American Air Boss Speaks Softly, Carries Stick

[lonestar]

American Air Boss Speaks Softly, Carries Stick
April 17, 2012
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American Air Boss Speaks Softly, Carries Stick

AMR CEO Tom Horton.

AMR chief executive Tom Horton may be soft-spoken, but people who know him say he has a backbone of steel and will not flinch if he has to cut thousands of jobs to save the bankrupt American Airlines.

AMR last month asked the US Bankruptcy Court in Manhattan for permission to void contracts with unions that do not agree to the concessions that the airline is demanding. A hearing on the issue is scheduled to begin on April 23.

The right to end contracts is perhaps the sharpest knife a company can wield in bankruptcy, and people who have worked with Horton say he is prepared to use it.

"If people want to test his resolve, they'll find that he's got a steel backbone," said former AT&T CEO David Dorman, who recruited Horton to be chief financial officer of the telecom company in 2002.

In 2004, AT&T announced plans to trim its work force by 20 percent, or about 12,300 jobs. Dorman recalled that Horton did not hesitate when AT&T's restructuring plan called for a 25 percent cut in management staff, a move that met pushback from managers close to Horton.

"Look, this is not my first rodeo," Horton said in a March 16 interview at his office at AMR's headquarters in Fort Worth, Texas.

"I've done a fair bit of M&A (mergers and acquisitions) in a pretty public way in the telecom industry and here at this company in the past. I have done some restructuring work."

The 50-year-old Horton became CEO of AMR as it filed for bankruptcy in November 2011, citing the need to cut costs to match those of rival airlines. Horton replaced his friend Gerard Arpey who had resisted a Chapter 11 filing, preferring negotiated deals to court-imposed contracts.

Arpey had won steep voluntary concessions from the unions in 2003 but the cuts were not enough. AMR lost USD$10 billion over the past decade and has posted net losses for the last four years.

The carrier now aims to shed 13,000 jobs from its 74,000 work force to trim staff costs by USD$1.25 billion. The cost cuts, opposed by the unions, also could mean changes to work rules as well as pay and benefit reductions.

LESSONS LEARNED

Born in Virginia but raised in Texas where his father worked for NASA, Horton holds a degree in accounting from Baylor University in Waco, Texas, and a master of business administration degree from Southern Methodist University in Dallas.

He began his career with AMR in 1985 and held various financial positions. He was appointed chief financial officer in 2000, but left two years later to join AT&T as CFO. Horton later helped lead the 2005 sale of AT&T to SBC Communications, which led to more layoffs.

Horton returned to AMR in 2006 as CFO with expanded responsibilities for network, fleet and alliances. He became AMR's president in 2010.

Horton said he is focused on bringing stability to AMR. He said abrogating deals is a last resort and that he prefers negotiated contracts.

His office is a modest room, decorated with aviation memorabilia, including an autographed photograph of astronaut John Glenn that Horton received when he was 5 years old. Glenn wrote: "Best regards to my friend Tommy Horton."

Bob Crandall, AMR's former CEO, said Horton's skills in finance and restructuring will serve him well as he navigates the maze ahead. In many ways, running an airline and restructuring one are a matter of arithmetic, he said.

"I was a former finance guy. That's where I started," Crandall said. "In the end, the airline business is about lots and lots of numbers."

A NEW CHALLENGE

When Horton returned to AMR at the request of Arpey, he shared the prevailing view at the company that bankruptcy was an "un-American" solution to its woes.

But after years of fruitless talks with unions on concessions, American lagged profitable rivals such as United Airlines and Delta Air Lines. Those carriers restructured in Chapter 11 and later took merger partners. They overtook American in size, knocking it from No. 1 to No. 3.

By late November, the writing was on the wall. AMR's board of directors decided on Chapter 11. The company was able to show sufficient hardship to declare bankruptcy despite having USD$4 billion in cash - enough to operate without outside financing.

