American Airlines Files For Bankruptcy

[FlyGy]

NEW YORK (CNNMoney) -- American Airlines' parent company, AMR Corp., announced Tuesday that it has filed for chapter 11 bankruptcy.

AMR said American Airlines, American Eagle and all other subsidiaries will honor all tickets and reservations and operate normal flight schedules during the bankruptcy filing process, using its $4.1 billion in cash.

The airline also announced that Gerard Arpey, its chairman and CEO, is retiring. He is being succeeded by Thomas Horton, who was named president of the company in July 2010.

http://money.cnn.com/2011/11/29/news/co ... ?hpt=hp_t1

[mbav8r]

On Tuesday, Horton told CNN that bankruptcy "never has been a goal or preference." He said that American faced an $800-million-a-year cost disadvantage compared to the labor deals at its competitors. But he said efforts to renegoiate both its labor contract and its debt structure had proved unsuccessful.

"Clearly it was our preference to do this in consensual fashion," he said. "Unfortunately, we were not successful in that regard." American will now gain significantly greater leverage in those talks given the bankruptcy court's power to void contracts.
It's absolutely disgusting that a company with 4.1 BILLIONin cash can file for bankruptcy, and further to that they can blatantly state they're doing it to void labor contracts. The shareholders will be wiped out and the living wages will be reduced to who knows and the CEO's will continue to rape and pillage. Sickening

[RichAir]

I feel something is insane here. I had to book a flight a few weeks ago and AA were selling seats at a cheaper cost than any other. I looked at other destinations and they kept being the cheapest. Great for customer but what about people working there? Anyway, I'll leave room for others to write on it...

[Localizer]

The courts should reject AMR's filing .. Its disappointing to see the means to help a corporation get through a tough period abused to this level. It seems to be the "in trend" .. How many times can we file Chapter 11 (U.S) or CCAA (Canada) and get away with screwing thousands of people.

So I guess another CEO is ready to cash-out of the airline business and a new CEO (rapist) will take his spot. Yay capitalism!

[yycflyguy]

Executive compensation at American Airlines raises eyebrows

“They’re not bonuses,” Arpey told his questioner. “It’s stock-based compensation.” If it’s mid-April, it’s bonus/stock-based compensation time again at AMR Corp., American’s parent.

AMR is expected to announce the awards Wednesday or Thursday, officials said.

Awarded to the company’s top executives by AMR’s board of directors, the bonuses reward executives for the company’s stock and financial performance.

During the past five years, AMR has awarded top executives more than $300 million in stock-based compensation, officials said.

The same year, Chief Financial Officer Thomas Horton received $2.23 million in total compensation, of which $1.05 million or 47 percent was stock or stock option awards, AMR documents say.

In 2008, AMR reported losses of $2.1 billion.

Despite losses, American Airlines CEO's compensation climbs

AMR Corp. Chief Executive Gerard Arpey received $5.2 million in total compensation last year, even though the parent company of American Airlines was the only major U.S. carrier to lose money in 2010.
Arpey's compensation grew 11 percent over 2009, boosted by an increase in stock awards and options that were granted in May.
Last year, AMR posted a $471 million loss while other major carriers reported profits. And with rising fuel costs, the Fort Worth-based company reported a $436 million loss for the first quarter.


Yeah, sure. It is the labour groups fault for not allowing further degradation in their pay and work conditions. Frikin criminals.

[Expat]

Yes, the 1% getting it again. How long will the 99% take it?
And the bankruptcy will again fill the pockets of the few...
This is becoming so predictable!

[North Shore]

Shame on you, Expat! Don't you know that the 'Occupiers' are really just left-wing fringe merchants who are too lazy to drop their Starbucks lattes and iPhones and get real jobs?

[C-FABH]

I wonder how much their "stock-based compensation" will earn them with AMR trading at 34 cents a share. If the senior management had knowingly sold any in advance of the CH11 filing, wouldn't that count as insider trading?

[bmc]

This is the first time AA files for protection. A friend of mine holds a senior job there, and his compensation is tied to stocks. The folks at AA have been trying to not go this route for obvious reasons. None of them could sell their shares knowing this was coming.

[ahramin]

After 2011 American did a good job of staying out of bankruptcy, part of that was negotiating with the unions to reduce wages across the board. Soon after the unions agreed to sizable pay cuts, management gave themselves a congratulatory round of bonuses. Surprisingly, since then the unions have been unwilling to take another pay cut.

[bmc]

After 2011 American did a good job of staying out of bankruptcy, part of that was negotiating with the unions to reduce wages across the board. Soon after the unions agreed to sizable pay cuts, management gave themselves a congratulatory round of bonuses. Surprisingly, since then the unions have been unwilling to take another pay cut.

How exactly does management give themselves a round of bonuses? Do they call down to finance and tell them to cut some cheques? How does that work?

