AA TA?

[B767]

APA INFORMATION HOTLINE*****

************************************************** ***** This is APA Communications Director Gregg Overman with the APA Information Hotline for Wednesday, August 15.
JUDGE SEAN LANE GRANTS AMR MANAGEMENT’S MOTION: United States Bankruptcy Judge Sean Lane issued a ruling today that grants AMR management’s application for authority to reject the Allied Pilots Association-American Airlines Collective Bargaining Agreement.

Your APA legal team is currently reviewing the document. Upon completion of our review, if appropriate we will file an appeal of Judge Lane’s decision.

We regard AMR’s intent to reject our contract as an admission of failure—failure to reach a mutually acceptable agreement with a vital employee group, and in a broader sense, failure to avoid bankruptcy and to present a credible vision for our airline’s future. Any future for this airline must include a consensual, industry-standard contract that properly recognizes our pilots’ sacrifices and our critical role in the operation of American Airlines.

Your APA leadership is exploring and pursuing all legal avenues in response to today’s ruling, including the pending appeal regarding the inapplicability of Section 1113 to the 2003 pilot collective bargaining agreement. Your APA leadership will issue a follow-up message later today.





Second hand info - I didn't think the judge was ruling until later today. Maybe this is just a "in preparation" message in case the judge does throw out the contracts.

 

[SlumTodd_Millionaire]

Ouch! In any case, previous case law is that management can only impose the last TA. Nothing worse.

 

[B767]

Nevermind! Can't get the link...but the judge ruled the other way! For the APA!

 

[SlumTodd_Millionaire]

Yep. Just as I predicted, if I do say so myself.

 

[etflies]

http://www.nbcdfw.com/news/business...uest-to-Reject-Pilots-Contract-166327766.html



Good luck guys, glad its gone in your favor this far.

 

[Autothrust Blue]

My mind is somewhat blown by this development, truthfully.

 

[SlumTodd_Millionaire]

Well, don't get too excited yet. The judge specified two areas that he felt were unreasonable: codeshare and furlough protections. He said his ruling was without prejudice, and AMR can come back with a new request if they fix those areas. That means concessions in other areas are likely to be approved when they come back with another proposal. The question now is how badly management wants scope concessions. Because if they want them, they're going to have to bargain for them now.

 

[HVYMETALDRVR]

I'm not much on legal speak but towards the end it seems too infer that management will have its way with scope however...

 

[HVYMETALDRVR]

Well, don't get too excited yet. The judge specified two areas that he felt were unreasonable: codeshare and furlough protections. He said his ruling was without prejudice, and AMR can come back with a new request if they fix those areas. That means concessions in other areas are likely to be approved when they come back with another proposal. The question now is how badly management wants scope concessions. Because if they want them, they're going to have to bargain for them now.

Beat me too it, and from what I understand beating the scope clause was a primary objective of management.

 

[Get-home-itis]

I hate to rain on everyone's parade, but this ruling is, at best, a very small and temporary victory for the APA.

The Judge's ruling can be found here . To sum it up, he agrees with AMR's business plan and finds it both reasonable and necesssary for the company to make large changes to pensions/retirements, to gut the sick leave policy, increase hours of service, and start flying large numbers of 88 seat jets among other things.

His two objections to the debtor's motion were fairly small and easily remedied. He agrees with AMR's plan to furlough up to 400 pilots, but felt they overreached by asking to eliminate any furlough protections especially since the current agreement has a 'Force Majeur' clause already in it for use by the company. He also said that the Court agrees that a large increase in domestic codesharing is necessary for the company to thrive, but he didn't feel it should be completely unlimited.

Basically, he told AMR to make some minor changes to those two proposals and resubmit the motion and he will review without prejudice.....and likely approve it.

 

[Get-home-itis]

The Judge's ruling can be found here

Sorry, left our the link to the Court Ruling http://www.amrcaseinfo.com/pdflib/4044_15463.pdf

 

[SlumTodd_Millionaire]

I'm not much on legal speak but towards the end it seems too infer that management will have its way with scope however...

