Tough road ahead for AMR employees

[On Your Six]

There's an article in the WSJ about tough days coming up for their employees. I thought I could paste it, but I can't. Can anyone do it for me? Sorry.



Godspeed!


The OYSter

 

[johnsonrod]

I don't get the quote at the bottom. Does she contradict herself? Nice double negative...


Workers At AMR To Hear Of Cuts
By SUSAN CAREY -- WSJ
JANUARY 26, 2012

Union employees at AMR Corp.'s American Airlines and American Eagle may get their first taste of what is in store for their pay, benefits, pensions and job security on Wednesday when AMR lays out its cost-cutting plans.

The Fort Worth, Texas, company, which filed for bankruptcy-court protection two months ago, has warned its employees in general terms that painful changes lie ahead, including job cuts and the possible termination of their pension plans. AMR claims its labor costs are $800 million-a-year higher than its major U.S. rivals, which already have gone through bankruptcy reorganizations and in some cases jettisoned their pensions.

But Wednesday's meetings promise to give anxious employees a clearer picture of how drastic the changes might be. Union officials of American are expected to receive presentations on AMR's bankruptcy business plan from Chief Executive Tom Horton and Beverly Goulet, AMR's chief restructuring officer. Jeff Brundage, the company's senior vice president of human resources, is expected to discuss proposed changes that affect all unions.

According to a memo from the Transport Workers Union, company negotiators will meet separately with each of the American unions to present specific proposals, initiating the process of changing current labor contracts under U.S. Bankruptcy Code. The American Airlines unions, representing pilots, flight attendants and ground workers, would then enter negotiations.

Eagle's unions also will receive presentations on Wednesday from Ms. Goulet and Dan Garton, CEO of American Eagle. They won't receive term sheets or begin talks until the American union negotiations are well along or concluded.

In Chapter 11, companies can seek to make permanent changes to their labor contracts by making proposals, negotiating with the unions in good faith but on a shortened time line, and proving to the bankruptcy judge that the proposed modifications are necessary to permit the company to successfully reorganize. If the unions don't go along, the court can allow the company to reject the existing contracts. A similar process would be required before a company could terminate its pension plans.

AMR confirmed that it has asked the union officials to a meeting "to discuss the kinds of changes we believe are necessary" for the company to be able to compete, prosper and grow. "Our challenges are great, but so are our opportunities," the company said in a statement, declining to provide details about its proposals to the unions.

Tom Hoban, a spokesman for the Allied Pilots Association, said the union isn't sure whether it will receive a "term sheet" on AMR's desired cuts next week or not. When it comes, "everybody expects it to be pretty onerous," he said. The union, which represents 10,000 American pilots, in November refused to put out a proposed new contract to its members, an event that helped precipitate AMR's sudden plunge into court protection a couple of weeks later.

Laura Glading, president of the Association of Professional Flight Attendants, said she expects next week's meeting will culminate in an initial proposal being put to her 18,000 members at American.

"It's going to be horrible," she said. "I wouldn't be surprised if it wasn't very aggressive." APFA members "need to see that there is some path to success here," and not just a litany of concessions, Ms. Glading said.

These two unions and the TWU, which represents ground workers at both American and Eagle, have seats on the creditors' committee involved in AMR's bankruptcy. But in Chapter 11, companies tend to have more leverage than labor in forging reorganization plans.

 

[fam62c]

It's going to be tough, bankruptcy judges tend to give management teams whatever they want. What makes it even tougher is that mediation is now an endless process and the strike threat is basically gone forever at the large carriers so concessionary contracts can last for very long periods of time.

Labor's best shot may be a merger where the other party is willing to sweeten the pot to gain the support of the unions, that's the only reason DAL/NWA managed to do as well as they did. I'm sure AMR's management will look at whoever pays the least and say they need those rates or less to survive and the work rules will be gutted to gain productivity. It's a lousy spot to be in with very little recourse. The unions have to abide by the RLA but the airlines can get around it through bankruptcy. Our bankruptcy laws are ridiculously tilted in favor of keeping failed companies alive and rewarding incumbent management teams for their failures.

 

[waveflyer]

Amazing anti-union WSJ prints a scary article about cuts. Pilots gave 35% and it left them in bankruptcy- no more cuts unless a better management plan and personnel are in place. And then- explain delta's rates and a $1b in profit? Explain swa's pay and solid profits? The scape goat just isn't convenient anymore and from my reading - the PBGC has & will aggressively push back against simply dumping pensions onto them-

 

[HalinTexas]

Amazing anti-union WSJ prints a scary article about cuts. Pilots gave 35% and it left them in bankruptcy- no more cuts unless a better management plan and personnel are in place. And then- explain delta's rates and a $1b in profit? Explain swa's pay and solid profits? The scape goat just isn't convenient anymore and from my reading - the PBGC has & will aggressively push back against simply dumping pensions onto them-

1. Who cares what the WSJ says?

2. It's not about what was done. It's about what will be done. Live in the present.

3. It's not all about pay.

4. APA nor any union, as unsecured creditor, is in any position to dictate management or business plan.

5. Don't bet on your government (PBGC) coming to the rescue. Be careful what you wish for here.

6. Management manages and pilots fly.

7. Life ain't fair. Someone always has it worse than you.

 

[Flopgut]

8. Did you even read the article and the thread?

 

[HalinTexas]

8. Did you even read the article and the thread?

Read it, lived it, t-shirt has stained pits now.

Even if a "white knight" comes it to "save" them, they're going to have big changes ahead.

If you remember DAL and NWA filed within 24 hrs. of each other in the same court. You might say it was a pre-planned, packaged bankruptcy.

AMR and TWA did the same thing.

 

[Flopgut]

Explain #5? Did you mean mgt shouldn't count on the PBGC taking the pensions? Cause the PBGC doesn't want them. Google "wooden wings" and read it. Pilot leaders have indeed shown CEOs the door before. I hope the APA can do something similiar.

 

[shon7]

Labor's best shot may be a merger where the other party is willing to sweeten the pot to gain the support of the unions, that's the only reason DAL/NWA managed to do as well as they did...Our bankruptcy laws are ridiculously tilted in favor of keeping failed companies alive and rewarding incumbent management teams for their failures.

Any merger will involve layoffs in the pilot ranks this time - if you think it would not you're dreaming. This is a very different situation than the DAL/NWA scenario.

 

[HalinTexas]

Explain #5? Did you mean mgt shouldn't count on the PBGC taking the pensions? Cause the PBGC doesn't want them. Google "wooden wings" and read it. Pilot leaders have indeed shown CEOs the door before. I hope the APA can do something similiar.

I mean that if AMR choses to reorganize on it's own that the PBGC will accept, whole, the pension obligations of AMR, and reduce benefits according to ERISA laws that created it. It will negotiate with the BK judge to force AMR to pay a sum into the fund, but the actual payouts will follow the guidelines of ERISA. The AMR pension as "they" know it will no longer exist. The PBGC cannot force AMR to continue the plan through and past bankruptcy. AMR must prove to the court that as part of restructuring that they need relief from the various obligations, be it pensions, labor contracts, aircraft contracts or any other debt. Kodak's pension fund is 80% funded. AMR's is 45-80% funded depending on whose math you use. Follow that case.

I found nothing relevant in "wooden wings" to this discussion. Four pages of Google. Care to be more specific?

No "pilot leader" has ever ... ever ... shown a CEO the door, particularly in bankruptcy. Boards of Directors have done it, but only in response to lack of earnings. BODs only care about shareholder value. That's their main responsibility. Gerald Arpey stepped down because he didn't want AMR to file. The BODs overruled him.