"Circumstances change," Horton said. "I think it's fair to say that our company fought that battle as long as it possibly could, did everything possible to avoid going down this path."

Horton shrugged off merger interest from US Airways, saying AMR plans to exit Chapter 11 as a stand-alone company. He dismissed talk of meetings between US Airways and members of AMR's creditors committee, saying objections to a business plan are normal. "There's a lot of due diligence that is done on the plan," he said.

Gordon Bethune, the former Continental CEO credited with turning around the troubled airline in the 1990s, said Horton has a big challenge to preserve the airline's independence.

"He has a 50/50 chance," Bethune said.

'RUTHLESS' DEMANDS

Horton's supporters such as Larry Kellner, a former CEO of Continental Airlines, regard him as smart and analytical. "He's a very strong leader," Kellner said.

His critics frame him as a detached executive who keeps his customers and employees at arm's length.

"He doesn't care about his customers and he doesn't listen to his employees," Laura Glading, president of the Association of Professional Flight Attendants, said in an emailed statement. The union has called AMR's demands "ruthless."

The union representing American Airlines' pilots declined to comment on Horton. A spokesman for the Transport Workers Union, which represents seven work groups at the airline, also declined to comment, saying union leaders do not know the former finance executive well enough to assess his leadership.

Robert Mann, an airline consultant and former AMR executive, ended his career at AMR in 1985, briefly crossing paths with Horton, who was just starting there. He said that while Arpey showed strong resistance to bankruptcy and the toll it takes on workers, Horton embraced the challenge.

"It almost appears that when Arpey refused to carry the pointed stick and poke people in the eye with it, Horton was more than willing to," Mann said.

(Reuters)

http://news.airwise.com/story/view/1334656767.html

life as AA employees knew it is coming to an end..

UNions are toast..at least the contracts are..

[lonestar]

American To Cut 1,200 Non-Union Jobs
April 19, 2012
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American Airlines plans to eliminate another 1,200 jobs as part of its plan to cut costs in bankruptcy, the company said in a letter to employees.

Affected jobs include non-union passenger and cargo agents, sky caps, and baggage service workers at smaller airports, including Memphis, Reno, Sacramento and Portland, Oregon.

American previously announced plans to eliminate 13,000 union jobs, or roughly 15 percent of its workforce, as part of an overall drive to save roughly USD$1.25 billion in annual staff costs.

The latest cuts would come on top of that, the company said.

As part of the announcement, American said it would also close its southwestern reservations centre in Tucson. Those workers, however, will be offered jobs elsewhere or set up as home-based employees.

American will also close its Admirals Clubs at Washington Dulles and Kansas City.

The latest changes, which do not require approval of the New York bankruptcy court, are expected to take place within the next few months, American said.

Other major rivals also cut thousands of jobs when they restructured in bankruptcy several years ago, emerging as leaner and tougher competitors.

AMR, the parent of American Airlines, filed for bankruptcy in November.

The company has also sought permission from the court to void union contracts, including those covering pilots, flight attendants and ground workers.

A hearing on that motion is scheduled for Monday.

(Reuters)

http://news.airwise.com/story/view/1334826907.html

[lonestar]

Merger Support Growing Among AMR Unions
April 20, 2012


At least two unions at bankrupt American Airlines would support a potential merger with US Airways and could issue a joint communication soon pressuring airline management to consider a deal, two sources said on Thursday.

The sources said unions representing flight attendants and ground workers were open to talks between the two airlines. It was unclear if the union representing pilots also would support merger talks, they said.

American Airlines parent AMR filed for Chapter 11 bankruptcy in November citing high labour costs. The company on Thursday posted a net loss of USD$1.7 billion for the first quarter.

AMR has said repeatedly it wants to exit Chapter 11 as a stand-alone company.

