Chat transcript: On unions, politics and executive compensation

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Chat with our airlines writer Andrea Ahles about American Airlines' bankruptcy and reorganization plan. | On a mobile device? Click here.

 American Airlines Bankruptcy(02/03/2012) 
11:24
Moderator: 
Welcome to the chat, everyone. Andrea will be joining shortly. Please stand by.
Friday February 3, 2012 11:24 Moderator
11:30
Andrea Ahles: 
Hello. I am here an ready to take your questions on American Airlines' reorganization plan that was announced on Wednesday.
Friday February 3, 2012 11:30 Andrea Ahles
11:30
[Comment From clscurnuttclscurnutt: ] 
Is there anything in the reorganization plan concerning giving up naming rights on two sports arenas and a NYC theater? Or about putting the London $7M townhouse up for sale?
Friday February 3, 2012 11:30 clscurnutt
11:31
Andrea Ahles: 
At this point American's parent company has not made any bankruptcy filings related to its naming rights agreements on American Airlines Center in Dallas or American Airlines Arena in Miami. The London townhouse similarly has only been listed as an asset and there have been no additional filings made on that either.
Friday February 3, 2012 11:31 Andrea Ahles
11:32
[Comment From GuestGuest: ] 
AMR gets a tax exemption for its Tulsa maintenance base. The tax incentives for Alliance expired in 2005. Why doesn't Mayor Price and the Fort Worth city council offer these incentive again in exchange for keeping Alliance open and retaining X number of Fort Worth-area employees? Remember that's what Arlington did for the GM plant - which is thriving now.
Friday February 3, 2012 11:32 Guest
11:34
Andrea Ahles: 
Guest - That is a good question. On Wednesday, I only briefly had time to talk with the city of Fort Worth and they confirmed that the tax abatement had ended in 2005 and the total value of the abatement was $4.87 million. According to the city spokesman, American never came back to the city to ask for the incentive to be extended or to ask for any new tax breaks on the Alliance facility. The mayor also did not address offering any sort of abatemen to keep Alliance open in her statement on Wednesday.
Friday February 3, 2012 11:34 Andrea Ahles
11:34
[Comment From martaymartay: ] 
Does the PGBC have any influence with the BK judge or is this just whistling dixie for employee retirement funds?
Friday February 3, 2012 11:34 martay
11:36
Andrea Ahles: 
Martay - The PBGC has a seat on the very important creditors committee as does the APA, APFA and TWU. In terms of influence on the BK judge, that remains to be seen. The PBGC did make a court filing earlier this month asking the BK judge to subpoena pension documents from AMR and that motion is scheduled for a hearing at the end of February. We'll see then how the judge rules on it.
Friday February 3, 2012 11:36 Andrea Ahles
11:36
[Comment From GuestGuest: ] 
Is there any possibility of a retirement buyout (ie 5and5or a stand in stead)
Friday February 3, 2012 11:36 Guest
11:37
Andrea Ahles: 
Guest - At this point, AMR has not made any retirement buyout offers to employees. That is not to say it isn't a possibility but the carrier could have made that offer on Wednesday and chose not to.
Friday February 3, 2012 11:37 Andrea Ahles
11:37
[Comment From outlookoutlook: ] 
The 3 Unions are now in the process of mitigating terms of the company's "ASK"....What is the deadline for these negotiations and is the NMB participating?
Friday February 3, 2012 11:37 outlook
11:38
Andrea Ahles: 
Outlook - there is no deadline in these negotiations and yes, the NMB is participating from what I've been told. However, in the editorial board meeting with AMR CEO Tom Horton and AMR senior vice president Jeff Brundage, Brundage said that it is American's decision on when it files the Section 1113 motions with the bankruptcy judge. And based on his comments that were published today in the Star-Telegram, Brundage said they want to get these negotiations completed "in weeks."
Friday February 3, 2012 11:38 Andrea Ahles
11:39
[Comment From PetePete: ] 
Have any financial independent expert crush the numbers for AA?