Yep. I had only read summaries before, but now reading the ruling, this looks ugly. He separated code sharing from regional jets, and although he disagreed with the company's proposal on code sharing, he supported their RJ proposal.

For those who haven't read their proposal, it was truly draconian in most areas, but especially so in the area of RJs and code sharing. This would be an atrocious development in mainline outsourcing if they get their way, and completely undo the progress that DALPA just achieved. My advice to the APA would be to start bargaining again and quick. Don't let this get to an 1113(c) motion being granted. This judge is ignoring industry trends and putting a lot of respect into what Jerry Glass has to say in his testimony. For those who don't know him, Glass is a Ford & Harrison hatchet man. He's not unreasonable at the bargaining table, but he knows how to do his job very well, and he's slanted his testimony in a way that makes AMR's proposals look reasonable to an uninitiated judge, even though they're really out in left field. This is bad. Very bad.

 

[Autothrust Blue]

Well, don't get too excited yet. The judge specified two areas that he felt were unreasonable: codeshare and furlough protections. He said his ruling was without prejudice, and AMR can come back with a new request if they fix those areas. That means concessions in other areas are likely to be approved when they come back with another proposal. The question now is how badly management wants scope concessions. Because if they want them, they're going to have to bargain for them now.

I have no dog in the AMR fight either way these days. Feels good, man.

 

[Maximilian_Jenius]

I have no dog in the AMR fight either way these days. Feels good, man.

Don't you though? You want a job at a mainline carrier one day, right?

 

[Firebird2XC]

Don't you though? You want a job at a mainline carrier one day, right?

He believes by bailing out for greener pastures in the short term he's insulated himself from the long-term ramifications of the industry shifts over time. Apparently, anyways.

 

[Maximilian_Jenius]

He believes by bailing out for greener pastures in the short term he's insulated himself from the long-term ramifications of the industry shifts over time. Apparently, anyways.

 

[jtrain609]

Turning to the specific details in American’s proposal, the Court finds that American has demonstrated that changes are necessary to employee benefits that apply to all union employees, including the pilots, and to many of the collective bargaining terms that apply only to the pilots. The need for change is supported by both American’s business plan and by comparing the existing pilot agreement to the pilot agreements of American’s competitors. Notably, the Court concludes that change is necessary to the scope clause that defines the extent of flying done by American’s pilots. The Court further finds that most of the specific changes in American’s proposal satisfy all of the requirements of Section 1113.

Page 3

The APA envisions a scenario in which American uses its entire allotment of 50-plus seat aircraft to fly the largest regional jets at 88 seats. Such a concern is misplaced given the evidence. The Company has stated that it seeks this flexibility on regional jets in order to “right size” its utilization of aircraft. (Goulet Decl. ¶ 55, Vahidi Decl., ¶¶ 9, 30–31; Dichter Decl. ¶ 27). Right-sizing involves “match[ing] the proper gauged aircraft, meaning the right-sized aircraft, to a particular market.” (Trial Tr. 264:22–23, April 23, 2012 (Glass)). This concept goes directly to the meaning of necessity under Section 1113, which is meant to provide American with the ability to make the “necessary, but not absolutely minimal, changes that will enable the debtor to complete the reorganization process successfully.” Carey Transp., 816 F.2d at 90. If the market can support an 88 seat regional jet, that is what American will use to its economic advantage, thus contributing to a successful reorganization. If a market can only support a 70 seat regional jet, however, it would make no economic sense for the Company to use an 88 seat aircraft in that capacity and therefore pay higher costs for that aircraft while failing to fill seats. (See Trial Tr. 264:18–265:12, April 23, 2012 (Glass); Trial Tr. 18:8–19:22, 53:12–19, May 16, 2012 (Eaton).