"As you know, there continues to be much takeover speculation in the press fuelled by those who seek to serve their own agendas, including the circulation of misleading information. I expect this to continue and to escalate," AMR chief executive Tom Horton said in a statement accompanying the airlines earnings report on Thursday.

An AMR spokesman declined to comment beyond that statement.

Sources have said US Airways, formed in 2005 from a merger with America West Airlines, has pitched merger proposals to members of AMR's creditors committee, which includes unions, in hopes of attracting support for a deal.

For now, AMR has the right to reorganise without intrusion from outside parties.

"Although we put a high probability that an eventual merger will happen, we believe that this could be aggressive timing since AMR management has the exclusive right to reorganise through the summer," said Ray Neidl, an airline analyst at Maxim.

In March, US Airways gave a presentation to representatives of AMR's unsecured creditors and told them that a combination of the two airlines would create about USD$1.5 billion in synergies, according to people familiar with the matter.

The briefing, which included US Airway's analysis as to how a proposed merger would reduce costs while boosting combined revenues, received positive response from the AMR creditors, they said.

American has said it plans to eliminate 13,000 union jobs, or roughly 15 percent of its work force, as part of an overall drive to save roughly USD$1.25 billion in annual staff costs.

The company has asked the bankruptcy court for permission to void the contracts. A hearing on the matter is set for next week.

The company said on Wednesday it intended to cut another 1,200 non-unions jobs to reach that goal.

Spokesmen for the Transport Workers Union, which represents ground workers, and the Association of Professional Flight Attendants declined to comment. A spokesman for the Allied Pilots Association was not reachable for comment.

(Reuters)

http://news.airwise.com/story/view/1334917455.html

[snowspot66]

The unions negotiated with the company and came to an agreement that was signed by the company. Why should they be forced by a judge to give up what was negotiated for and received in a legally binding contract? It's always the unions faults isn't it? It's never the companies failures. It's always the unions. Does responsibility only apply to the individual that can be stepped on and walked over?

I particularly like the part where it says:

Arpey had won steep voluntary concessions from the unions in 2003 but the cuts were not enough.

And then a few paragraphs later says:

But after years of fruitless talks with unions on concessions,

[lonestar]

Originally Posted by snowspot66

The unions negotiated with the company and came to an agreement that was signed by the company. Why should they be forced by a judge to give up what was negotiated for and received in a legally binding contract? It's always the unions faults isn't it? It's never the companies failures. It's always the unions. Does responsibility only apply to the individual that can be stepped on and walked over?

I particularly like the part where it says:



And then a few paragraphs later says:

Guess you have never seen someon go through bankruptcy.. everything is on the table..
EVERYTHING

[lonestar]

AMR Fires Opening Shot In Court Battle
April 23, 2012
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American Airlines kicked off a week-long court hearing on its bid to abandon union contracts, telling a judge on Monday that its bankrupt parent, AMR, cannot survive without major concessions from its workforce.

Hundreds of people, including lawyers and airline workers, filled the courtroom and two overflow rooms in US Bankruptcy Court in Manhattan for the start of the hearing, as other unionised workers rallied outside the courthouse.

Cordoned off by police, the workers held signs and chanted for fairer work terms and against AMR's plan to cut about 13,000 union jobs.

AMR wants to convince Judge Sean Lane not only that it desperately needs labour concessions, but that its unions have unreasonably rejected prior attempts to negotiate those concessions. AMR filed for Chapter 11 bankruptcy in November, citing uncompetitive labour costs.

In opening statements, AMR lawyer Jack Gallagher said the company needs 20 percent across-the-board reductions in employee costs, half of which must come from medical benefits.

AMR spends three times as much annually on medical benefits as the average lower-cost carrier, such as Southwest Airlines, he said.

"It's not the unions' fault we're in bankruptcy, but it's not about whose fault it is," Gallagher said. "It's about the facts of our business."

Edgar James, a lawyer for the Allied Pilots' Association, which represents about 10,000 AMR pilots, said AMR's proposed business plan is unfair, in part because AMR has not done enough to explore possible merger or consolidation options.