Friday February 3, 2012 11:39 Pete
11:40
Andrea Ahles: 
Pete - Horton said on Thursday that the company had its reorganization plan looked at by McKinsey & Co. as well as other financial advisors. The unions have been able to bring in their outside financial experts as well yesterday and today but so far have not said publicly what their financial experts have concluded upon seeing the plan.
Friday February 3, 2012 11:40 Andrea Ahles
11:40
[Comment From TomTom: ] 
I have read about all the labor cuts/cost savings that American wants from its labor groups but haven't really seen much on the revenue plan that AA says they have to make to get to the 1 billion in increased revenue. What are their plans?
Friday February 3, 2012 11:40 Tom
11:44
Andrea Ahles: 
Tom - When pressed about the revenue plan, Horton said it is comprised of a few things...1.) they plan to grow flights at its 5 cornerstone markets by 20 percent in the next five years. 2.) they plan to gain more revenues from their joint-business agreements with British Airways/Iberia, JAL and Qantas. 3.) by changing the scope rules with its pilots, they will be able to fly more profitably by matching the right size of plane to the route.
Friday February 3, 2012 11:44 Andrea Ahles
11:45
[Comment From helloitsmehelloitsme: ] 
Is there any past experiences where any BK judge in airline industry didn't just rubber stamp what the company wanted?
Friday February 3, 2012 11:45 helloitsme
11:47
Andrea Ahles: 
Helloitsme - If you look at United Airlines' bankruptcy case in 2002, the judge did not just rubber stamp everything the company wanted. That was also why the United case went on for three years before the carrier was able to reemerge. Also in Delta's case, the carrier, I believe, wanted to end all of its pension plans, but in the end only terminated its pilots plan. Its other three plans were frozen prior to bankruptcy.
Friday February 3, 2012 11:47 Andrea Ahles
11:47
[Comment From Nancy Ratcliff-RondeauNancy Ratcliff-Rondeau: ] 
Will retirees be sent anything in writing regarding pension payments being paid to us.
Friday February 3, 2012 11:47 Nancy Ratcliff-Rondeau
11:48
Andrea Ahles: 
Nancy - At this point, everything is sort of up in the air with the pensions and what will happen to your exact pension benefits. The PBGC has said it has not yet received pension information from AMR that it would need to specifically calculate benefits. And since the PBGC has a very complicated benefit formula, retirees are not likely to see anything in writing regarding their specific pension payments until much later in the process.

UPDATE: After the chat, I remembered that American sent out a statement last week saying that is has been providing the PBGC with pension-related information and has met with them to provide additional data and documents.
Friday February 3, 2012 11:48 Andrea Ahles
11:48
[Comment From GaryGary: ] 
Any potential buyers or lessors in line for the AFW facility? Any speculation on TAESL employees?
Friday February 3, 2012 11:48 Gary
11:49
Andrea Ahles: 
Gary - The AFW facility is not owned by American. The city of Fort Worth owns the actual building and leases it back to the carrier. That way, American does not pay property tax on the building and land and only pays property tax on the inventory and personal property at the site. TAESL is currently expected to stay open and continue repairing and overhauling Rolls Royce engines.
Friday February 3, 2012 11:49 Andrea Ahles
11:50
[Comment From TimTim: ] 
What about AMR's meeting with Eagle? We haven't heard anything about their meeting
Friday February 3, 2012 11:50 Tim
11:51
Andrea Ahles: 
Tim - The Star-Telegram asked Horton about the future of American Eagle and he said that it was too early to tell what was going to happen with Eagle and their employees. Their focus is currently on the mainline operations and they will work on the Eagle situation later in the process. I have also not yet had the chance to contact ALPA, AFA or the TWU regarding the Eagle pilots, flight attendants and mechanics/ground crew meetings that occurred.
Friday February 3, 2012 11:51 Andrea Ahles
11:51
[Comment From GonzGonz: ] 
Why is there no mention of upper management give backs in this layout, is the company going to cut the number of VPs it takes to run this place
Friday February 3, 2012 11:51 Gonz
11:53
Andrea Ahles: 
Gonz - As we published in Thursday's paper, management and support staff will lose 1,400 positions. This is what AMR published on its restructuring website regarding management: "The company will have an organization that gives managers the optimal spans of control; that reduces the number of layers between management, support staff and the frontline; and that is responsive to the needs of customers." It also said that the pension, healthcare costs and retiree medical changes will also affect management and support staff.
