Tag Archives: American Airlines pilots

Why American Airlines’ Pilots Need to Vote Yes


To say that I have been bombarded over the last week with emails pertaining to the American Airlines’ pilot TA vote would be an understatement. This is not to say that the voting that is also going on with the airline’s flight attendants and its TWU groups which did not vote for the “last best” TAs are also not important.

But we all know how this works.

The pilot union vote is the one that carries the most clout.

While I already voiced my opinion on this matter two weeks ago in PlaneBusiness Banter, I am going to say it again today — very clearly and very publicly.

If you are a pilot for American Airlines — you have to put aside the emotional firestorm that has erupted over the last several days, a result of an email that was circulated within the pilot group concerning “conversations” and “comments” involving both the airline’s Chief Pilot John Hale and SVP of Operations Jim Ream.

You have to stop thinking that there is a “deal” that is going to happen between JetBlue and American. It isn’t going to happen. Period.

You have to stop thinking that a “yes” vote is a vote in favor of the current management.

You have to stop thinking that leaving your fate to a bankruptcy judge is preferable to the contract that is now up for grabs.

You have to remember that you cannot expect a contract that is part of a bankruptcy process to begin to come close to the contract that the Delta pilots recently ratified, or the contract that the United pilots now have on the table before them. Trying to compare these two contracts to the situation that you are now looking at with American is a case of “magical thinking.”

As Ivan Rivera, Aliied Pilots Association Domicile Chairman put it so well in an email he sent out today,

Setting aside for a moment the “cannon shots” and the I Pads, it is clear that AA management has been in a horrible “state of confusion” to add to their incompetence. Confused and incompetent are not the qualities we need from our management, and this is why our primary goal should be to fight to replace them. Without new management, with vision and competence there will be no long-term future for this airline, regardless of what our CBA’s look like. I know we all want this; we just may disagree on the best way to get it done. We have two options going forward to try to achieve that goal, and each carries it’s own set of advantages and risks. The YES vote endorses APA’s strategy of “strategic and financial” leverage thru the 13.5% claim. The NO vote endorses a more traditional “labor” leverage that, depending on many factors, may result in a “financial” leverage as well. As you know, following all our advisor’s recommendations, I have endorsed the YES vote but I have also presented our options with a NO vote at our MIA Domicile meeting. I’ve also shared with you that I believe APA’s strategy following a YES vote will be the same as for a NO vote: We will continue to oppose the “stand alone” business plan-we will continue to oppose this management- we will continue seek the best path for all pilots and other AMR stakeholders, except our current management of course. However, there are two very significant risks with a NO vote: First is the loss of the economic value and power of the 13.5% claim; and second is the risk of doing irreparable damage to our SCOPE thru the outsourcing of the ERJ190-195 (DC-9 size A/C capable of decimating the bottom of our seniority list).

I agree.

I think the recent actions of management at the airline should only convince pilots even more that the current management team at the airline needs to go.

After all, there is a reason that the pilots at both Delta Air Lines and United Airlines are now looking at contracts that are much richer than the one you are now looking at. It’s called — management teams at those airlines realized years ago what had to be done in order to grow their businesses effectively. They realized that “heft” was necessary in order to be competitive on a global scale.

But voting “no” is not the way to get this management team out of the picture. Nor is it a way to tell the current management team to go F*$% themselves.

In fact, I would argue that a “no” vote makes the situation much more advantageous for the current management team.

I know it sounds contrary. I know it sounds confusing.

But the pilot group will not “win” if the current contract is abrogated.

Finally, if you are foolish enough to think management will come back and “sweeten” the deal if the contract is abrogated– while creditors are breathing down their neck to get as much money as possible out of the airline’s coffers — think again.

But this time think rationally. Not emotionally.

PlaneBusiness Banter Now Posted!

home-typewriter copy 1.jpg

Good evening to all.

It’s a late night tonight here at the Worldwide Headquarters. Three guesses why. That’s what happens when a U.S. airline files for Chapter 11 bankruptcy protection at 6 AM in the morning.

Not surprisingly, I spend a lot of time this week talking about AMR and American Airlines. The airline’s bankruptcy filing, why it finally pulled the trigger, why the move was inevitable years ago, why it was not a “moral failure,” and more.

