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Odds and Ends: Judge smacks down American; ailing Hong Kong Airlines
We were traveling Wednesday so we’re a little behind on this:
American Airlines: The judge overseeing American’s bankruptcy denied a request to void labor contracts, particularly the pilot contract. This is a huge blow to management–and would seem a boost for the US Airways merger effort.
Hong Kong Airlines: This financially ailing carrier, under growth restrictions by the authorities, may cancel its order for the Airbus A380. The airline was supposed to firm up an order for the Boeing 747-8I that was announced as an “Unidentified” commitment during the Paris Air Show last year, but it never did.
Categories: Airbus, American Airlines, Boeing
747-8I, A380, Airbus, American Airlines, Boeing, Hong Kong Airlines
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Leeham News and Comment
- Odds and Ends: Boeing ponders 787 rate hike; A350 fly-by at PAS?; EMB wins order for E-Jet May 21, 2013
- United returns 787 to service today; WSJ points to other issues May 20, 2013
- Comparing the 787, 777-200/300ER and the 777-8/9X May 17, 2013
- Assessing the A350 program May 16, 2013
- Boeing gets launch order for MAX 7 May 15, 2013
I’m not so sure its a “huge blow” to AA management’s plan as the judge did allow AA to refile w/out prejudice. Basically, they will change the “unlimited codesharing” (which I thought was a bit of a stretch anyway) and the amount furloughs. In fact, those were the only items which needed to be changed. I don’t know about the furloughs situation, but I think AA will change the codesharing to a more limited basis (which probably won’t be too bad anyway).
What this does show IMHO is that the judge believe most of AA’s provisions were indeed vital for AA to make a recovery. This actually puts more pressure on Parker to come up with a more viable plan.
I don’t think Hong Kong Airlines will finalize either Boeing or Airbus VLA order. Interesting to see they want to become an “all Airbus fleet”.
As mentioned on the airliners.net thread with a similar title, the explicit mention of the A380 for Hong Kong is a bit unfair and misleading since *ALL* their (potential) orders are currently suspended…
I agree with jacobin777 on AA. This is not the total victory for the unions and US you think it is, Scott. It will send both the unions and AA back to the barganing table, and Mr. Parker won’t be there.
But I disagree with him on Hong Kong Airlines. HX has a MOU for 55 Boeing aircraft, and has 52 Airbus aircraft on firm (now semi-firm) order from Airbus. HX has not been allowed to take delivery of any Airbus airplanes since the Chinese Government began the trade dispute over the EU’s ETS.
The HX A-380s were not going to begin delivery until 2015, anyway. So if they converted their MOU now for the B-747-8I they could still get them on time.
I don’t think Hong Kong Airlines is in a financial problem, they are 55% owned by Grand China Airlines Holding Company and 45% owned by Hainan Airlines (which is also owned by GCAHC). With all the tenticals entwining airlines in China, and the government in ultimate control of everything, I’d say it doesn’t look good for Airbus airplanes as long as ETS is a problem to the Chinese.
Basically, KC, I think the VLA orders will be cancelled-for both Boeing and Airbus. “Too much airplane”. Now whether they become an “all Airbus fleet” is to be seen but it can potentially happen, though as you stated, no probable.
Here is the latest from the Flight Attendent’s Union in the Fort Worth Star Telegram;
http://blogs.star-telegram.com/sky_talk/2012/08/flight-attendants-union-court-ruling-is-clear-message-to-approve-contract-or-else.html
“Leaders of the Association of Professional Flight Attendants, in a strongly worded message to the membership overnight, found nothing to cheer about in Wednesday’s ruling by U.S. Bankruptcy Judge Sean Lane.
In a post on the union hotline, APFA warned its members:
Late this afternoon, the Bankruptcy Court issued a blistering indictment of the labor unions on American Airlines’ property. The Court summarily rejected all but two arguments the pilots made in the Section 1113 hearing, including convergence – the argument that the company’s ask would put the pilots below industry standard. Most of the pilots’ arguments were identical to ours.”
Read more here: http://blogs.star-telegram.com/sky_talk/2012/08/flight-attendants-union-court-ruling-is-clear-message-to-approve-contract-or-else.html#storylink=cpy
From the article, “AMR declared bankruptcy in November, and says it needs USD$1.06 billion in annual labour savings – including USD$842 million from its unions – to become profitable.”
So AMR is stating that their union wages account for almost 80% of their salary problem.
I wonder how much all of the non-Union and executives will have to give up.
AA has filed 20% of its non-union workforce, IIRC, primarily in management/mid-management jobs.
All the judge did was deny AA’s motion to modify minor portions of the contract. AA will re-submit and get they want: unilateral modification of their pilot contracts unless otherwise agreed on. The creditors’ committee representing unsecured creditors will not agree to any shifts more value from AA to the pilots. See:
http://atwonline.com/operations-maintenance/news/amr-creditors-committee-american-unionized-workers-it-s-time-deal-0817?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+AtwDailyN