Friday February 3, 2012 11:53 Andrea Ahles
11:53
[Comment From Eagle WatcherEagle Watcher: ] 
Do you think there is a chance that American never makes it out of chapter 11 and liquidates or get purchased
Friday February 3, 2012 11:53 Eagle Watcher
11:54
Andrea Ahles: 
Eagle Watcher - There is always a chance during the bankruptcy process that a company ends up being liquidated or is purchase by a third-party. That risk exists in every bankruptcy case.
Friday February 3, 2012 11:54 Andrea Ahles
11:54
[Comment From AnnAnn: ] 
Management met with the American Eagle unions Wednesday afternoon but no news emerged from it. Have you heard anything about furloughs or concessions on that side?
Friday February 3, 2012 11:54 Ann
11:54
Andrea Ahles: 
Ann - No, we haven't heard yet. And AMR executive comments are that is to be determined.
Friday February 3, 2012 11:54 Andrea Ahles
11:54
[Comment From AlanAlan: ] 
back to Gary's question, Has there been any mention of someone setting up an MRO at the Alliance facility?
Friday February 3, 2012 11:54 Alan
11:55
Andrea Ahles: 
Alan - No. There has been no mention of another company being interested in setting up an MRO at the Alliance facility. The comments from AMR executives indicate that the work they want to outsource is on its widebody aircraft which is typically done in Asia.
Friday February 3, 2012 11:55 Andrea Ahles
11:55
[Comment From ReginaLizReginaLiz: ] 
AMR has addressed what medical coverage options will be provided to future retirees. Any word on the plans for current under-65 retirees who are dependent on our medical coverage?
Friday February 3, 2012 11:55 ReginaLiz
11:56
Andrea Ahles: 
ReginaLiz - this is what AMR has said about retiree medical to date: "Current retirees are not part of these changes. Their retiree medical benefits will be addressed separately." That's all so far.
Friday February 3, 2012 11:56 Andrea Ahles
11:57
[Comment From GuestGuest: ] 
An argument heard over & over is about bonuses & stock options. Think it would be wise for AA's mgt do away with that pay plan & go to a straight salary plan. This would remove this constant thorn.
Friday February 3, 2012 11:57 Guest
11:59
Andrea Ahles: 
Guest - Horton was asked about executive compensation in the editorial board meetingon Thursday. He said that his executive team would not receive any cash bonuses until after the employee profitability plan they are proposing paid out. When pressed about stock awards and stock options, he said executive compensation has not yet been determined by the board of directors or the bankruptcy court in this process.
Friday February 3, 2012 11:59 Andrea Ahles
11:59
[Comment From GuestGuest: ] 
If AMR's plan satisfies the creditors, will it keep potential buyers USAir and Delta from acquiring AA?
Friday February 3, 2012 11:59 Guest
12:00
Andrea Ahles: 
Guest - Usually in bankruptcy, if the creditors committee and the US Bankruptcy Trustee agree with the reorganization plan put forth by the company's management team, that is the plan approved by the judge and yes it then would keep potential buyers from bidding on the company. That doesn't mean the third-parties can't try to submit competing plans but typically the judge will approve a management plan if the creditors and trustee agree.
Friday February 3, 2012 12:00 Andrea Ahles
12:01
[Comment From homelessboundhomelessbound: ] 
Any political support out there for employees to keep their jobs?
Friday February 3, 2012 12:01 homelessbound
12:02
Andrea Ahles: 
Homelessbound - at this point, I have yet to see a Texas politician come out and discuss trying to get American to keep these jobs. Tulsa local leaders have been very vocal about meeting with American executives and trying to convince them to keep the Tulsa MRO open.
Friday February 3, 2012 12:02 Andrea Ahles
12:02
[Comment From carolcarol: ] 
In going forward, are the unions privy to the outside financial opinions of the company's plans? Or do unions have to pay their own experts to review?