"What everyone believes is going to occur is they're going to get out of this bankruptcy and consolidate with someone," yet the company has told the pilots' group it has not considered that option, James said.

Some of AMR's expert witnesses were expected to testify on Monday afternoon, along with the company's chief restructuring officer, Bev Goulet.

After the hearing wraps up, the company and its unions have another two weeks to negotiate. If new terms are still not reached, the unions will have a chance to present their case in court in May.

Regardless of how Lane rules, AMR must keep negotiating for a consensual deal with its unions. A ruling by Lane granting AMR's request to break its contracts would allow AMR to impose its own unilateral terms while those negotiations go on.

WORKERS SAY MERGER COULD SAVE JOBS

In an unusual step in bankruptcy, three unions that represent AMR's pilots, flight attendants and ground workers on Friday said they had struck a deal with US Airways to support a potential merger between US Airways and AMR. They said a deal could save more than 6,000 jobs.

AMR has long shunned merger interest from US Airways, and on Monday, chief executive Tom Horton again shrugged off attention from US Airways in a letter to employees.

"I want you to know these developments in no way alter our course," he said. "We are making significant progress, and the court has granted us the exclusive right to pursue our plan of reorganisation at least through the end of September and this may be extended further."

US Airways chief executive Doug Parker cautioned his employees on Friday that the union deal does not mean a merger is in the works.

If the two airlines combine, it would create a carrier that rivals United Airlines and Delta Air Lines in size and scope.

In March, US Airways gave a presentation to representatives of AMR's unsecured creditors and told them that a combination of the two airlines would create about USD$1.5 billion in synergies, according to people familiar with the matter.

American has about 74,000 full and part-time employees. AMR said in February it expects to trim about 4,600 mechanics and related jobs, 4,200 fleet service workers, 2,300 flight attendants, 1,400 management and support staff, and 400 pilots.

The Association of Professional Flight Attendants, which represents 17,000 employees, said the US Airways plan offers a pay increase of 2.5 percent initially and 1.5 percent a year for the next five years.

Gregg Overman, a spokesman for the Allied Pilots Association, declined to give details on the union's deal with US Airways. He also declined to confirm a Wall Street Journal report that the deal would give pilots an immediate 5.5 percent increase and 3 percent a year for five years.

(Reuters)

http://news.airwise.com/story/view/1335214787.html

there has NEVER been a merger that did not cost jobs lost of them..

Initially they may not cut but when they merge ground staffs, cut flights in markets they both serve, boht Flight Attendents and pliots lose jobs..

theese unions are way out there in LALA land..

[lonestar]

American imposes concessionary contract terms on its pilots
September 14, 2012
American Airlines, having warned its pilot group that management would impose a new contract on them if they rejected a tentative agreement, followed through with that tactic this week to the dismay of the Allied Pilots Association, according to Dallas’ NBC affiliate station.

American’s pilots soundly rejected a tentative agreement that had less-concessionary terms than what was imposed on them. A bankruptcy judge last month ruled that American had the right to set aside the pilots’ current contract and impose new terms.

American’s pilot union will hold a strike vote Oct. 3; the expected approval from that vote does not mean the pilots will strike, as they will need permission from the National Mediation Board, the story said. One union member called the new contract terms, which began Wednesday night, “atomic” and said American has chosen a “nuclear option” instead of going back to the bargaining table.

The new pilot agreement is the last labor deal American has reworked as it moves through bankruptcy restructuring, having reached ratified deals with its other major labor groups. An American spokesman told NBC that imposing the new contract terms – lower pay, different work rules and more liberal rules on codesharing with other airlines – was regrettable but necessary for American to be able to compete.

American Airlines pilots knew the cuts were coming, but the union calls the new terms “atomic.” A company spokesperson tells NBC 5 that there’s no joy in making the cuts, but claims it has to be done for the airline to survive.