And yes, don’t even start with the AMR merger rumors. Long way between here and there.

In addition, I also take a time this week to talk about the recent DOT slot auction for slots at both LGA and DCA. While the DOT won’t make the “formal” announcement concerning who won what until Thursday, the winners have either confessed or been outed by process of elimination. 😉

The results of the auction were somewhat intriguing — both because of what airlines were successful in nabbing slots and because of the one big airline that came away empty-handed.

Then there is the continuing mess that is the Indian aviation industry. We talked a great deal about this last week, but this week it’s back on the radar as both Jet Airways and Kingfisher continue to struggle. Jet announced a new lease-back plan that should generate at least $300 million for the airline in the coming months, but Kingfisher is still looking for an investor. Meanwhile, employees haven’t been paid in weeks, and the airline’s pilots are beginning to leave for better opportunities. Oh, and AerCap is taking two of its planes back.

The Air Transport Association is ready to roll out its new “branding” Wednesday. Not sure I like the new name, but I am a fan of the idea behind the extreme makeover. For too long the ATA has been a wet noodle in a sea of sharks — a totally ineffective trade organization.

So here’s to a new gorilla on the block.

Meanwhile, last week was a horrible week for airline stocks. We’ll go over the details of the carnage.

All that and more in this week’s issue of PlaneBusiness Banter.

PlaneBusiness Banter Now Posted!

home-typewriter copy 1.jpg Hello everyone. It’s that time again. PlaneBusiness Banter is now posted. This week we are talking airplanes, pilot contracts and we wrap up the third quarter earnings season with our in-depth look at the recent earnings calls from WestJet, Air Canada and Republic Holdings.

American Airlines had clearly wanted a contract with its pilots in place before the AMR board meetings began Wednesday of this week. Does not look like that is going to happen.

The lack of a contract continues to drag down shares of the airline. Tuesday shares slid 1%, closing at 1.92. Shares dropped 5% on Monday.

Looking at what the company has proposed, I think it’s going to be hard for the APA Board to sell the deal to its membership given the wide disparity between the numbers its members had proposed and numbers the airline has proposed.

We look at the 101 page position paper the pilots at United Airlines distributed last week regarding their concerns over training and integration procedures with the merged airline. Who knew the FAA inspector who was fined for his involvement with the Southwest Airlines fiasco a few years ago is the same FAA inspector involved in the FAA SOC [single operating certificate] process at United Airlines?

Of course we also wrap up the third quarter earnings season as we take our in-depth view at the recent earnings call from Republic Holdings, Air Canada, and WestJet.

Then there is the Dubai Airshow. We give you all the top news from the event that passed $55 billion in orders as of Tuesday.

As usual, all this and much, much, more in this week’s issue of PlaneBusiness Banter .

PlaneBusiness Banter Now Posted!

home-typewriter copy 1.jpg

Let’s try this again. It seems that our blog editor chose to eat my earlier post this evening. You guys know the drill. This week’s issue of PlaneBusiness Banter is now posted.

This week we talk a lot about American Airlines. Again. We also talk about the craziness going on in Europe where it truly is “Let’s Make a Deal” season. Aer Lingus, British Airways, Etihad, Virgin Atlantic, bmi. It’s a mad, mad, mad world out there.

Airline stocks had a great week last week — and one stock in particular shone the brightest. That stock was Spirit Airlines. The airline announced killer traffic numbers last week and shares took off in the low fare carrier as a result.

JetBlue announced its CFO, Ed Barnes, had resigned, effective immediately, after the close of trading Tuesday. We never like to hear that a CFO has resigned, effective immediately. In addition, given the timing of the news, just one week before the airline announces third quarter earnings, you have to believe this was a board of directors decision.

The DOT reported its August Airline Consumer Travel Report last week. We dissect the numbers and let you know who had a good month and who didn’t. Hint: JetBlue had an awful month — the result of the August storms that raked the East Coast. But US Airways and Continental Airlines both saw their performances slip for the month as well.

Of course the big news this week is earnings. Hawaiian Airlines kicked off the third quarter earnings season Tuesday with better than expected numbers, and Wednesday, American Airlines will report its third quarter loss. As has been the case for more quarters than we can remember, American should be the only major U.S. airline to post a loss for the quarter.

