American Airlines Bankruptcy, a little history, and what the judge should be aware of

[cpamomfromtexas]

Just so you know, AMR's (parent company of American Airlines) CEO Gerard Arpey stepped down today along with subsequent filing of bankruptcy papers for the airline. He takes with him a SERP (SENIOR EXECUTIVE RETIREMENT PLAN) which was immune and outside the bankruptcy court which was set up in the aftermath of 911 and the subsequent eating down of employees. This SERP led to the resignation of Don Carty who was the CEO at the time. So, the employees just got screwed today and this bastard walks with his SERP totally intact.

Here's a little history for you. Arpey's dad was Jim Arpey and he was right hand man to Frank Lorenzo- airline union buster.

Airline mis-management by the CEO on down led to this mess and in order to ensure managers are held responsible for missteps and ensure new competent management are retained, the bankruptcy judge needs to order all files that the government has on the company be opened and inspected. Here's a hint for you-- one of the files they need to have is the Department of Transportation Inspector General's workpapers on their 18 month safety investigation of the company. This investigation began after problems were reported to the FAA and the FAA refused to do their job. There were at least 17 major areas of mismanagement pertaining to safety issues, many of which are indicators of incompetent, arrogant, immoral & illegal activities.

Furthermore, on the financial side, the judge needs to inquire as to why 4.5 billion dollars have been spent the last few years on capital expenditures, far in excess of the burn rate for other airlines. This would include taj-majal terminal reburbishments etc.

The judge also needs to take a look at how the bonus plan for managers was monkeyed with since 911 to reward managers every April even after they failed time and again. It was seriously manipulated.

In addition, the judge needs to ensure that the 8000 "managers" at AMR (at last count) take a serious haircut as well. Not only do they need to be seriously thinned out, but jobs must be combined. He also needs to ensure that more skilled people are brought on board. AMR headquarters is a bastion of pimple-faced idiots running amuck (hope that's a word). Their marching orders seem to be "whatever you do, just blame the pilots."

In addition, he needs to ensure the pilots get a couple of seats on the AMR board since they took massive pay cuts 8 years ago. Captain Lloyd Hill would be one very qualified candidate. He's the past Allied Pilots Association (the pilot union) that was true blue, always thought long-term (contrary to the current AMR board) and was sharp enough to know that pilots should not shoulder the burden of "saving the company from bankruptcy". Unfortunately, Captain Hill was not President when the pilots took the lion's share of paycuts in 2003. Those cuts ranged from 23% to 100% (for those furloughed) and averaged 40% reduction in pay. Also, unfortunately, he is not the APA President now, because the current APA President thought they should take the bulk of pay restoration off the table so as to be considered "favorable" by the National Mediation Board.

The Railway Labor Act covers labor-management negotiations with airlines and the contracts that the employees work under. Workers are not allowed to strike unless released by the NMB. Contracts do not expire under this Act, they simply become amendable. That is how your pilot that is responsible for hundreds of lives each day (and who, by the way, simply cannot have a bad day!) has not had an hourly raise for 2 decades!

[ret5hd]

1. AMR has $4B in the cash and 300+ aircraft on order...

(with full intentions on keeping those orders)...

AND

the vast majority of their debt is secured debt (unlike other airlines that have filed BK) whichmeans they will get very little debt relief under bankruptcy.

on edit:
which means the only reason for BK is busting the unions and dumping the pensions on PBGC.

[Sen. Walter Sobchak]

3. They will also dump much of their leased MD-80 and 757 fleet

American Airlines leases 140 of their MD-80's and 40 of their 757's - these leases will be broken in the bankruptcy. They may also break the leases on some of their 737's as better terms could be obtained by way of lease-back transactions on new aircraft to be delivered.

They will also likely allow for the forfeiture of their entire fleet of Embraer regional jets, which are all financed.

In a bankruptcy this is known as "surrender and return" and any unsatisfied deficiency resulting from the rejected or repossessed aircraft becomes an unsecured debt in the bankrupt company.

Further Reader: Bankruptcy Code Section 1110.

[ret5hd]

5. you and your hero can shove an md-80 up your ass.

[Sen. Walter Sobchak]

6. Where did that come from?

I used to, and sometimes still work on bankruptcies. And am stating the obvious that American will use bankruptcy to eliminate much of their regional and mainline fleet.

[FarCenter]

7. They have a huge number of obsolete MD-80s

As of 12/31/10, they were operating 224 with an average age of 20 years, of which 83 were owned. They also had another 59 that were non-operating, of which 37 were owned.

They have been marginally profitable only two years in the last 10, with many years of big losses.

As the only remaining major from the regulated airline industry period that hasn't gone through bankruptcy and merger, it was only a matter of time. Blame Jimmy Carter.

[Sen. Walter Sobchak]

8. Blame being mindlessly territorial at preposterous cost

The legacies did it to themselves by maintaining asinine route structures at catastrophic cost to no productive end. American for instance bought two airlines AirCal and Reno Air for the purposes of "dominating" the West Coast. In both cases they spent hundreds of millions of dollars only to walk away a short time later. The two transactions cost American almost half a billion dollars, they immediately forgot why they had bought these regional players and soon had nothing to show for it.

[Sen. Walter Sobchak]

9. They broke the first twenty MD-80 leases today,

Along with four Fokker 100's that have been sitting in the desert for the last 7 years.

[ret5hd]

2. amok. the word is amok.

[Huey P. Long]

4. MF Global Rewards Staff Bonuses Just Before Bankruptcy

http://www.forbes.com/sites/halahtouryalai/2011/11/08/bankruptcy-bonuses-mf-global-rewards-staff-just-before-bankruptcy/

[Downwinder]

10. Usually everybody retained through the bankruptcy gets a pay

raise.