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What now? After pilots at American Airlines (AAMRQ.PK) rejected a new contract deemed as too...

What now? After pilots at American Airlines (AAMRQ.PK) rejected a new contract deemed as too long, the matter lands in the lap of a bankruptcy judge. The drama this week suggests that current management is resoundingly unpopular with employees and most likely sets back a merger plan with US Airways (LCC +1.4%).
Comments (8)
  • latech13
    , contributor
    Comments (5) | Send Message
     
    Economist and Accountant
    10 Aug 2012, 12:01 PM Reply Like
  • electricjet98
    , contributor
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    You'll recall during Parkers Press Banquet appearance that he voiced concern over possible AMR foot-dragging during their review of potential merger candidates. He was particularily concerned that AMR intentionally caused delays of that review would allow their "stand-alone" plan to be the front-runner...at the expense of thorough review of the others. Paraphrasing, I believe he stated something like the creditors may think, "Gee, a merger might be the best long-term solution...but AMR's stand-alone plan is all ready to go and we don't want any further delay in getting our money/equity back".

     

    So if that was a legitimate concern then, wouldn't those same creditors now be concerned amout AMR's inability to get their act together and the inability to forcast future labor costs? LCC has a cap on future labor cost via their agreement with the three major labor unions...AMR cannot claim the same. And it should be obvious which management team will creat the greatest future labor unrest...something that is certainly of interest to the UCC members that will be holding equity in the airline when it emerges from BK.

     

    So if the above is all true, the BK exit may be slightly delayed but the chances of it exiting as a merged airline with LCC may have improved.
    10 Aug 2012, 12:01 PM Reply Like
  • jackooo
    , contributor
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    LCC is ahead of the game if they just walk.
    10 Aug 2012, 12:05 PM Reply Like
  • jackooo
    , contributor
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    The contracts ALWAYS expire and it takes the unions many, many years to negotiate another so the length of the contract should be a blessing for the pilots.
    10 Aug 2012, 12:06 PM Reply Like
  • chellappan
    , contributor
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    I still don't understand how the vote is a set back to the potential LCC merger, as stated in the report?
    10 Aug 2012, 12:41 PM Reply Like
  • mrbill757
    , contributor
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    Having been a captain since 1991 and just recently retired from being with this outfit for 27 years I can tell you first hand that AA has always dragged it's feet when "negotiating" a new contract. A long term contract is not a good thing in an environment where volativity is part and parcel of this kind of industry, perhaps even more so in recent years. Why should pilots be stuck with terms that might not be in their best interest? Who knows what lies down the road. If times improve dramatically, which they have in the past, the pilots with their paltry 2% raise for instance, cannot share in the profits if the company does well. In this case management wins and pilot lose. One might argue for management saying that if the reverse comes true, management is stuck with a contract they can't afford. If that happens, its chapter 11 all over again in order to get "their costs" down. Again, management wins, pilots lose. The solution is a short term contract, say 5 years at most. The railway labor act needs to be changed to prevent companies like AA from dragging their feet which they have done over 5 contracts during my employment there. Set a time limit of 6 months from when the contract expires. If the two groups cannot come to agreement in that amount of time, pilots or other groups are free to self help. This option is not available at the current time due to archaic rules that were set into place nearly a hundred years ago. The government controls when and if labor groups are free to self help. In an environment where the government is seizing an increasing portion of the economy, its in their best interest that things like strikes do not occur, thus negotiations end up dragging on for years and years and years. My prediction: If AA does not merge, it will end up in chapter 7. It can't possibly compete with the other majors. Nobody will buy a company with that many problems including very large liabilities.
    10 Aug 2012, 02:20 PM Reply Like
  • MexCom
    , contributor
    Comments (3042) | Send Message
     
    The judge told the parties that they should settle their labor dispute. If not he would force them to settle else liquidate the company and pay off the creditors. The union would see the light in view of them all losing their jobs.
    10 Aug 2012, 04:42 PM Reply Like
  • mrbill757
    , contributor
    Comments (41) | Send Message
     
    Hey MexCom,
    Why always the emphasis on "unions"? Why not take a look at management? They'll lose theirs too. As a side bar, pilots' unions are not like other unions. More like a guild of old. They have a critical role to play in safety issues, interfacing with the FAA, DOT, etc. They also provide aeromedical assistance for pilots who are just about on par with astronauts if you we're aware. Just cutting the grass can be a career ending unlike just about any other job. I was out of work for 6 months just due to a bee sting and was on a waiver with the FAA medical community for the past 13 years of my career. Two physicals every year, EKGs, drug tests, continual evaluations by not only the company but by the FAA as well. OUr driving records in our own privately owned vehicles can place our career in jeopardy, just to name a few. But these days, airline management see pilots as merely a "cost". IF they had their way, we'd have to pay them to fly. When airlines fold, management gets huge golden parachutes and severence packages. Pilots get nothing but a pink slip. When folks in management lose their jobs they can slide over to another management position somewhere else for roughly the same pay. A pilot, if he's fortunate enuf, gets a job at another airline but must start all over with seniority, flying the smallest airplane, on the least preferred schedule, for the beginning pay which is about $12,000/ year to start. Do you see the light yet, MexCom Tell you what Mexcom, next time you board one of those stupid little RJs which are basically being outsourced from the majors, poke your head in the cockpit and check out who's flying the airplane. Most likely the guy in the right seat either qualifies for food stamps or is quite close to qualifying. He's probably got over $250K in debt, lives in a crash pad with 6 other pilots in triple bunks, is single, (can't afford to get married), and is just hoping and praying he'll get hired by the majors which may or may not happen. But every year the compensation for our skills continue to fall. At some point, they'll be no more pilots flying in our country who live here. Is that what you want...more outsourcing to Europe and Asia?? I'm hoping more and more pilots do see the light MexCom, and find another career. You get what you pay for. In my opinion, pilots are one of the most underpaid for the qualifications which are needed than any other profession and its largely the flying public's fault who seem to have an increasing sense of entitlement to cheap air fares. Its mainly the pilots who have born the brunt of the lowering of fares. BTW, if AA is liquidated which is a strong possibility as I mentioned previously, the creditors will get about 20 cents on the dollar if they're lucky. Not hardly "paying off the creditors". More like ripping off the creditors.
    11 Aug 2012, 12:15 PM Reply Like
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