“What they’ve elected to do is really kick the hornet’s nest. They told us they were going to go slow, that they’d like to get back to the bargaining table, but they’ve chosen the nuclear option here,” said First Officer Tom Hoban with the Allied Pilots Association.

Hoban said the cuts coming from American Airlines are just fueling pilots frustrations. The company got the green light last week from a judge to start slashing $370 million in pilot costs. The airline isn’t wasting any time.

“We’re going to be working more days with less pay, under some pretty significant, onerous conditions,” said Hoban.


read more

http://www.nbcdfw.com/news/local/Ame...169608336.html

just a matter of time before they redo all the union contracts

they started with the big guns first and now coming after the rest of them..

[nyuk nyuk]

Amazing considering that at least from Denver, AA charges more than other airlines, and doesn't offer direct service. Most of their fleet are older McDonnell Douglasses, no? According to Wikipedia, their fleet is older than United and oddly I end up on United because other airlines like AA charge more and/or have weird hours for flights and irritating layovers.

[Rohirrim]

Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration.
Abraham Lincoln

[ghwk]

The only thing I know for sure is Horton won't consider his or his other execs salaries, bonuses, etc. on the table. Easy to go cut other people's wages when you have a contract and a golden parachute. Takes no guts at all.

[ant1999e]

Originally Posted by ghwk

The only thing I know for sure is Horton won't consider his or his other execs salaries, bonuses, etc. on the table. Easy to go cut other people's wages when you have a contract and a golden parachute. Takes no guts at all.

I'm with you on this one. If the union has already made concessions and they're still having problems, maybe they need to cut costs somewhere else.

[lonestar]

Originally Posted by nyuk nyuk

Amazing considering that at least from Denver, AA charges more than other airlines, and doesn't offer direct service. Most of their fleet are older McDonnell Douglasses, no? According to Wikipedia, their fleet is older than United and oddly I end up on United because other airlines like AA charge more and/or have weird hours for flights and irritating layovers.

for the most part all airlines have the same "base fares" where the differences come in are the airport fees that you pay for every airport you touch via take off, landing or connections.

Now taht is not saying that all the seats on the plane are at the lower rates..

they all have computer models that figre out the best "load" rates for x amounts of seats at the lowest fares going up to the full fares Y "Coach"..

When one airline lowers/raises a fare in a certain market say DEN-LA all the other airlines match them most of the time.. May not dedicate the same number of seats to that fare but can say that the fares are the same..

Most of the airlines have old fleets with US Air probably being the oldest.. that is the airline that AA will probably be merged with and if you think AA is screwed up now just wait..

US Air still has not settled some of the Union issues they had when they merged with America West a very long time ago.. The last I heard they still have not merged the Flight attendant schedules and union rules because they are from different unions..

AA's hubs are in DAL, CHI and LAX IIRC so most of the time you will have to connect in one of those cities to get where you want to go..

Some of Uniteds hub cities are DEN, CHI, HOU, and Newark and LA, so taht is the reason you get direct (non Stop) flights..

[lonestar]

Originally Posted by ghwk

The only thing I know for sure is Horton won't consider his or his other execs salaries, bonuses, etc. on the table. Easy to go cut other people's wages when you have a contract and a golden parachute. Takes no guts at all.

one of the perks of an education, working hard and knowing how to run a business..

[ghwk]

Originally Posted by lonestar

one of the perks of an education, working hard and knowing how to run a business..

Man this is just so *****ed up on so many levels.

[lonestar]

Originally Posted by ant1999e

I'm with you on this one. If the union has already made concessions and they're still having problems, maybe they need to cut costs somewhere else.

the unions for the airlines much like the auto company's are out of touch with the Real world..

In the past strikes crippled both industries and then the money became bloated..

