NorthernAtlanticRacer

It should not be forgotten that Ch. 11 provides a competitive edge to those emerging from BK - no need to repay debt. AA would put itself at a disadvantage compared to US and UA (if they emerge, which I doubt; rather US will pick up peices of US), who have debts shed. Continental comes to mind here.

martin33

Hang on a moment. Ch. 11 does NOT erase debts. UA and US will not be emerging from Ch. 11 debt-free, by any means.

As part of the process debts might be refinanced, re-sized, or even partially converted to equity, but there is no chance of them just going "poof"...

NorthernAtlanticRacer

Yes, they do not go poof. I shortened the post too much. I guess we can however agree that Ch 11 provides leverage in delaing with crteditors and suppliers and ofetn leads to a rescheduling of debt service that essentially eliminates the need to meet regular debt service payments. Thus, I still see a competitive edge for Ch. 11 airlines over one which does not go that way, although itself in a dire financial situation.

martin33

You most certainly don't get relief from regular debt service payments-- every day in court that a payment holiday entails is counted as further debt. rescheduling might at best reduce some payments now in favor of even higher ones later on...

jmorris

While it will be painful in the short run, in the long run the only way AA can survive is to break the back of its uncompetitive union contracts. I am a sizable creditor of AA with my hoard of miles, and I'm all for Chapter 11! Let's hope we lose some of the surly FA's along the way.

HK-UMICH

Sorry, maybe already discussed, but why by integrating Egale into AA will save cost? (I assume Engle is wholly owned by AA..)

Thanks!

SFOJFK

The integration would be for the pilots. This would get rid of the current heat between the two groups (mainline and Eagle unions). The SCOPE clause could be removed because it would be pilots from same union flying both mainline and Eagle routes. No worries about having your flights taken away from your group.

SCOPE was put in place to protect mainline pilot flying. Under integration, they would be under the same seniority umbrella. Just wondering how pay scale would work when you would have a 777 pilot compared to a Saab pilot. AC has mainline pilots flying the RJs for them.

martin33

As pointed out, APA wants one workforce, on one seniority list, so that "scope" cannot be an issue anymore. AA wants workrule changes and/or wage changes and/or headcount changes. The arrangement envisioned is something like this: bridge the Eagle/AA gap with 70-100 seat aircraft (perhaps the CRJ? or perhaps the ERJ 170 or 190 series? these are quite nice and could even be given a First Class-- see http://www.embraer.com/english/content/aeronaves/aviacao_comercial/erj170/cross_section
). you could run these at closer to eagle rates rather than mainline rates.

once you're merging workforces, you have more degrees of freedom to negotiate in. it becomes potentially easier to work out stuff like productivity changes and potentially lower wages. Under a unified system, pilots in lower paid positions would automatically be in the queue for higher paid ones.


[This message has been edited by martin33 (edited 02-06-2003).]