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badger
11/30/2011, 01:08 PM
Filed for Chapter 11 yesterday. They're based in Fort Worth/Dallas and have about 7k employed in Tulsa at a maintenance base so I figured there'd be someone on here with more info. About all I know is what I've read locally here. (http://www.tulsaworld.com/webextra/continuingcoverage/default.aspx/American_Airlines/34)

Also of note, anyone catch NBC Nightly News last night? Right when the AA story started...

4RQboHSnwaI

diverdog
11/30/2011, 01:15 PM
Filed for Chapter 11 yesterday. They're based in Fort Worth/Dallas and have about 7k employed in Tulsa at a maintenance base so I figured there'd be someone on here with more info. About all I know is what I've read locally here. (http://www.tulsaworld.com/webextra/continuingcoverage/default.aspx/American_Airlines/34)

Also of note, anyone catch NBC Nightly News last night? Right when the AA story started...

4RQboHSnwaI

My BIL is a Pilot with American and my sister called me yesterday because she was really upset. They are worried about their pension and pay cuts.

Lott's Bandana
11/30/2011, 01:19 PM
Deja Vu?

Didn't this happen already with AA and UA?

Didn't they both survive the first bankruptcy?

Didn't AA just blitz us with a marketing campaign about how they were purchasing 62,000 new aircraft, prompting a thread on this board about Boeing v. Airbus?

badger
11/30/2011, 01:42 PM
I don't think American ever declared bankruptcy before, but could be mistaken. I think like nearly 200 airlines have declared bankruptcy in my lifetime (I'm in my 20s) and American wasn't among them till now.

The AA workers have given up a lot recently to stave off bankruptcy so I hope that is given consideration when looking to save exec bonuses or workers' jobs... but we all know that's unrealistic. Would be an awesome PR move, though.

diverdog
11/30/2011, 01:51 PM
Deja Vu?

Didn't this happen already with AA and UA?

Didn't they both survive the first bankruptcy?

Didn't AA just blitz us with a marketing campaign about how they were purchasing 62,000 new aircraft, prompting a thread on this board about Boeing v. Airbus?

I might be wrong but I do not think AA has ever filed bankruptcy. The other strange thing is that they have $4 billion in cash. My guess is they want to extract wage concessions from the labor unions.

Lott's Bandana
11/30/2011, 02:05 PM
I stand corrected as I thought both UA and AA filed in 2003. AA avoided it with concessions from Labor. Thanks Badj and Dog.

Still, UA successfully came out of BR, and as a United Mileage Plus 100K, the cutbacks were extremely obvious and many things changed while United struggled.
I imagine AA will use UA as a blueprint, however, I still am amazed at the poor timing of their new aircraft purchase...which will likely be kaput now.

badger
11/30/2011, 03:13 PM
I think labor stood their ground a bit too firmly on this one, because as another poster mentioned, bankruptcy puts pensions and benefits at risk. I think the labor side thought that AA should use its cash on hand to make up its shortfall, while the exec side wanted concessions from labor to be able to get closer to making annual profits again.

I wonder if Obama's administration will help the union out at all on this one, or if they even can.

BetterSoonerThanLater
11/30/2011, 03:29 PM
maybe we can get jetblue to come to dallas now...

TFSooner
11/30/2011, 04:49 PM
I imagine AA will use UA as a blueprint, however, I still am amazed at the poor timing of their new aircraft purchase...which will likely be kaput now.

This morning on the radio, a spokesperson for AA said that the new aircraft purchase was still going to happen because it was financed through the manufacturers. The newer aircraft would be more fuel efficient, thus saving the company money in the long term.

diverdog
11/30/2011, 05:38 PM
This morning on the radio, a spokesperson for AA said that the new aircraft purchase was still going to happen because it was financed through the manufacturers. The newer aircraft would be more fuel efficient, thus saving the company money in the long term.

That is correct. When I get home I will try to fill you in on aircraft leasing. My bank is one of the largest custodians for this type of business in the world.

badger
11/30/2011, 06:37 PM
Eep.


The parent of American Airlines had been trying to renegotiate pay and work rules for pilots in the weeks before Tuesday's Chapter 11 bankruptcy filing. Now, pension benefits could be at risk.

AMR Corp. has about $8.3 billion in assets to cover $18.5 billion in pension benefits owed to active and retired employees, according to the Pension Benefit Guaranty Corp., the federal agency that insures pensions. Pension plans covering about 130,000 people, including 69,000 active employees, could be among the obligations on the chopping block as AMR goes through bankruptcy proceedings.

AMR's pension obligations are subject to complex accounting formulas. AMR pegs its pension exposure at roughly $8 billion.

Following AMR's filing, "employees and retirees worry—and they should," Josh Gotbaum, the PBGC's director, said in a statement. "Based on our estimates, American Airlines employees could lose a billion dollars in pension benefits if American terminates their plans."

If AMR terminated its pension plans, as United Airlines did during its 2005 stay in bankruptcy court, the PBGC would assume payments to its retirees. However, those monthly payments would be capped under federal law, so retirees could get less than they would normally expect, depending on their benefit plans.

WSJ's Liam Denning stops on Mean Street to discuss AMR's bankruptcy filing and how it impacts the airline industry.

On Tuesday, the PBGC said it would pay out about $17.5 billion in pension benefits if the carrier terminated its plans. It would use AMR's $8.5 billion in assets and spend an additional $9 billion of its own money.