Friday February 3, 2012 12:02 carol
12:03
Andrea Ahles: 
Carol - from what I was told, the unions are being given access to the financial opinions from advisors that AMR has hired to look at this reorganization plan. The unions have also hired their own advisors to review those plans and I believe were scheduled to do so yesterday and today.
Friday February 3, 2012 12:03 Andrea Ahles
12:04
[Comment From GuestGuest: ] 
AA says they want to get the contracts done "in weeks" but they asked for and were granted an extension from the BK judge for submitting financial documents. Will those documents be submitted before the section 1113 motions would be filed? How can anyone make an accurate decsion (labor included) without those financial documents?
Friday February 3, 2012 12:04 Guest
12:05
Andrea Ahles: 
Guest - It depends on when American decides to file its section 1113 motions. Apparently all of the labor unions have signed non-disclosure agreements in order to have access to financial documents related to the reorganization plan.
Friday February 3, 2012 12:05 Andrea Ahles
12:05
[Comment From tipsytipsy: ] 
Has anyone asked the union leadership why they didn't send a company proposal some months ago to its members to vote on? As I recall in that proposal each employee would get a small raise, a decent immediate bonus, and no job cuts. What happened so drastically between last spring and November?
Friday February 3, 2012 12:05 tipsy
12:07
Andrea Ahles: 
Tipsy - Depending on what union you are with, there were some ratification votes schedules (two in fact) when the company filed for bankruptcy. The debate union leaders often have is if they should spend the time offering members the opportunity to vote on a company proposal when their own internal surveys show that the proposal would fail. The TWU offered up tentative agreements in May 2010 to its mechanics and store clerks to vote on and both failed.
Friday February 3, 2012 12:07 Andrea Ahles
12:07
[Comment From homelessboundhomelessbound: ] 
One article said there was only a 20% chance that AA can come thru this without being acquired. Can you speak as to what obvious risks AA has now to being acquired?
Friday February 3, 2012 12:07 homelessbound
12:09
Andrea Ahles: 
Homelessbound - That was one analyst's opinion on American's survival chance in this bankruptcy process. The obvious risks to AA is if the carrier runs out of cash to operate on a daily basis and needs to find a "debtor-in-possession" financer to provide that cash. If that happens, the DIP financer has more say in how the company restructures moving forward during the bankruptcy process. AA still has about $4 billion in cash to continue operations during bankruptcy.
Friday February 3, 2012 12:09 Andrea Ahles
12:09
[Comment From Eagle WatcherEagle Watcher: ] 
FYI, the unions at Eagle wont comment either. I was told they signed non-disclosure agreements before entering the meetings. AFA told its members to be patient and wait a few weeks. It all depends on what the AA unions agree too
Friday February 3, 2012 12:09 Eagle Watcher
12:10
Andrea Ahles: 
Eagle Watcher - That is what I have heard as well.
Friday February 3, 2012 12:10 Andrea Ahles
12:10
[Comment From EpsteinEpstein: ] 
How could employees get politicians involved?
Friday February 3, 2012 12:10 Epstein
12:12
Andrea Ahles: 
Epstein - you can always try to contact your local representatives (U.S. House reps, U.S. senators, state and local reps) and tell them your concerns either by phone or email. Of course, they can choose whether or not this is an issue they want to get involved in.
Friday February 3, 2012 12:12 Andrea Ahles
12:12
[Comment From AnnAnn: ] 
NBC Channel 5 reported the other night that AMR was going to purchase new airplanes for Eagle and have the regional pick up more of the mainline carrier's flying. Any validity to this story?
Friday February 3, 2012 12:12 Ann
12:13
Andrea Ahles: 
Ann - I did not see Channel 5's story but AMR is planning to purchase new planes if the bankruptcy court allows those agreements to go forward. AMR did not say if those planes would be for Eagle or the mainline carrier, however, the assumption has always been that it would be using regional jets (i.e. the A319) to replace mainline MD-80s.