Now that said I really want the best pilot in the world driving the planes I'm on..

but to hear that these poor guys are going to have to be away from home 20 days of the month sorry but the money your making justifies that issue..

most people would love to have 10-11 days off a month.. at home with momma.. There are all sorts of regs that the FEDs have in place for crew rest, most flights over say 8 hours the pilots rotate out of the cockpit for a nap..
On longer flights say from NY to Asia there are two crews to make the flight each direction..

sometimes in life you can't have your cake and eat it also..

[lonestar]

Originally Posted by ghwk

Man this is just so *****ed up on so many levels.

guessing you have never made it past supervisor level..

[ghwk]

Originally Posted by lonestar

guessing you have never made it past supervisor level..

Wrong and I also didn't grow up to be an arrogant ahole who feels I have earned the privelidge to feel superior to others.

Your Christian values are not very Christworthy.

[lonestar]

Originally Posted by ghwk

Wrong and I also didn't grow up to be an arrogant ahole who feels I have earned the privelidge to feel superior to others.

Your Christian values are not very Christworthy.

sure seems that way..

I earned every promotion I got, in some cases more than once.. all form hard work very little arrogance involved at all..

[Rohirrim]

Wow! Talk about sanctimonious arrogance. I hope you live alone. It would be a shame to imagine some poor soul having to put up with such a bloated ego.

[houghtam]

And Jesus said to his disciples:

"And yea, whatsoever you do to the least of me people, that, you do unto me. But if you have a better education than someone, it's your goddamn right to fight for what's yours, no matter who you screw over in the process."

[Garcia Bronco]

Originally Posted by snowspot66

The unions negotiated with the company and came to an agreement that was signed by the company. Why should they be forced by a judge to give up what was negotiated for and received in a legally binding contract? It's always the unions faults isn't it? It's never the companies failures. It's always the unions. Does responsibility only apply to the individual that can be stepped on and walked over?

I particularly like the part where it says:



And then a few paragraphs later says:

Because there are a number of assumptions, business assumptions, that never came to be and based on that the company is billions in debt. So now you're in a situation where you either need to cut people to save the ship or let everybody drown. Good luck with that. I'll never fly American Airlines or US Airways because they ****ing suck.

[houghtam]

Originally Posted by Garcia Bronco

Because there are a number of assumptions, business assumptions, that never came to be and based on that the company is billions in debt. So now you're in a situation where you either need to cut people to save the ship or let everybody drown. Good luck with that. I'll never fly American Airlines or US Airways because they ****ing suck.

That's what I was going to say...the only people who fly AA do so because they have no other choice. Same with Delta. If there were actual competition between airlines instead of every airline having their own hubs and regions where they're the de facto sole carriers, this wouldn't have ever become an issue in the first place.

Same with cable companies today, same with telephone service back in the day. The illusion of choice that props up companies who would otherwise fail when faced with legitimate competition goes directly against the alleged free market.

[Blart]

Pilots are living in poverty, donating plasma for money, surviving on foodstamps.

This is the quality of pilot you should expect on poverty wages,




Here's the Hudson River hero, the type of pilot you're never going to see again:



Skip to 3:35,
"I don't know a single professional airline pilot who wants his or her children to follow in their footsteps"


PBS has a good documentary on the problem,
"Flying Cheap"
http://www.pbs.org/wgbh/pages/frontl...ingcheap/view/

[houghtam]

Originally Posted by Blart

Pilots are living in poverty, donating plasma for money, surviving on foodstamps.

This is the quality of pilot you should expect on poverty wages,




Here's the Hudson River hero, the type of pilot you're never going to see again:



Skip to 3:35,
"I don't know a single professional airline pilot who wants his or her children to follow in their footsteps"


PBS has a good documentary on the problem,
"Flying Cheap"
http://www.pbs.org/wgbh/pages/frontl...ingcheap/view/

who needs facts when you've got God and "capitalism" to hide behind?

[Rohirrim]

And people wonder why I refuse to fly.