A spokesman for AMR said in a statement: "Our goal in this process is to be competitive, and for that to happen, our labor costs must become competitive."

"It is still too early to know precisely how that will be accomplished, but as with many Chapter 11 decisions, our creditors' interests will weigh heavily,," he added.

A person familiar with the situation said AMR hadn't yet decided how to handle pension obligations, and that any changes in retirement benefits could be packaged with other steps to reduce labor costs, including broader contract changes.

Scott McCartney on Lunch Break discusses whether Tuesday's bankruptcy filing by American Airlines parent AMR will impact scheduled flights, frequent flier miles and reservations.

If AMR decides to terminate its pension plans, it would add to the financial woes at the PBGC, which has run up a record $26 billion deficit taking over the pension plans of companies that have tumbled into bankruptcy in the wake of the financial crisis. The PBGC gets funding from companies with defined-benefit pension plans, the kind that guarantee payouts of a specific amount. The agency doesn't receive taxpayer funds.

For AMR's active employees with pension plans, the age at which they retire could prove critical. A 65-year-old retiree guaranteed up to $4,653.41 in monthly payments from the PBGC in 2012 should the agency take over his or her plan. But a 55-year-old retiree is guaranteed just $2,094.03.

For someone expecting a $4,500 monthly payment, "that's a huge reduction," said David Kudla, chief executive of Mainstay Capital Management LLC, an investment adviser in Grand Blanc, Mich., that manages $1 billion. Mr. Kudla advised Delphi Corp. retirees on their benefits when the large auto supplier terminated pension obligations during bankruptcy proceedings.

AMR's pension plans are "significantly underfunded at this point and it's a cash-strapped company. If I'm an active employee, my PBGC risk has just gone up," he said.

Mr. Kudla said pension benefits can sometimes decrease by a third or even half depending on how a company restructures. When the PBGC took over US Airways's pensions a few years ago, one former pilot's $75,000 in benefits were reduced to about $25,000, Mr. Kudla said.

diverdog
12/1/2011, 08:29 PM
This morning on the radio, a spokesperson for AA said that the new aircraft purchase was still going to happen because it was financed through the manufacturers. The newer aircraft would be more fuel efficient, thus saving the company money in the long term.

The bank that I work for has a very unique business. We put together investment deals for the purchase of airlines that gives a good return for investors and frees up cash for the airlines. Essentially it is a sale-leaseback arrangement, the aircraft owner sells the aircraft to the lender or lessor who then immediately leases the aircraft back to the original owner. There will be no interruption or disruption of aircraft operations, but the transaction should give the company some extra cash. There also may be changes concerning taxes and the way in which the aircraft is accounted for on the company's balance sheet. Our business is huge and we have over half the airline market.

The other interesting thing is that we are going to be handling some of the AA bankruptcy as the trustee and custodian of assets. Our boys have been busy because they are also working on the MF Global Bankruptcy.

badger
12/2/2011, 12:46 PM
That's about what California is trying to do with their government buildings. Sell them then lease em for all eternity.

BetterSoonerThanLater
12/7/2011, 08:45 AM
maybe we can get jetblue to come to dallas now...


and so it happens... look for the official announcment today. jetBlue will start service to BOS out of DFW 3 times daily beginning MAy 1st.

my original post was a bit of foreshadowing and insider intel., as I work for jetBlue :) hopefully i am able to transfer and move out of this god for saken state known as California

NormanPride
12/7/2011, 10:58 AM
Off topic a bit here, but isn't now the time to kill the unions? Jobs are scarce and the economy is crap. If they cut ties and the union struck, they have a good chance of getting enough scabs to run a bit of the business...

BetterSoonerThanLater
12/7/2011, 11:32 AM
Off topic a bit here, but isn't now the time to kill the unions? Jobs are scarce and the economy is crap. If they cut ties and the union struck, they have a good chance of getting enough scabs to run a bit of the business...

absolutely! one of the reasons AA made this move..couldn't afford the pensions. I myself am proud to work for an Airline--or company for that matter-- that is Union free!

soonercruiser
12/7/2011, 01:35 PM
absolutely! one of the reasons AA made this move..couldn't afford the pensions. I myself am proud to work for an Airline--or company for that matter-- that is Union free!

Oh, Joe! Tell me it ain't so!

Sooner5030
12/7/2011, 06:53 PM
The idea of a union is ok. The problem is that with their past political clout the scales were tipped in favor of the labor supplier.

it would be like me going to walmart to buy some produce. Walmart doesn't like the price I pay so they refuse to sell to me. By law I cannot just say f u and go to safeway (and replace walmart) until I meet some requirements. The labor market is not free.....it's gamed.....and unless all the suppliers (of labor) have to play by these same stupid rules.....labor will be purchased elsewhere.

f unions

badger
12/7/2011, 07:01 PM
The airline industry is tricky.

1- People don't like paying big airfares. Some probably still think they can fly anywhere for $19.

2- Many airline workers are a skilled workers and demand skilled worker wages. Pilots do more than press the "fly" and "stop" buttons. Mechanics don't just whip out a can of WD-40 everytime a plane needs servicing.

3- Fuel costs can't be controlled. It's a coin flip these days if oil will be over or under $100 a barrel.

4- Terrorist threats make things more complicated. It isn't just about asking people to not say "bomb" on an airplane.

I wonder if a foreign company could come in and do things better. I remember reading Toyota coming into the U.S. and working with the unions and still being able to be more cost efficient than their American counterparts... that was before the recalls and the tsunami, of course.