendants had earlier rejected the deal, which would cut annual pay and benefits by $340m.
But a union spokesman said members who did not vote - or who cast their votes early - were allowed to vote or change their vote.
The carrier has said the three pay deals will help save it $1.8bn a year in labour costs.
Don Carty said: "We believe that all employees will be better off if we can save jobs and restructure our costs consensually rather than through the bankruptcy process.
"This is our last chance to avoid bankruptcy."
Shares in AMR rose in early trading on Wednesday on growing hopes the vote would go in the airline's favour.
Flight attendants employed by the beleaguered American Airlines have narrowly voted in favour of accepting a pay cut to help the firm stave off bankruptcy proceedings.
They voted by 10,761 to 9,652 to support the proposed measure, according to results posted on the website of the Association of Professional Flight Attendants.
A further 562 votes were deemed ineligible.
Don Carty, chairman of American's parent company AMR, had said he would be "left with no alternative but to immediately file for bankruptcy" if the attendants rejected the deal.
Agreements secured
The future of 100,000 jobs rested on the outcome, Mr Carty said.
Earlier this week, American Airlines' mechanics voted to accept cuts in pay and conditions adding up to about $300m a year.
The pilots union has also ratified an agreement that cuts its members' wages and benefits by $660m.
Members of the Association of Professional Flight Attendants had earlier rejected the deal, which would cut annual pay and benefits by $340m.
But a union spokesman said members who did not vote - or who cast their votes early - were allowed to vote or change their vote.
The carrier has said the three pay deals will help save it $1.8bn a year in labour costs.
Don Carty said: "We believe that all employees will be better off if we can save jobs and restructure our costs consensually rather than through the bankruptcy process.
"This is our last chance to avoid bankruptcy."
Shares in AMR rose in early trading on Wednesday on growing hopes the vote would go in the airline's favour.
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Ignition Override and Wino; I want to pick up on just one of your points - buying back stock.
You make it sound like a bad idea.
In general, it's not - it's a smart (i.e. tax-efficient) way of paying a return to shareholders (you may not care much for them, but you DO need them - or rather their money).
Buying back stock is only a bad idea if the company does not have sufficient cash or is overburdened with debt already. I think at that time the cash and debt position was OK.
[Anticipating a possible reply that Carty just increased AA debt to pay out cash for stock purchases - debt is not necessarily bad either. Debt payments (interest...) are tax-efficient (i.e. save money). There is an optimum proportion between debt and equity (trouble is, no-one really knows what it is). Arguably, AA had the best cash position and debt rating in the industry (of the majors) on 9/11, so probably had managed its capital relatively well.]
You make it sound like a bad idea.
In general, it's not - it's a smart (i.e. tax-efficient) way of paying a return to shareholders (you may not care much for them, but you DO need them - or rather their money).
Buying back stock is only a bad idea if the company does not have sufficient cash or is overburdened with debt already. I think at that time the cash and debt position was OK.
[Anticipating a possible reply that Carty just increased AA debt to pay out cash for stock purchases - debt is not necessarily bad either. Debt payments (interest...) are tax-efficient (i.e. save money). There is an optimum proportion between debt and equity (trouble is, no-one really knows what it is). Arguably, AA had the best cash position and debt rating in the industry (of the majors) on 9/11, so probably had managed its capital relatively well.]