Thursday we hear the profit news from Alaska Air Group and Southwest Airlines.

As always, we talk about all of this — and much more — in this week’s issue of PlaneBusiness Banter.

PlaneBusiness Banter Now Posted!

home-typewriter copy 1.jpg

Hello earthlings. This week’s issue of PlaneBusiness Banter is now posted. In this week’s issue we take a follow-up look at the problem known as AMR. After our look at the airline’s Monday Meltdown last week, this week we give you more insight from an assortment of Wall Street analysts. The upshot? Bankruptcy is not going to save the airline, but at the same time, the airline does not appear to be anywhere near a filing.

The airline also announced cuts in capacity for the late fall and winter months. This news was probably the best news American Airlines could have uttered. Analysts liked the reductions. The airline says they are not a result of falling demand — but of higher fuel prices. Not certain, but the airline’s continued exodus of top-tier pilots just might have something to do with the airline pulling back on the reins as well.

Other airline stocks suffered as a result of AMR’s drop last week. US airline stocks were clearly the laggards in a week that saw the the rest of the markets do fairly well.

NextGen. FAA. Congress. Department of Transportation Inspector General.

Send chills up your spine yet? It should.

Last week the FAA and its project management of the NextGen project got raked over the coals by the DOT IG. But as we talk about this week in PBB, how can the FAA be expected to manage such a complex project when it can’t even count on having money to pay for paper clips from day to day — a result of how the agency is funded (or is not funded) by Congress?

Meanwhile, the European Court of Justice gave the EU a huge thumbs up last week on its plan to charge airlines around the world for their greenhouse gas emissions. Needless to say the airline industry is not happy about this.

Southwest Airlines’ CEO Gary Kelly talked to Bloomberg last week and he started throwing around some huge revenue numbers that he says the airline can produce — as a result of its AirTran acquisition. Only one problem. I’ve been talking to a number of industry people who don’t think he can.

What do you think?

Which reminds me. This week you, our subscribers, get a chance to tell me what the next airline merger will be. That’s right. Sharpen up those pencils and send me your two cents on just which merger could be next on our radar. And why.

All this and much, much more in this week’s issue of PlaneBusiness Banter.

PlaneBusiness Banter Now Posted!

home-typewriter copy 1.jpg

This week’s issue of PlaneBusiness Banter is now posted. We are all over the place this week as first, I tell you what you missed at The BeatLive Conference last week. The conference usually attracts an assortment of corporate travel heavyweights. This year was no exception.

Then of course we have to talk a bit about that certain airplane that was finally delivered to its new owners in Everett, WA on Monday. You know. The one that was just a tad late and, apparently, a tad overweight.

Yes, Boeing finally delivered its first 787 to All Nippon Airways (ANA) on Monday.

We also have lots of union labor news to talk about. How many American Airlines’ pilots are now expected to retire on Oct. 1? We hear the number could be almost four times as many who retired at the beginning of September.

American Airlines was also in the news last week as Moody’s lowered its outlook on the airline’s debt to “negative.” Tuesday, the airline announced an EETC debt refinancing deal. We let you know what JP Morgan analyst Mark Streeter thinks of the debt deal.

One thing’s for sure. The airline is certainly paying more than it did back in January for the deal. Yield on this one is in the 8% range. In January the airline did a financing deal at about 5.25%. That’s what rumors of bankruptcy, impending debt bills, and a continued inability to make a profit and throw off cash does.

Meanwhile, pilots from both Continental and United Airlines picketed on Wall Street Tuesday.

We update you on the status of the pilot negotiations at United, in addition we wonder why it is that pilots think Wall Street analysts really care if they picket outside the NYSE. And why it’s really a bad idea — both for United and for the industry as a whole.

Speaking of Wall Street, airline stocks did not have a good week last week. Neither did Wall Street. We give you our take on the latest economic tea leaf reads and tell you why this Thursday is a very important day for the eurozone — and US financial markets as well.

One good side effect of continued eurozone anxiety – both crude oil and jet fuel posted large declines for the week. That is very good news for airlines.

Lots of reader mail this week — from baseball to airlines to comments on our column from last week.

All this and more — in this week’s issue of PlaneBusiness Banter .