The APA also argues that the March 21 Proposal with respect to large regional aircraft is not anchored to the Business Plan.49 The Business Plan contains a network plan that sets forth American’s contemplated aircraft usage.
The Court finds that the information in the Business Plan on regional jets is in line with American’s regional jet “ask” in the March 21 Proposal, which caps the number of aircraft at the 51 to 88 seat range at the larger
of 255 or 50% of the total number of mainline aircraft in use at the time. The request for 255 regional aircraft is very much in line with the projected need in the Business Plan.

It is true that the March 21 Proposal also contains a clause granting the Company some additional flexibility by pegging the number of regional jets to a percentage of American’s mainline fleet; using today’s figures, American would be able to use 304 aircraft in the 51 to 88 seat range. However, American has a “need for long-term flexibility in order to have a truly successful reorganization, one that results in a healthy company emerging from the process. A debtor’s proposal need not be limited to the bare bones relief that will keep it going.” Royal Composing, 848 F.2d at 350 (internal citations and quotations omitted.). The Court finds that the percentage proposed by American will give it the flexibility necessary in using regional jets in the future to keep pace with the industry and the changing demands of the markets. (See Trial Tr. 264:21–265:4, April 23, 2012 (Glass) (“[A] proposal like this gives the company exactly the kind of flexibility it needs to decide, because there’s a wide range . . . of regional aircraft, and whether it’s turboprop aircraft or whether it’s jet aircraft, depending on its performance characteristics, depending on the market, depending on the area of the country that[] it’s operating in, all of those are critical factors to determining what aircraft should be in what market.”)). Thus, while American’s proposal does permit more regional jets than is currently forecast in the Business Plan, American has capped that number at a range generally consistent with the Business Plan, but in a way that will provide them with the flexibility to react to changes in the market. Indeed, “[p]rojections are necessarily speculations about the future and are an art, rather than a science.” Royal Composing, 848 F.2d at 350 (quoting In re Royal Composing Room, Inc., 62 B.R. 403, 407 (Bankr. S.D.N.Y. 1986)). It is not necessary that a debtor “show the necessity of every conceivable future use of the flexibility it now requires; it is enough that . . . it needs that flexibility.” Royal Composing, 848 F.2d at 350.

Finally, the Court notes that the Business Plan helps demonstrate the necessity of the proposed changes by detailing the increase in annual revenue to be generated from the additional use of regional jets (Dichter Decl. ¶ 24), and providing several key examples of the markets in
which American intends to implement this usage. (Vahidi Decl. ¶¶ 30–31 and n.6; AA Ex. 213).

Pages 64-65

 

[jtrain609]

The more I read of this opinion, the more I'm concerned about United's scope. I really hope that this AIP turns into a TA with very serious restrictions on scope, and that if those restrictions are, in fact, in the final document, that the TA passes.

 

[Gonzo]

Did you read what Judge Lane had to say about the sick time? Hell the way I read it he would have been OK with furloughing more then 2,000 guys and letting AA have unlimited codesharing if the business planed called for it. APA better start working on a TA now.

 

[jtrain609]

Did you read what Judge Lane had to say about the sick time? Hell the way I read it he would have been OK with furloughing more then 2,000 guys and letting AA have unlimited codesharing if the business planed called for it. APA better start working on a TA now.

HA! This stuff is gold!

The Court finds that the Company’s proposed changes are a reasonable way to address the extremely large amount of sick leave and the costs imposed on the Company, which totaled $88.6 million for 2011 alone. (Newgren Decl. ¶ 157). The pilots’ use of sick leave is the highest amongst American’s network peers and its costs must be controlled for the Company to remain competitive. The Court does not credit the APA’s contention that pilots would fly when they are too unwell to do so. American’s pilots are highly trained and disciplined professionals, and the Court does not believe they would put themselves, the flight attendants and the public at such risk. Furthermore, there are checks in place to deal with pilots who report to work too ill to fly. (Trial Tr. 102:6–9, May 14, 2012 (Roghair)).

Highly trained has nothing to do with being forced to fly while sick. Somebody needs to get this judge on a jumpseat for a high credit 4 day on the Mad Dog!