Friday February 3, 2012 12:13 Andrea Ahles
12:14
[Comment From GuestGuest: ] 
According to an e-mail I received from the City of Fort Worth, Mayor Price held a press conference at the Botanic gardens on Wednesday afternoon to 'discuss the AMR announcement'. Did anyone at the FWST report on this event? If so, I can't find it.
Friday February 3, 2012 12:14 Guest
12:15
Andrea Ahles: 
Guest - Although I was talking to the city spokesperson on Wednesday morning, I was not informed of any press conference at the Botanic gardens with the mayor. I will check with the Star-Telegram's city hall reporter but I know we also sent him out to the airport to interview workers.
Friday February 3, 2012 12:15 Andrea Ahles
12:15
[Comment From AdamAdam: ] 
the 4200 Fleet Service Clerks that AA wants to lay off, does the number include AE Fleet Service Clerks also, or just AA?
Friday February 3, 2012 12:15 Adam
12:16
Andrea Ahles: 
Adam - the 4,200 fleet service clerk number from what I understand is just mainline American Airlines and not American Eagle.
Friday February 3, 2012 12:16 Andrea Ahles
12:16
[Comment From outlookoutlook: ] 
The Flight Dispatchers had a tentative agreement in place with the company just weeks prior to bankruptcy. It was voted on and passed. What happened to this agreement? If the company was happy with it then, why won't they honor it now?
Friday February 3, 2012 12:16 outlook
12:18
Andrea Ahles: 
Outlook - from what I understand, yes the TA was approved and passed. However, the company is asking for pension changes, healthcare benefits and retiree medical benefits for future retirees from everyone, including flight dispatchers. So my assumption is that when American files Section 1113 motions, the dispatch contract will be included in that because of those universal changes.
Friday February 3, 2012 12:18 Andrea Ahles
12:18
[Comment From dwdw: ] 
how quickly in reality can AA cut their gas bill? thats the biggest threat to them and vastly out ways their labor costs . unless they get control of that, they will not get out of bankruptcy any time soon
Friday February 3, 2012 12:18 dw
12:19
Andrea Ahles: 
DW - Not that quickly. They are currently scheduled to take delivery of 33 737-800 aircraft from Boeing in 2012 that will replace about 33 or so MD-80s. AMR simply can't replace all 200-plus gas-guzzling MD-80s all at once and still maintain its operations. AMR also can't control the price of oil although they have been more agressive lately in their fuel hedging portfolio which has helped some.
Friday February 3, 2012 12:19 Andrea Ahles
12:20
[Comment From TomTom: ] 
The proposal for the TWU maintenance and related showed the closing of the AFW base and the outsourcing of up to 40% of the maintenace done by AA mechanics. If that is true the numbers would be much higher than 4600. Any discusion about the Tulsa facility?
Friday February 3, 2012 12:20 Tom
12:21
Andrea Ahles: 
Tom - The closing of AFW affects 1,200 workers (TAESL remains open with 500 to 600 workers). Tulsa is also expected to lose between 2,300 and 2,800 positions depending on the reports I've seen.
Friday February 3, 2012 12:21 Andrea Ahles
12:21
[Comment From Eagle WatcherEagle Watcher: ] 
i dont think the eagle could fly the 319 most are configured in the 120 seat range, far exceeding the scope they offered in the new proposal of 88 seat jets. Will Eagle be allowed to purchase jets of its own since AA acqiured all the jets from Eagle pre-bk
Friday February 3, 2012 12:21 Eagle Watcher
12:23
Andrea Ahles: 
Eagle Watcher - the future of American Eagle is completely up in the air so to speak. American is likely waiting to see what it is able to accomplish scope-wise from its mainline unions in the bankruptcy process before proceeding with Eagle. I would expect scope changes to occur at Eagle as well if Eagle survives the process. It really is too early to predict what the future of Eagle will be.
Friday February 3, 2012 12:23 Andrea Ahles
12:23
Andrea Ahles: 
This is it for me. Thanks to everyone who participated in the chat.
Friday February 3, 2012 12:23 Andrea Ahles
12:24
 

 
 
 

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