[ahramin]

Dear AAdvantage® Member,

As you may know, on Tuesday, November 29, American Airlines filed for reorganization under Chapter 11. We took this action as part of our efforts to secure our long-term success in delivering the highest standards in air travel. We are committed to meeting your travel needs with outstanding customer service and safety, and it will be business as usual at American throughout our reorganization process. More than 80,000 people at American appreciate your loyalty and look forward to continuing to serve you.

We want to assure you that your AAdvantage® miles are secure. The AAdvantage miles that you've earned are yours and will stay yours, subject to usual policies, until you choose to redeem them for a great award with us. Likewise, your elite qualifying miles and your elite status, including lifetime status granted under the Million MilerSM program is secure and remains intact. You will continue to earn miles through all our existing AAdvantage participating companies and you will be able to redeem those miles for the same great awards — flights, upgrades, car rentals and hotels just to name a few. And, throughout the coming year, we will be adding even more opportunities to earn miles, as well as new ways to redeem those miles.

American is honoring all tickets and reservations as usual, and making normal refunds and exchanges. And, we intend to maintain a strong presence in domestic and international markets. As we and all airlines routinely do, we will continue to evaluate our operations and service, assuring that our network is as efficient and productive as possible. Additionally, relationships with our oneworld Alliance and other codeshare partners are continuing to provide you with opportunities to earn and redeem miles for travel to hundreds of destinations worldwide, and we are honoring all tickets and reservations for travel on our partner airlines as usual. For information about American's reorganization process, please visit AA.com/restructuring.

Even more importantly, we remain committed to providing a superior customer experience with a focus on delivering what our customers value most — the newest fleet with our upcoming aircraft deliveries, network strength in the important cities of the world and world-class products, service and technology.

American Airlines has a proud history, and we will have a successful future. All of us on the American team thank you for your loyalty and we look forward to welcoming you aboard soon.

[ahramin]

After 2011 American did a good job of staying out of bankruptcy, part of that was negotiating with the unions to reduce wages across the board. Soon after the unions agreed to sizable pay cuts, management gave themselves a congratulatory round of bonuses. Surprisingly, since then the unions have been unwilling to take another pay cut.

How exactly does management give themselves a round of bonuses? Do they call down to finance and tell them to cut some cheques? How does that work?

The senior executives decide on the bonuses for the rest of the executives. For their own bonuses they have to be approved by the board of directors. In the case of American Airlines, guess who the Chairman of the Board is? The CEO. So the CEO will submit his bonus to his board, who will then vote on it, and then payroll cuts the check / issues the shares / etc.

[Doc]

I fear, the answer for the entire industry is going to be a tough pill to swallow.
Higher fares.
Lower wages.
No bonuses.
Less top brass.
But, their employees would rather see this sort of thing happen, than give an inch?

[yycflyguy]

I fear, the answer for the entire industry is going to be a tough pill to swallow.
Higher fares.
Lower wages.
No bonuses.
Less top brass.
But, their employees would rather see this sort of thing happen, than give an inch?

Problem is that the employees have been "giving an inch" for over a decade now. (Yes, that sounds exactly like I wanted it to)

Executives claim that without employee concessions the airline will fail. Employee group gives concessions. Executives take the money for bonuses and exponential salary increases. Airline continues to function as an ATM machine. After the concessions have been exhausted, claim that more concessions are needed. When is enough, enough?

[whipline]

I think YYC has hit the nail on the head. One union anyone?

[robertsailor1]

Problem is that even if you took away the managements income the effect on the bottom line would not be that great. Airlines are a bloody tough business no matter how you look at it.

[yycflyguy]

Problem is that even if you took away the managements income the effect on the bottom line would not be that great. Airlines are a bloody tough business no matter how you look at it.

It's not just the exorbitant executive salaries. It is the unnecessary middle managers, poor leadership, poor executive decisions and accounting tricks that result in an airline that appears to be unsustainable. Then they turn around and the easy target is the unionized labour.

It is incredibly arrogant to tell your employees that they have to take wage concessions or increase productivity the same time the BoD authorizes $5 million dollar retention bonuses to go on top of your salary that increased 77% from the year before. It's thievery.

[boeingboy]

This story so hits the nail on the head.
http://www.star-telegram.com/2011/11/29 ... -will.html

Once again unions ask for too much. Stupid, childish tactics - and what does it get them...................a whole lot worse off - especially in an ecomomy that has as many unemployed people as the population of Canada.Blow off a deal because of ice machines?? Text the company to say scew you?? Pay and job security that's better than what you had?? You should be lucky to simply have a job right now.

[Colonel Sanders]

Buzz Hargrove taught me that the CAW thinks that not having a job is better than taking any kind of pay cut (from $80/hr):

http://en.wikipedia.org/wiki/Canadian_A ... ive_Crisis

UAW president Ron Gettelfinger agreed to have the UAW's "all-in" wage, benefit and pension costs drop from a high of $75.86 per hour in 2007 to an average of about $51 per hour starting in 2010.

By comparison, the CAW's cost per hour was $77 in 2007 and will rise to over $80 per hour by the end of the new contract. Faria said that Gettelfinger went into negotiations "with the right intention...Save jobs. The CAW strategy was to squeeze every dime out of them."

See any parallels here?

[CanadianEh]

This story so hits the nail on the head.
http://www.star-telegram.com/2011/11/29 ... -will.html

Once again unions ask for too much. Stupid, childish tactics - and what does it get them...................a whole lot worse off - especially in an ecomomy that has as many unemployed people as the population of Canada.Blow off a deal because of ice machines?? Text the company to say scew you?? Pay and job security that's better than what you had?? You should be lucky to simply have a job right now.

That is nonsense. They deserve job security and raises more than revolving door executives who are raping the company. The unions are just trying to get back a fraction of what they have lost over the last decades.

[yycflyguy]

This story so hits the nail on the head.
http://www.star-telegram.com/2011/11/29 ... -will.html

Once again unions ask for too much. Stupid, childish tactics - and what does it get them...................a whole lot worse off - especially in an ecomomy that has as many unemployed people as the population of Canada.Blow off a deal because of ice machines?? Text the company to say scew you?? Pay and job security that's better than what you had?? You should be lucky to simply have a job right now.

I read the article. It is incredibly biased and selective in its substance. I went through the comments and thought this was an excellent rebuttal to the company view.

Little things say a lot... So does inaccurate and untruthful "reporting"

There were no real raises offered...

3/1/1%... and then nothing while talks drag out for years on the next new contract, doesn't keep up with inflation, thus a loss of buying power. That is not a raise, and especially not when the employee contributions to Insurance would increase dramatically. For the pilots, the "pay banding" and other miscellaneous pay proposals would have resulted in some pilots immediately taking another actual cut in thier hourly rate.

There was no "pension protection" that does not already exist proposed. Or even anything painted as such.

More outsourcing does not equate to "job protection". "Furlough Protection" and Pilot Employment Floors in past contracts have proven to be worth even less than the paper they were written on, literally. Empty, unenforceable promises.

The pilots' talks did not break down over hotel room upgrades. Really... give your readers some credit for having a brain. That is just stupid.

I wasn't in the room, but I have been through a few of these contract negotiations, and bankruptcies, and I believe from the proposals that were made public, that a deal was possible, and soon... IF AA wanted one.

AA opened negotiations ~ 6 years ago... AA stalled for ~ 5 1/2 of those years, enjoying deeply concessionary labor contracts, only "appearing" to have any interest in actually settling new contracts in the last 6 months, or so. This group of "top talent" didn't see this coming before then? Really?

The two or three days the APA negotiatiors took to step back, "catch thier breath", and review the process during Thanksgiving week are not the reason the talks did not succeed. Following the hurry up rush job cram-down in 2003, APA instituted procedures to make sure any Tentative Agreement is carefully reviewed and (OMG!!!...) actually written down in final language before being sent to a vote. Is it unreasonable to actually get to see, and review, what you are "buying"?

Do you really want pilots who rush like the young bull headlong into a "crisis", ( a crisis that AA management created, btw...) blindly and without thinking, disregarding checklists and procedures, and jump on the first "solution" that appears? Or, would you rather have your pilot use his/her experience to assess the situation calmly and thoroughly, and use all the tools available to him/her to work deliberately toward a successful resolution to the problem at hand.

That is what the APA negotiators were doing... working deliberately toward an appropriate and effective solution. It appears that is not what AA wanted.

Mr. Horton himself stated yesterday that the BK filing was not caused by AA's failure to reach a new deal with its pilots. I would guess you, being in the business, would know that.

Read more: http://www.star-telegram.com/2011/11/29 ... z1fCuMkeFn

[sanjet]

This story so hits the nail on the head.
http://www.star-telegram.com/2011/11/29 ... -will.html

Once again unions ask for too much. Stupid, childish tactics - and what does it get them...................a whole lot worse off - especially in an ecomomy that has as many unemployed people as the population of Canada.Blow off a deal because of ice machines?? Text the company to say scew you?? Pay and job security that's better than what you had?? You should be lucky to simply have a job right now.

Boeingboy, after reading that article, it seems the journalists was "sponsored" in some way by AMR.

Best Quote from that article:

Well, no need to rush the talks now. While the union rested, American executives worked through the holiday and weekend, so parent company AMR could file for Chapter 11 on Tuesday.

Read more: http://www.star-telegram.com/2011/11/29 ... z1fCypULrd

Haha as if flight crews don't work in thanksgiving. Total bs, definitely trying damage the union's PR.

[wallypilot]

FWIW, if it wasn't going to have such a negative effect on such a huge number of people, I'd love to see AMR go away. I have never had worse customer service on any airline in the NA, and I have flown on most of the majors, in business and coach class.

Given that they have such a large order with Boeing, and given that a huge number of employees would be affected, (AA employees, families, boeing employees, etc) it's hard to wish that they ultimately fail, no matter how much I despise the organization itself.

[fish4life]

Doesn't hotel rooms not beside ice machines make sense? I don't think a pilot up all night because an ice machine kept him up is very safe